Terry Halifax
Northern News Services

Inuvik (May 30/03) - Sometimes payday in Inuvik doesn't always mean there's money in the bank.

If your head office does not use direct deposit and deposits from a bank other than the Canadian Imperial Bank of Commerce, you could wait up to 10 business days before you see your money.

Susan McDougall, spokesperson for the CIBC, says if a deposit is made from a Canadian bank to a Canadian account, funds can be held five to 10 business days at the bank's discretion.

"There is a payment clearing process that it goes through," McDougall said. "It just takes that much time for these cheques to clear."

If a non-Canadian deposit is made, the hold can be 10 to 20 business days, on a deposit to a non-Canadian bank the wait can be 15 to 30 days.

McDougall said the wait is decided by an objective credit scoring method, based on individual customer's credit ratings.

"The length of time of the hold would be determined by your credit bureau rating," she said. "When you open an account, you are told about the holds."

"It's standard practice with all Canadian deposit-taking institutions or banks in Canada."

She said the company making the deposit has no bearing on how long the hold, but rather the customer's credit standing.

Martin Pacheco, at the Financial Consumer Agency of Canada (FCAC) disagrees.

The FCAC is the federally funded consumer watchdog for banks in Canada and Pacheco said the basis for holding funds is twofold.

"If they don't know who the company is, or if the consumer is a new customer at the bank, cheques could be held," Pacheco said.

"If it is a well-known company and the consumer has had a long relationship with the bank, there should not be any holds on cheques."

"If it is a not well-known company or a personal cheque, they are the ones that are more at risk of having a fraudulent signature, a stop payment at the other end or even being a counterfeit cheque."

He said there should never be a hold payment on a government cheques as long as the beneficiaries can properly identify themselves.

Pacheco said all federally-regulated financial institutions must provide, in writing, its policy on holding cheques upon opening a new account.

He said the consumer can minimize holds by having funds directly deposited or building a long relationship with the bank, but McDougal said that won't help at the CIBC.

"It doesn't matter if it's a new account or an old account," McDougall said.

She said the five to 10 days are required because of the human resources required in servicing the volume of paper.

"There are millions of cheques floating around each day, that need to be cleared," she said. "It's actually a paper-based thing, with real people clearing these cheques."

"Five to 10 business days doesn't sound like a long time to me."

McDougall said while the funds are in process, the money is "floating around out there," but could not say where the money is actually held or who gains interest during the transition from when the cheque is received to when the money is deposited.

Pacheco said when funds are held, the cheques are cashed and must held in the bank's account to prove their worth. While the funds sit in that account, interest will be paid to the institution that may be paid back to the customer, but only if they hold an interest bearing account.

"They have to do that by depositing the cheque in their own account, via the Bank of Canada," he said. "Depending on the interest that the bank has, they may certainly earn interest at that point."