The Banking Ombudsman Scheme has issued a warning after investigating a complaint which involved use of a cheque from bogus United Kingdom bank "WeRe Bank".

The complaint was made against a New Zealand bank for refusing to honour a cheque presented by a customer who wanted to use it to pay off her credit card.

"The customer was upset the bank wouldn't honour the cheque and the relationship deteriorated to the point the bank closed the customer's account. We were asked to look at whether the bank's decision to refuse to bank the cheque was legal and if it could end the relationship it had with her," says Banking Ombudsman Nicola Sladden.

"In short, our investigation revealed the 'cheque' was not actually a cheque because the issuing 'bank' was not actually a bank."

The Banking Ombudsman says WeRe Bank was set up in the UK in 2015 as a "common law bank".

Customers send the bank a promissory note of £150,000 and then pay membership fees of £10 a month for an account. It deals in its own currency called the Re, apparently a unit of energy used to pay debt. 

WeRe Bank supplies the customer with a cheque book to write 'cheques' drawn against the promissory note to pay debts.  The cheques are not legal tender so debts aren't paid. WeRe isn't a registered bank or even a company, but is run online by one person and with a mobile phone number.

Warnings about using WeRe Bank have been issued by the United Kingdom Financial Conduct Authority and the UK Financial Ombudsman Service, and a decision from Canada's Alberta Court of Queen's Bench has described it as a "pseudo legal scam".