Banker's Draft query

noh

jonesMUFCforever wrote: »

It's not that simple.

eg you send a cheque to a supplier for £x amount of £.
They claim to lose it - you cannot say sorry tough luck you still owe £x.
You can deduct a small amount to cover any cost of stopping original cheque and getting a new one.

OP still owes £x in this case - a bankers draft is not like cash in this instance.

A bankers draft is like cash that is the point.

JuicyJesus

jonesMUFCforever wrote: »

IMO stop instructions can be put on both types once it has been established that they have not been presented for payment.

YO is wrong. Banker's drafts are worthless if the drawer can stop them - I must have said this about three times now. If a draft could be stopped then it carries no greater guarantee of payment, and is therefore no more useful, than a standard personal cheque; albeit a big, pretty and very expensive one.

NatWest have advised their customer entirely correctly.

pmduk

jonesMUFCforever wrote: »

It's not that simple.

eg you send a cheque to a supplier for £x amount of £.
They claim to lose it - you cannot say sorry tough luck you still owe £x.
You can deduct a small amount to cover any cost of stopping original cheque and getting a new one.

OP still owes £x in this case - a bankers draft is not like cash in this instance.

Actually it is that simple. The OP has paid for a bankers draft (ie she has no access to the money anymore.) She gave the draft to the recipient (in full and final settlement of the debt) The recipient has lost the draft. Not the OP's fault, she has still paid her bill and now has not got the cash. The difference with a cheque is that until it has cleared you have the cash available to you.

System

I thought the strict legal position was that ordinary cheques and banker's drafts (and Bank of England notes??) are descendants of Bills of Exchange? The sources seem to agree that a banker's draft is drawn (by the bank) on a specified account held by the bank, is processed through the standard cheque-clearing system, and won't bounce unless the bank fails. If that is (more or less) correct, then
(a) is it true that a banker's draft made out to (in principle, a specific) John Doe can be paid into any account in the name of a John Doe?
(b) why exactly is it that a banker's draft cannot be stopped (for example if the payee can prove it has been stolen, eaten by the dog, etc)? Is is technically not possible, or is it against banking etiquette? Or would it be illegal to stop it, and if so why? Is it analogous to the fact (I assume) that the Bank of England will say 'tough' if I can prove that my dog has eaten a £50 note? (But will replace it if I can produce shredded bits?)

And is it generally agreed here that the payee can ask the bank to replace the draft, and that the bank must do so provided that she (the payee) gives the bank an acceptable indemnity against the presentation of the original: Bills of Exchange Act 1882, Section 69?
http://www.legislation.gov.uk/ukpga/Vict/45-46/61

jonesMUFCforever

I have been doing some digging at work and can categorically say that a bankers draft or managers cheque CAN be stopped if lost or stolen (provided they have not been paid already).

So I reiterate all my above postings and OP better get that indemnity signed because he/she still owes the money.

Sceptic001

jonesMUFCforever wrote: »

I have been doing some digging at work and can categorically say that a bankers draft or managers cheque CAN be stopped if lost or stolen (provided they have not been paid already).

So I reiterate all my above postings and OP better get that indemnity signed because he/she still owes the money.

You are contradicting the Financial Ombudsman, so you need to back up your assertion with a good source.

Although a banker’s draft may look like a
cheque – and is processed through the
banking system in a similar way to cheques
– it is not legally a cheque. A banker’s draft
is written by the bank itself on its own
head-office account – and is made payable
to whoever the customer wants. Unlike a
cheque, a genuine banker’s draft cannot be
stopped – even if it is lost or stolen.

jonesMUFCforever

My work's procedures - a major high street bank.

Also why would Nat West want OP to sign an indemnity if the draft could not be stopped??

System

Is it possible that the Ombudsman means that a draft cannot be stopped by the person who requested it, but only by the bank?
However, the 1882 Act seems to make it absolutely clear that once OP has handed over the draft, that clears his debt, and losing the draft is the payee's problem. She can tell the bank she's lost it, and ask them to stop it and replace it. If the bank can stop it, then I don't see why they would need an indemnity, unless they believe that their system will screw up and not in fact stop it. If they can't stop it, then I can see why they would ask her (the payee) for an indemnity, because they have only her word for it that she's lost it. And even a video of her dropping it down a drain (or whatever) could be faked.