Explanatory note

These Regulations support the presentment for payment of instruments by electronic image under section 89A of the Bills of Exchange Act 1882 (c. 61) (“the 1882 Act”). Part 2 provides for banks to provide copies of paid instruments as evidence of payment. Part 3 provides for banks to provide compensation for loss arising out of presentment by electronic image.

In Part 2, regulation 3 requires a banker who has paid an instrument following presentment under section 89A of the 1882 Act to provide a copy of the instrument and the prescribed accompanying information to the creator of the instrument on request. Regulation 4 provides for the copy and information provided to be evidence of receipt by the payee named in the instrument of the sum payable by the instrument (there being a similar provision for paper cheques in section 3 of the Cheques Act 1957 (c. 36)).

In Part 3, regulation 5 requires a responsible banker (as defined in section 89E of the 1882 Act, and usually the bank collecting payment of an instrument on behalf of its customer) to compensate the bank which paid the instrument or the person from whose account money has been debited, following presentment of an instrument under section 89A of the 1882 Act, for loss incurred in certain circumstances. That regulation sets out certain criteria to be met in order for compensation to be payable, including that the bank or person has made a claim in accordance with regulation 6, which sets out the procedure for such a claim.

Regulation 7 provides that a claimant is not entitled to compensation under regulation 5 if they are protected by section 80 of the 1882 Act.

Regulation 8 provides that the compensation to be paid by a responsible banker under regulation 5 is reduced if the claimant’s behaviour contributed to the loss.

Regulation 9 confirms that, where a claim has been made for compensation under regulation 5 and the responsible banker has not paid the full amount of compensation to be paid under that regulation, the claimant may bring an action in court.

Regulation 10 provides for the periodic review by the Treasury of these Regulations and subsequent publication of a report setting out the conclusions of the review.

An impact assessment of the effect of Part 4A (presentment of cheques and other instruments by electronic means) of the 1882 Act on the costs of business and the voluntary sector was prepared and is available from Her Majesty’s Treasury, 1 Horse Guards Road, London, SW1A 2HQ or on www.gov.uk.