The time it takes for electronic bank payments and cheques to clear has been reduced but further improvements are needed, the Office of Fair Trading (OFT) has announced. The judgement came in the OFT's review of the Payments Council, which has been charged with making the payments industry work for consumers and businesses since it was established in 2006. It has been estimated that banks earn up to £30 million a year by holding onto their customers' money while it is being transferred. The Payments Council introduced the Faster Payments Service last year, which was established to allow consumers to make and receive payments within a matter of hours rather than having to wait for days. However, the service has been found to be operating at just 69 per cent capacity across its member banks, while the Council's progression has been judged as disappointing in some areas, particularly in driving improved payments for customers. The Council has also been encouraged to take a proactive approach, rather than acting on external pressure and put plans in place to ensure back up procedures can take the strain if payment systems fail. While acknowledging the improvements made, OFT senior director of services, Cavendish Elithorn, said: "More work is needed to sharpen the Council's focus on the flexibility and efficiency of its systems and to make sure benefits are passed on to the end user." Which? Economic policy manager, Pula Houghton, added: "It's been a year and a half since the original deadline to implement same day transfers so why are the banks dragging their heels? These shortcomings overshadow the overall good work that the Payment Council is doing."
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