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ombudsman news

issue 22

November 2002

round-up of banking cases

A selection of some of the banking cases we have dealt with recently.

22/8
money transfer abroad - responsibility for abortive costs

Mr B needed to pay some money in Italy on a particular date. A month beforehand, he asked the firm to transfer money from his UK bank account to a bank in Italy. The bank arranged the transfer but then, with just a week to go, it found the money had gone astray so it made a second transfer.

Both transfers arrived in Italy on the same day, just before the payment was due. It turned out that the first transfer had come through Portugal. Because of currency-exchange differences and the fact that he had to pay extra charges, Mr B lost £300 on the transaction.

When Mr B complained, the firm said it was not responsible; it had sent the money correctly and the problems had occurred abroad.

complaint upheld
We asked the firm for information about how it had made the first payment. It then discovered that it had, after all, given the wrong instructions. Mr B accepted its offer to pay him the £300 he had lost, together with £100 for inconvenience.

22/9
cheques - stopped chequebook - cheque paid

Mr K was in dispute with a trader from whom he had recently bought some goods. Since he had paid with a post-dated cheque, he decided to put a stop on it. But the cashier at his branch told him that the firm could not stop the cheque because Mr K was unable to identify the cheque number. The cashier suggested that the firm could instead stop the whole book of cheques and Mr K agreed to this. He was therefore very annoyed when the firm went ahead and honoured the cheque.

complaint settled
Initially, the firm tried to argue that this was partly Mr K's fault - because he had not been able to identify the cheque number. We pointed out that since the firm was supposed to have stopped the whole chequebook, the number of the individual cheque was irrelevant. The firm then agreed to refund to Mr K the amount of the cheque and to pay him £150 for inconvenience.

22/10
cheques - forgery by husband but no loss

In 1998, Mrs T was injured in a road accident. While she was in hospital, her then husband forged her signature on a cheque for £2,000, drawn on her personal account, and paid it into their joint account.

Mrs T did not discover the forgery until the following year, by which time she and her husband were divorced. In 2002, after she had remarried, Mrs T reported the forgery to the police and complained to the firm. The firm rejected her complaint, saying that the money had been paid into the joint account; the financial position between Mrs T and her former husband must have been settled in the divorce; and Mrs T had waited several years before telling the firm what had happened.

complaint settled
We pointed out to Mrs T that it was unlikely she had suffered actual loss. The money had gone into the joint account and the financial issues between her and her former husband had been settled in the divorce proceedings, at which she had been legally represented.

However, we pointed out to the firm that although Mrs T could not establish an actual loss, it had paid out on a forged signature. The firm then agreed to settle the complaint by paying Mrs T £500.

22/11
cheques - disputed payments

Mr E went abroad for two weeks. While he was away, his account went into unauthorised overdraft after some cheque payments went through. On his return, he complained that he was not liable for the overdraft. He said that, by mistake, he had left his chequebook and cheque guarantee card in the car of an acquaintance who had given him a lift to the airport.

complaint rejected
Our investigation revealed that all the cheques that had gone through while Mr E was abroad had been written by him before he mislaid his chequebook and card in the acquaintance's car. We therefore rejected his complaint.

22/12
disputed banking account transfers - elderly banking customer

Mrs V, who was in her late 70s, had signed an authority permitting her son to operate her account with the firm. For some years, only modest transactions took place. But shortly before Mrs V died, her son turned all of her assets into cash and paid £35,000 of the proceeds into her account. Over a period of two weeks, he then made three transfers (totalling £35,000) from her account into his own account with the firm.

After Mrs V died, her daughter found out about the transfers and complained to the firm. It froze the son's account, leading him to complain as well. He said Mrs V had wanted him to have all her money, because he was the only one of her children who looked after her.

one complaint upheld and one rejected
We upheld the daughter's complaint. The nature of the transfers should have made the firm suspicious, and it should have tried to contact Mrs V. It would then have discovered she was frail and confused and living in a nursing home. We required the firm to pay the daughter £1,000 for the trouble and expense that arose as a result of the firm's allowing the transfers.

We rejected the son's complaint. Having discovered the situation, the firm was entitled to freeze his account in order to safeguard the money.

The dispute between Mrs V's children over the ownership of the money was a matter for the courts, not us, to decide.

22/13
internet banking - account closed by mistake

Mr H did his banking over the Internet and had both a current account and a savings account. He attempted an online transfer of £500 from his savings account to his current account. But a hitch in the firm's computer system meant that all the money was transferred out of his savings account and it was then closed.

When Mr H complained about this, the firm offered to reopen his savings account and to pay him £300. That sum covered the £180 interest that Mr H had lost (on the amount transferred and on the money he usually paid into the savings account), together with £120 for inconvenience. Mr H did not think this was good enough so he brought his complaint to us.

complaint rejected
We told Mr H that, while we accepted that everything had happened as he said, the firm's offer was reasonable in the circumstances.

22/14
bank executor - deceased's funeral instructions overlooked

Mr C appointed the firm as his executor and left his will in the firm's custody. When he died, his sister - Mrs G - contacted the firm to check whether the will said anything about the funeral. By mistake, the firm said it did not. It was only after Mr C had been buried that Mrs G found that the will said that he wanted to be cremated.

The firm paid for Mr C to be exhumed and cremated, and it also paid for the first funeral. It allowed Mrs G to take over administration of her brother's estate and it offered her a further £200 as compensation. She rejected this sum as "derisory" and brought her complaint to us.

complaint settled
We noted that the firm had already gone some way to make amends, as far as was possible in these difficult circumstances. Mrs G felt the firm needed to be "punished" by being made to pay a considerable sum of compensation on top of this. We explained that we do not have the power to "punish" firms in this way. We only have power to award enough compensation to put things right for customers.

The firm made a revised offer of £1,000, which Mrs G accepted.

Walter Merricks, chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.