4.3.4 Instalments Paid by Cheque

Summary

In some circumstances an applicant/recipient may be granted an exemption from the requirement to provide bank details for direct credit. In this case, payment is made by cheque. Cheque payments should only be made when:

• direct credit is not reasonably possible or appropriate, and
• the applicant/recipient understands the advantages of direct credit, and
• every reasonable avenue towards payment by direct credit has been explored.

A full investigation, including direct contact with the applicant/recipient is required before a decision to pay by cheque is made.

Appropriate reasons for cheque payment

There are 4 circumstances in which cheque payment may be appropriate:

• remoteness or isolation,
• age, frailty or disability,
• legal or administrative problems experienced by the recipient, or
• cultural or religious beliefs.

Each of these is explained in more detail in the rest of this topic.

Delegates need to exercise judgement in each case. Requests for regular cheque payments in circumstances other than those noted in this topic should be refused.

Remoteness or isolation

Cheque payment may be appropriate if a recipient lives in a remote or isolated area (1.1.R.30), making it completely unreasonable for them to have and operate an account. However, if this is the case, it may be as difficult for the recipient to cash cheques as it is to operate an account. In these circumstances, direct credit is the better option. Other relevant factors affecting the decision include:

• accessibility to private or public transport,
• absence of authorised agencies or electronic facilities, and
• distance.

Recipients allowed cheque payment because of isolation should be paid by direct credit if they relocate to a metropolitan area.

Age, frailty or disability

If a recipient cannot operate an account because of age, frailty or disability it is also likely that cashing cheques might be a problem. Recipients should be made aware of the security risk of keeping cheques or significant amounts of cash at home on a regular basis. If the recipient is adamant that direct credit will not be suitable, it may be more satisfactory to appoint a nominee (1.1.N.20). Payments to a nominee should always be by direct credit.

Policy reference: FA Guide 4.3.6 Payments to a Third Party

Legal or administrative problems experienced by the recipient

Payment by cheque may be appropriate when it is clear that a recipient may be deprived of payments due to legal or administrative problems.

Example: A recipient may:

• be bankrupt, or
• have an overdrawn account.

Cultural or religious beliefs

Payment by cheque may be appropriate when it is clear that a recipient does not operate an account for genuine cultural or religious beliefs.

Address allowed for cheque payments

Cheques are normally posted to the recipient's residential address. Other addresses such as post boxes should only be accepted when a recipient:

• is absent from home, or
• can demonstrate difficulty in receiving home delivered mail.

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Last reviewed: 2 January 2009