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Tuesday, 9 March 1971

Senator WEBSTER (Victoria) - The Senate is discussing the Bills of Exchange Bill, which will be a contribution towards a refining of the requirements relating to money cheques which are now. by law, required to service all cheques marked 'to order'. In dealing with bills of exchange, and in particular with what the ordinary citizen recognises as a cheque, there have been accepted levels of endorsement for security of ownership of a bill or cheque. The instructions which a client of a bank may write on a cheque form the legal basis as to their being carried out. Various instructions, such as in writing to whom the funds noted on the cheque are to be transferred, cause a great deal of work in the form of some level of scrutiny by bank staff. The client's instructions must be carried out. So, one finds that in the case of an 'order cheque the payee noted thereon must endorse the cheque before it can be accepted for payment.

This Bill seeks to provide that where a cheque marked 'to order' is paid into the account of the payee, as noted on- the cheque, no endorsement will be necessary for the instrument to be valid. This amendment apparently derived from a report known as the report of the Manning Committee, to which the second reading speech refers. I suggest that, with the increasing use of cheques for the transfer of money from one person or body to another, simplification of the method of transfer is necessary to reduce the work created by unnecessary legal requirements. Private business today is involved in a significant time loss in dealing with cheques upon which thi; instructions are deficient or creative of unnecessary scrutiny. The saving in time created by the proper use of a bill of exchange is of the utmost benefit to private people and industry.

In conjunction wilh comprehensive amendments which are to be put to the Parliament and which will deal with the use of cheques and other bills of exchange. I would advocate that amendments being made to ensure that penalties for misuse of those bills be increased substantially. The tendering of cheques which have no funds to back their issue is an increasing hazard of modern business. Police fraud squads in every State are occupied to great lengths in following through cheque transactions and attempting to bring to law those who mishandle or misuse bills of exchange. For instance. I understand that there is an abortive effort generally by the law to bring to justice an individual who issues a worthless cheque - one which at the moment of issue was not in fact backed by any credit whatsoever - because provided the payer cun assert that he expected funds to be available upon presentation of the cheque he can avoid the consequences of legal restraint. This is a developing trend amongst those who have cheque books but no intention of using the cheques as they should be used. The measure now before the Senate does nothing to alleviate the fraudulent actions of some people but it does tend to offer a saving of time and effort on the part of those who receive order cheques and pay them into their own accounts. On that basis I support the Bill.

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