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09/01
policies surrendered and proceeds paid to ex-wife in
error
Mr
and Mrs J had a number of accounts, and a mortgage, with
the firm. They separated – not amicably. They went to court,
where it was agreed that Mr J would have sole ownership
of the house. He would keep on paying the mortgage and the
premiums for the two endowment policies taken out to support
it. The firm knew about this agreement.
Mr
J kept on paying the policy premiums but (by arrangement
with the endowment policy provider) he did so yearly, not
monthly. The firm did not know about this arrangement and
misunderstood a letter it received from the policy provider,
thinking that Mr J was in arrears with his premium payments.
Instead
of writing to Mr J about the policies at his
address – which it knew – the firm wrote to Mr and Mrs J
jointly at her new address. It said that,
if the premiums were not brought up to date within 21 days,
it would surrender the policies and convert the mortgage
to a repayment mortgage. Mrs J ignored the letter and did
not tell Mr J about it – so he did not know what was happening.
A
month later, the firm wrote once more – again to Mr and
Mrs J at her address. The following month,
having received no response, the firm converted the mortgage
and surrendered the policies. It sent a cheque for the net
surrender proceeds of £9,000 payable to Mr and Mrs J – again,
to Mrs J’s address.
Mr
J realised that something had gone wrong when he saw that
his mortgage payments had gone up. But he could not get
the endowment policy provider to re-instate the policies
because by then he had suffered two heart attacks. And it
took him some months to get the money back from Mrs J –
from whom, by then, he had obtained a divorce.
We
decided that if the firm had written to Mr J at his correct
address, it was unlikely that any of the later events would
have happened. So, one error had led to another. The firm
tried to blame Mrs J for not forwarding the letters. We
did not accept that, in the circumstances, it was reasonable
to expect her to do so. The firm knew that she was not entitled
to the money and it could have done more to try to get the
money back from her.
Because,
in the end, it was too late to set up new policies for Mr
J, we took the view that the firm should pay him what they
were likely to be worth – less the surrender proceeds, but
plus £1,500 for distress and inconvenience. That all came
to £26,500.
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09/02
customer wrongly told that a cheque he paid in had cleared
Mr A had to leave his job because he had been ill for some
time. He posted his final pay cheque, for a total of £4,000,
to his branch. The cheque was paid in to his account on
a Friday and that same day he phoned the branch to check
it had been received. He was told that it had.
The
following Wednesday, Mr A phoned his branch again to make
sure the cheque had cleared. He was told that the branch
would not know until the following day. When he phoned back
on the Thursday, he was told the cheque had cleared, so
he arranged to withdraw £1,500 from a local branch to buy
a car.
On
the Friday the cheque came back unpaid, marked ‘refer to
drawer, please represent’. It came back unpaid for a second
time the Friday after that. Mr A eventually got the money
three weeks later.
The
problem was that his branch was in England – but the cheque
had been drawn on a bank in Scotland. These ‘cross-border’
transactions can take a day longer than usual to complete.
But the firm’s computer system was only geared up for ‘normal’
transactions – so the problem wasn’t spotted. And when the
Scottish connection was finally made clear,
the staff involved did not seem to know anything about possible
delays with ‘cross-border’ transactions.
We
were satisfied that if, at the outset, the firm had understood
what might happen and had told Mr A he’d have to wait another
day before drawing out the money to buy the car, he would
have done so.
Before
the complaint came to us, the firm had already refunded
the £19 interest it had charged on Mr A’s unexpected overdraft.
We said it should also refund the charges of £64 – and pay
Mr A another £100 for the inconvenience he had suffered.
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09/03
firm credited a forged cheque to an account – then took
the money back without asking
Mr
and Mrs K paid a cheque for £5,000 into their account. A
week later, after the firm told them the cheque had cleared,
they used most of the money to pay off some debts.
Almost
two weeks later, the cheque was returned unpaid – and declared
to be a forgery. The firm debited Mr and Mrs K’s account,
causing it to become overdrawn. The couple said the firm
was wrong to do that and they refused to repay the overdraft.
The firm put the debt in the hands of recovery agents and
registered it with the credit reference agencies. The time
taken for the cheque to be sent back was much longer than
normal. We said the firm had not acted reasonably by just
accepting it back almost three weeks after it had been paid
in. It should not have simply debited the cheque back without
making any further enquiry. So we told the firm to re-calculate
Mr and Mrs K’s account as though the cheque had never been
returned, and to remove the adverse credit entry.
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09/04
joint cheque wrongly credited to wife’s sole account
Mr
D and his wife applied for a re-mortgage from the firm with
whom he already had a loan. This was agreed on condition
that the existing loan was re-paid. The couple arranged
to do this using some of the money they would obtain from
the re-mortgage.
When
the re-mortgage was completed, Mr and Mrs D’s solicitors
sent them a cheque for the surplus amount – to be used to
repay the loan. Mrs D paid the cheque into her sole account.
A few days later, she and her husband separated.
Mr
D said that it was not until after the separation that he
knew the solicitors had issued the cheque – and by then
it was too late to get the money back from his wife.
The
firm knew what the money was to be used for, yet it allowed
it to be paid in to the ‘wrong’ account. It argued that
Mr D had received benefit from the money. We disagreed.
We told the firm, first of all, to give him half of the
value of the cheque. And because of its generally unhelpful
attitude – and some manifestly incorrect advice, which delayed
things unnecessarily – we added £400 for inconvenience,
making compensation of almost £1,000 in total.
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09/05
delay caused loss
Mr
G repaid his mortgage with the firm. He then applied for
another mortgage, through a mortgage broker, and received
an offer from a different lender. One of the conditions
of the new offer was a satisfactory reference from the firm,
as his old lender. But the broker told Mr G that copies
of statements should do instead – they would be quicker,
cheaper, and easier to get hold of. This was important because
the sellers wanted a quick exchange of contracts.
Mr
G did not have all the statements so he asked the firm to
let him have the necessary copies. The firm said this would
take no more than five days, and would cost him £15. Three
weeks later, and after chasing the firm on several occasions,
Mr G was still waiting for his copy statements. A few days
after that, the sellers pulled out of the deal, saying they
had lost confidence in Mr G’s ability to follow it through.
Two
weeks later, Mr G got his statements. By then the property
had been re-marketed at a higher price – up by £15,000.
Mr G went back to the sellers and managed to negotiate a
lower purchase price, although it was still £5,000 more
than he had originally agreed to pay. He claimed this amount
from the firm, together with costs of over £1,000.
We
decided that Mr G would have had a very substantial
chance of buying the property at the original price if the
firm had let him have the copy statements within five days,
as it had said it would do. So we were satisfied that he
had lost out on at least £5,000. After questioning some
of the costs, we eventually told the firm to pay Mr G £5,750.
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09/06
how not to handle a re-mortgage application
Mr
and Mrs B already had a mortgage with the firm. They applied
to it for another one because they wanted to move house.
They also decided to transfer their current account to the
firm. Fairly quickly they got their mortgage offer – and
new cheque books and cards. Two weeks later, the firm told
them it had lost all Mr B’s details because of a computer
problem, so it would have to start all over again with the
mortgage application.
At
that point, Mrs B was out of the country on business. That
delayed things quite a bit as her signature was needed on
the new forms. The forms were eventually completed the following
month. When he sent them back, Mr B asked the firm if it
would waive the mortgage arrangement fee – in view of the
problems they had encountered so far.
A
month or so later, Mr B phoned the firm to ask how things
were going. The firm said it had done nothing with the forms
because it was waiting for him to pay the arrangement fee.
By then, there were three weeks to go before contracts were
due to be exchanged.
Mr
and Mrs B decided they had lost faith in the firm’s ability
to administer their new mortgage. They went to another lender
and got a mortgage completed in time. However, they had
to pay an early repayment fee of over £2,000 on their old
mortgage. They also discovered that the firm had wrongly
bounced monthly premiums on their endowment policies but
had not told them what it had done (Mr and Mrs B had transferred
the direct debits when they first opened their new current
account). The couple had always intended to surrender the
policies when the old mortgage was repaid. But the effect
of the bounced premiums was a reduction of almost £2,500
in the policies’ surrender values.
Mr
and Mrs B wanted the firm to make good their losses and
to pay them significant compensation for all the unnecessary
effort it had put them through and the time that had been
wasted. The firm came up with an offer fairly quickly but
the couple rejected it. Following our involvement, the firm
increased its offer to £5,250, which was accepted.
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09/07
cheques returned unpaid even though overdraft facilities
agreed
Mr
C ran a transport business. He was having cashflow problems
and the firm where he held a business account was bouncing
his cheques, so he went to see the firm, accompanied by
his accountant. A few days after the meeting (while Mr C
was away from home) the firm wrote to him confirming an
overdraft facility of £110,000 for the following month.
But shortly after that it bounced a number of Mr C’s cheques.
Mr
C said that at the meeting he had shown the firm a cashflow
forecast which revealed a borrowing need of £134,000. He
agreed that the firm had said no to that. But he said it
had agreed to let the overdraft go up to £130,000 – not
to the £110,000 quoted in the letter. Because of that, he
had felt able to write the cheques that were later bounced.
Many
of the cheques were bounced while Mr C was still away, including
the most important one – his monthly payment to his diesel
supplier. Because that payment was bounced, the supplier
stopped Mr C’s fuel card, seriously affecting his ability
to continue trading.
The
firm denied that it had agreed an overdraft figure of £130,000
but Mr C’s accountant confirmed Mr C’s recollections of
what the firm had said. There were few written records available
from the meeting. But the member of the firm who was at
the meeting was senior enough to have agreed a facility
of £130,000. And everyone knew how important the forthcoming
payment to the diesel supplier was. So, on balance, we decided
the firm had agreed to a temporary maximum overdraft of
£130,000 – not £110,000.
Because
the diesel payment was bounced, the supplier refused to
let Mr C have any more fuel unless he paid for it in advance.
That put a lot more strain on his cashflow – and inconvenienced
him and his drivers. Sometimes they had to buy fuel from
other suppliers for cash – which made it difficult for Mr
C to claim back the VAT. Added to that, because of the lower
overdraft facility, the firm’s charges and interest had
been higher than they should have been. We therefore told
the firm to pay Mr C £8,000.
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