Mis-advice of the cheque clearing cycle

karen3_2

A few months ago i lost £2000 because I feel my bank misadvised me in regards to the cheque clearing cycle. I had banked a bankers draft and proceeded to call my bank to see if it had cleared. The call rep then confirmed it was due to clear for Interest purposes and then corrected himself and said withdrawal purposes on the following Tuesday unless it was returned unpaid. At that point on the Tuesday, i checked my account and the funds were not returned unpaid as suggested by the call rep.

I proceeded to withdraw £2000 on the Wednesday so leaving it a further working day before i withdrew. (The bankers draft was banked the previous Thursday).

After i had made the £2000 payment to fraudsters (at the time unknown) a colleague advised me to ensure the bankers draft was not fraudulent. After hours of searching on the net, my fears became real, but i thought how can it be fraud when its confirmed as cleared?

I called my bank to advise them of my findings (2 days later, at which time the funds were still 'cleared') they confirmed they would get back to me.

After checking my on-line banking on the Saturday i discovered the bankers draft had been returned. (No one from my bank called or sent a letter to me to confirm this!)

I have checked on many websites, including the banking code and as far as i can see there are 2 definitive clearing types - For Interest and for withdrawal. On the banking code website, cleared for withdrawal states cleared for fate and therefore is considered as being cleared without any danger of being returned. As stated above, i was advised the funds would be cleared for withdrawal purposes.

I have complained to my bank (HSBC) who failed to even acknowledge my complaint within FSA guidelines. When they did finally respond, they rejected my claim. I took my case to the Ombudsman who again have refused my claim. There reasons being, when asked in the telephone call if i understood, i confirmed i did. At that time, there was nothing further for me to understand. I do not work in the financial industry and have no knowledge of how cheque / bankers draft clearing cycles work, so if i am informed it was cleared, then surely that's what it should mean??

The money i have lost along with the funds from the sale of my car were meant to be paying for my dream of travelling to Australia and taking qualifications for my future. Because of the above and HSBC's failure to inform customers more clearly, i am now unable to forfill that dream.

Knowing there possibly are some other people out there who may be able or advise me further provided me with a little hope!! Please could you let me know if i stand anyway in taking this matter further?

LisaT186

The clearing cycle is treacherous and I know of someone else that this happened to! Unfortunately a fraudulent cheque can actually be clawed back up to 6 years later!!!! Apparently it is classed as cleared if by a certain point / day the payees bank has not had notification from the drawers bank that it cannot be paid ie it is assumed ok. Fraud is different and can appear a lot lot later.

RayWolfe

karen3 wrote:

Please could you let me know if i stand anyway in taking this matter further?

You did take it further and both your bank and the banking ombudsman rejected your claim. Sad, but I think you have to let it go. Thieves are waiting to take all our money. Have you informed the police?
Thanks for warning us all again about the problems of banker drafts.

thesaint

I had a similar problem years ago with Natwest. I actually paid about £12 to have their 'express' clearance because I was unsure about the cheque. I went to the branch everyday and only let my goods go when they said it was clear. About a week later the cheque was returned.
I didn't have much money in the bank, so when they took the money back I was overdrawn(no o/d facility) I simply wrote them and refused to pay.
They did not chase the debt, but this was a long while ago, and things are a lot tighter now.

Biggles

This is why the Consumers' Association, when Which? reported on eBay, recommended that under no circumstances should you accept a cheque in payment for goods. I will now only take a bank-to-bank transfer, cash or postal orders.

newfoundglory

I was under the impression that cheques can only be returned up to 6 months after you pay them in. I think accepting cheques is safe, but that the current clearing cycle is not good guidance on how long you should wait. The problem is the amount of time it takes to return the cheque and inform the customer.

I would say after about 15 working days you can be almost certain it wont be returned.

In Novemeber, the whole system is changing.....

amandathepanda

I posted on here a couple of weeks ago about beware of stolen bankers draft, as we had one in the bank where I work, someone was selling a car and had been given a draft, and they were going to part with the car that afternoon. If we hadn't spotted it they would have been about £14000 out of pocket.
We always say to customers that a cheque is USUALLY available for withdrawal on the 5th working day, but that it can take longer than that as cheques are returned through the postal system, the bank doesn't know if a cheque is on the way back to them.

s1h

Its about time cheques were abolished altogether, i cant believe that in the 21st century they can still take so long to clear.

PosterBoy77

s1h wrote:

Its about time cheques were abolished altogether, i cant believe that in the 21st century they can still take so long to clear.

I still think the concept of cheques has a place. They are useful when opening up new savings accounts, paying people on an ad-hoc basis etc.

PBA

Sadly not going to help you now, but with bankers drafts there is a facility to phone up the issuing bank to check they're genuine before you deposit them at your bank. I had a customer last year receive a Bank of Ireland draft as payment for an Ebay sale. We looked up their number in the sort code directory and called them, they asked various details and confirmed it was fraudulent.

MarkyMarkD

karen3 wrote:

I have checked on many websites, including the banking code and as far as i can see there are 2 definitive clearing types - For Interest and for withdrawal. On the banking code website, cleared for withdrawal states cleared for fate and therefore is considered as being cleared without any danger of being returned. As stated above, i was advised the funds would be cleared for withdrawal purposes.

Whether or not the banking code website states that "cleared for withdrawal" means "cleared for fate" is irrelevant. In fact, the only reference on their website that I can see to "cleared for withdrawal" doesn't equate it to "clearance for fate" at all. Each bank can decide when it allows customers to withdraw against cheques - Barclays, for example, although them to be withdrawn against straight away but it doesn't affect the fact that they can still bounce.