The Irish Payment Services Organisation (IPSO), the body responsible for the clearing of transactions between the banks, has denied it had any role in the banks' decision to stop cashing crossed cheques and other cheque encashment changes.

The Director of Consumer Affairs, Ms Carmel Foley, said earlier this week that she believed IPSO, owned by the four main banks and Banque Nationale de Paris, was involved in the controversial change in policy.

She said she had referred the matter to the Competition Authority and called for an "urgent" inquiry into IPSO which, she said, constituted a barrier to entry to Irish retail banking. But a spokesman said IPSO would not concern itself with the policies of individual banks. Such policies would include cheque encashment at branches.

"Of course, there are valid reasons for the policies pursued by individual banks. They are merely adopting good banking practice, insisting that all cheques are lodged to payee accounts. This is the practice across Europe and its objective is to minimise fraud and reduce money laundering," he added.

Ms Foley told the Joint Oireachtas Committee on Finance and the Public Service this week that she was concerned so many institutions amended their cheque encashment procedures at the same time.

Mr Derek McDowell TD, of the Labour Party, said the committee would recommend to the Oireachtas that the legislation governing the new single financial regulator should include an obligation on banks to give prior notice of decisions affecting customers, including decisions on branch closures, along with the reasons for the decisions.