But the cheque had been stolen. The bank dishonoured it the next day and reversed the money credited to Morgan’ account. Morgan and the police were unable to find the buyer, leaving her without her car or payment for it.

Morgan complained to us that her bank should not have accepted the cheque because she did not personally present it at the bank. She said the cheque could be properly deposited into her account only if she presented it. She also said the bank’s decision to reverse the cheque was incorrect because the $10,000 had been credited to her account and the bank had taken on the risk of the cheque not clearing.

Our investigation

We did not agree that the bank had acted wrongly by accepting the cheque. The cheque had been made payable to “Morgan or bearer” and crossed with two parallel lines. The words “or bearer” had not been deleted so the cheque was a “bearer cheque”. It was also crossed with two parallel lines, meaning it had to be banked into an account (rather than cashed). Given these payment instructions, Morgan’s bank could accept the cheque into an account of either the named payee, Morgan, or any other bearer. There is no legal requirement that the payee has to personally present a cheque for the bank to accept it into his or her account. It is quite common for people to pay cheques into other people’s accounts. We therefore concluded that Morgan bore the risk of the cheque not clearing, rather than her bank.

Normally, the collecting bank sends details of a cheque electronically to the paying bank on the day it collects the cheque. The paying bank must decide whether to pay or dishonour the cheque by the end of the following day. If honoured, the funds are “clear” for the payee by the end of the third day. In Morgan’s case, we could not identify any discrepancies with the dishonouring of the cheque. It was dishonoured within the allowed time.

Outcome

We recommended Morgan withdraw her complaint.