Some banking firms offer their customers a "safe custody" service at certain branches. For a quarterly or annual fee, customers can arrange to store a box containing their valuables and important papers (such as jewellery, house deeds or investment certificates) in the firm's "strong room" or other secure area. Customers do not have to give the firm a key to the box, or declare what items they have stored. They can get access to their valuables, by arrangement, during banking hours and they can remove or replace items as they wish.
Most of the time the service operates without difficulty. But disputes sometimes arise - generally about whether some of the contents of a box have gone missing while in the firm's care. Safe custody is an "ancillary banking service" so we are able to look into these complaints, which can be among the most difficult we deal with. This is because the customer is often unable to provide any firm evidence of what was in their safe deposit box. The customer's own recollection is not normally enough. And it may not be accurate, particularly if items have regularly been removed or replaced.
When we investigate, the first thing we look at is the firm's record for the box. This will show the dates when the customer visited the branch to get access to the box. It should also show when the customer removed or replaced their box. We generally find these records are accurate, although occasionally they are not as complete as they should be.
We obtain statements from any members of the firm's staff who were involved, for example, in updating the records or in moving the box in question for any reason.
We also question the customer. We ask about the box itself, what was in it and how often the customer visited the branch to get access to the box. And we will ask if the customer ever used any other safe deposit service, since it is not unknown for missing items to come to light in another location. Customers may sometimes think our questions are intrusive, particularly as we will want to know exactly what items they stored, added or removed (information that the customers are not required to tell the firm). However, in order to reach a decision on the case, it is important that we have as full an understanding of the situation as possible.
Although firms do not have information about the contents of boxes, it is extremely important that they keep a record of the actual boxes they have in safe custody. This will need updating if a customer removes or replaces a box or deposits an additional one. It is also essential that firms keep an accurate and complete record of each visit a customer makes to get access to their box.
The bank has a duty to keep customers' boxes safe and it should store them in a secure area. If a problem occurs and any boxes are affected (for example, if there is a fire or a flood), then the firm should tell the customers concerned straight away and invite them to come in and check for any loss or damage.
Some firms give their "safe custody" customers a few practical suggestions to help them make the most of the service. Some of these suggestions may seem obvious points of common sense, but they are points that have often been overlooked in the disputes that come to us. For instance, although customers are not required to tell firms what they have stored, it is a good idea for firms to advise customers to keep their own list of the items they deposit, and to update this whenever there are any changes. If customers store important papers in the box, then it makes sense for them to keep photocopies at home in case the originals are lost or damaged. And customers may sometimes find it helpful to take photographs of the items they deposit, particularly if there are any rare or antique objects. Where possible, customers should also save the purchase receipts for items they subsequently place in safe custody.
Customers do not always appreciate that the valuables they keep in safe custody should be properly insured for their full value. Keeping valuables in safe custody should not be seen as an alternative to insuring them, but rather as a way of keeping insurance premiums as low as possible. Where relevant, from time-to-time customers should arrange professional valuations of any jewellery and other valuable objects kept in safe custody.
Of course, accidents can happen - and valuables stored in safe custody boxes can be damaged. But this is less likely if the valuables are properly stored. We have noticed in many of the cases referred to us that the customers have simply kept their jewellery loose inside the box. This makes it more vulnerable to loss or damage if the box is moved or dropped. Jewellers recommend storing jewellery (particularly pearls and gemstones) in fabric rolls, to keep it secure and prevent individual items from knocking against one another or becoming tangled.
And in some of the disputes we see, the customers' boxes have not really been adequate for the task. So firms may find it helpful to point out to customers the importance of ensuring their storage boxes are well-maintained and can be properly secured. In one case we saw, the customer had known for some time that her box had a faulty fastening. Rather than get it repaired, she secured the box with a rubber band. The rubber band eventually perished and broke, leading to a dispute over whether the contents had been tampered with. In another case, a customer had sealed his box with sticky tape. This had dried and shrunk over time, giving the false impression that someone had tried to open the box.
The following case studies summarise two disputes we dealt with recently involving safe custody boxes.
Mrs H said that when she went to remove some of the contents of her locked safe-deposit box, she found some items of jewellery missing. A member of the firm's staff checked the log book in which the firm entered details when anyone had access to a box in safe custody. This showed that Mrs H had last had access to the box the previous year. However, when Mrs H was shown the entry, she said that the signature was not hers. She denied having visited the branch the previous year and she said that an unauthorised person must have opened the box and taken the jewellery.
complaint partly upheld
During our investigation, Mrs H recalled that she had, after all, visited the firm's premises and looked at the box the previous year, on the date shown in the log book.
We concluded from the evidence that, having failed to obtain Mrs H's signature at the time, a member of the firm's staff had forged it. But we also concluded that Mrs H's safe deposit box had not been interfered with.
It would have needed the co-operation of three members of staff to get access to the area where the box was kept, and only Mrs H had a key to the box itself. The box was undamaged and there were no signs that anyone had tried to prise it open.
Our investigations were not helped by the fact that Mrs H was very uncertain about the exact contents of her safe-deposit box. She provided several conflicting lists of the items she said were in the box. And she subsequently found at home some of the jewellery she had previously told us she always kept in safe custody. We therefore concluded that her recollection of the contents was unreliable.
There was nothing to back up her allegation that an item of jewellery had been stolen while in the firm's care. However, the member of the firm's staff should not have forged her signature in the log book. We awarded Mrs H £250 for the confusion and inconvenience this had caused.
Mr B deposited a locked box in safe custody at one of the firm's branches. A year or so later, that branch closed and Mr B was told his box had been transferred to a branch in a different part of town. But when he subsequently visited that branch, the staff were unable to find his box. They said they had no record of it and that he must have removed it some time earlier and forgotten that he had done this.
When we looked into the case, we found Mr B's recollection of events was a little confused. After insisting that he had never been told about the change of branch, he later told us that the firm had written to let him know about it.
However, as we pointed out to the firm, if Mr B had withdrawn his box, this should have been noted in the firm's records. As the firm was unable to produce any record of the box, it seemed likely that it had been lost in the transfer from one branch to another. The firm acknowledged this was a strong possibility and it offered Mr B £500, which he accepted.
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.