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The Treasury Select Committee has called for cheque guarantee cards to be brought back into use.

The cheque guarantee scheme was designed to ensure that cheques up to a certain value would always be paid by the bank. The retailer would normally take an imprint of the card, or simply copy the number from the cheque guarantee card onto the back of the cheque.

Cheque guarantee cards were abolished in the summer of 2011 by the Payments Council, a board featuring members from many of the UK’s big banks. They said retailers had became more and more nervous about accepting cheques for fear of them being unpaid, also known as ‘bouncing’ a cheque. However, the cheque guarantee card was widely used by people who did not have electronic payment terminals, ensuring that they could guarantee payments from customers.

The MPs in the Treasury Select Committee suggested that legislation could be introduced by the government to reinstate cheque guarantee cards. Without support from a guarantee system, they said, the cheque could become completely sidelined as a form of payment.

The Committee is most concerned that older people do not have as much access to online banking facilities and may find it difficult to make payments for essential goods and services by cheque without a cheque guarantee card. Their position is supported by the charity Age UK and the consumer watchdog Consumer Focus. Michelle Mitchell, the charity director at Age UK, said: “‘This report is a strong signal to the banks to ensure they listen and protect what is an essential method of payment for many older people.”

The government has already come close to intervention to prevent cheques themselves from being abolished by the Payments Council after charities and organisations complained that cheques were an essential payment method for many people. The original decision was made after the use of cheques swiftly declined over the last 20 years; the number of cheques written in the UK declined from 1.2 billion in 1990 to 60 million in 2010.

After the decision on the abolition of cheques was reversed, some analysts believed that the abolition of cheque guarantee cards would be another way of reducing cheque payments to extremely low levels to strengthen the case for the total abolition of cheques.

MPs on the Treasury Select Committee believe that the Payments Council is acting without regulation and making key decisions that are not properly checked. They would like to see the Council’s powers reduced to give it less control over which methods of payment are accepted – or not accepted – in British stores, and they would like the cheque guarantee scheme to be reinstated or replaced with an equivalent scheme.

The Payments Council has been asked to research the effects of their decision and present the results at the end of 2011. If the abolition of the scheme is found to have been detrimental, they may be asked to reverse the decision. They have not yet said what their position is, but experts believe that a modern, cost-effective equivalent could be the most likely outcome.

A recent report from the Commons Public Accounts Committee has indicated that the UK’s consumer protection system is leaving people at risk of online scams.

The report from a group of government MPs suggested that the protection system is not keeping pace with the digital revolution.

Rogue traders are able to rip people off on the internet. They are basing their practices in areas where there is little policing by the authorities, running scams such as fake lotteries, counterfeiting and other questionable trading practices.

Rogue trading is estimated to cost consumers in the UK approximately £6.6 billion every year and many people are left open to email scams and fraud.

Earlier this year, the National Audit Office described the current consumer protection systems as ‘fragmented.’ There appears to be little help for consumers across the country, as the staff levels in trading standards departments vary from as few as 2 to 80.

In 2009 to 2010, local authorities have spent £213 million on consumer law enforcement whilst the central government only spent £34 million. The report from the Commons Public Accounts Committee suggested that the level of spending by local authorities is providing inadequate protection for consumers and leaving ‘enforcement deserts’ for rogue traders to exploit.

The rogue traders can operate in these local ‘enforcement deserts’ and use technology to run nationwide scams. As such, the protection system is unable to keep up with traders who can trick people out of their money over long distances.

The report went on to point out that trading was more localised when the protection system was set up. This meant that consumers tended to lose money through one off occurrences such as being overcharged. However, as the number of companies who operate on a national scale has grown along with the increasing popularity of online shopping, problems are beginning to appear on a regional and national level.

According to the report, there is no clear arrangement for the policing of these larger cases.

Under plans for the restructuring of consumer protection, the Consumer Focus watchdog is to be abolished and the work done by the Office of Fair Trading is to be scaled back. Margaret Hodge, who chaired the committee, has warned that these changes, planned by the Department for Business, must not leave the public open to new and more sophisticated scams without challenge.

Mrs Hodge added: “Doorstep selling of substandard or non-existent services is a massive issue for consumers, particularly those who are vulnerable. The department has too little information on what the cost of protecting consumers is or how successful current interventions are.”

The Department of Business confirmed that they are working with local authorities to to provide more effective national leadership and ensure that their resources are used effectively to target the bigger scams.

However, trading standards officers have suggested that their budgets are already tight and without adequate support they are unable to effectively fight rogue traders at cross-border level.

Furthermore, excessive belt tightening will continue to work against their services.