The government has established a new Payments Industry Association to police payment systems, as new rules are introduced to speed the cheque clearing process.

The outgoing initiative of the Payment Systems Task Force, which the new association replaces, was to reduce the time it takes for banks to start crediting interest to an account to no more than two days after a cheque is deposited.

Led by the Office of Fair Trading (OFT), it also forged agreements with the banking industry to allow withdrawals on deposited cheques no more than four working days later.

The OFT will have a role to play in the new association, reviewing its activities, while payments industry experts and directors will make up its memebership.

The changes to cheque clearing will come into affect in November 2007.