Old accounts systematically being 'lost' by banks? (dormant passbook accounts)

Rab125

Has anybody else know of this happening? Some years after my mother's death we discovered a passbook and statements for an account with many £thousands. To cut a long story short the the Financial Ombudsman agreed that as the bank had no evidence of the account being opened it must have been closed - this despite my mother having been in secure residential care from the time of the last account statement. A friend of mine discovered a passbook belonging to his deceased father - last transaction the day before his father died and passbook even had a few hundred pound in cash inside. Again the Ombudsman agreed that as the bank had no record of the account then it must have been closed. Several other friends of friends have also suffered the same result - if the bank or building society shows the Ombudsman a screenshot of a search showing no account then that is taken as fact even if relatives have passbooks, account statements, evidence and proof that the deceased could not physically have closed the account. How many £millions of pounds are being 'massaged' into these institutions cash flow by this going on one wonders? Is the UK Government using this as a method of putting a bit more liquidity into the banking system? It all smells just a bit too strongly of planned fraud for my liking - indeed I spoke to a couple of technical folk who work in finance and they stated that accounts can sometimes get overlooked, especially when systems are merged or migrated. Sorry for the long post but not easy to abbreviate!

cattie

Surely any active account would  have been receiving regular statements that showed the balance?

Sometimes accounts in credit not accessed for a good period of time are locked & placed in dormant mode, but banks keep records of such accounts. I have experience of one such account considered dormant due to not being accessed for close to 6yrs, but bank found details on the dormant register with no problem once identification had been provided.

eskbanker

Obviously banks can and do make mistakes, but if you're seriously suggesting that this is some coordinated government conspiracy then that's beyond credibility!  Passbooks in themselves are far from foolproof, but if all the evidence (including all the other backup you refer to) is put in front of the ombudsman and that still doesn't bear fruit then there's always the courts if you're convinced that there's a compelling case....

London7766551

I have seen at least two articles in the money advice page in the papers where people claimed passbook account funds had gone missing or the account could not be found, in both cases after an investigation it was found the customer had withdrawn the funds it was just the passbook had not been updated and they had forgotten or a relative had died and not told anyone. Seems it may not have been likely in this case, but I ask is it possible the money was withdrawn by somebody to cover the care costs?

In the case of your friends father? how did he die? Is it possible he withdraw the funds the day before his death?

I don't think banks or the government are trying to deliberately hide money from customers accounts, I think it is actually a combination of technical issues, passbooks getting misplaced by a customer and then being found after a clear-out by a family member, still appearing to show funds when in fact they were withdrawn long ago, and lastly people on the fiddle.

Speaking from personal experience of having an old passbook account, I had an account with Santander which I had not accessed for some 20 years, I took the book into the local branch, after a bit of digging they found the account had be made dormant, a few clicks later it was open again. I withdrew the funds and closed the account, I was allowed to keep the passbook, the cashier wrote "closed" over the pages. These passbook accounts are dog old and should be withdrawn.

Thrugelmir

Rab125 said:

 Some years after my mother's death we discovered a passbook and statements for an account with many £thousands. !

The executors of your late mothers estate would have done a thorough job in winding up her affairs. Probably held an LPA as well prior. 

tacpot12

eskbanker said:

Obviously banks can and do make mistakes, but if you're seriously suggesting that this is some coordinated government conspiracy then that's beyond credibility!  Passbooks in themselves are far from foolproof, but if all the evidence (including all the other backup you refer to) is put in front of the ombudsman and that still doesn't bear fruit then there's always the courts if you're convinced that there's a compelling case....

Well sometimes the truth might look like a conspiracy!

There is indeed a coordinated government "conspiracy" to sweep funds from dormant bank account into the hands of others. It's called the Dormant Accounts Scheme, and the money is collected and distributed by the Reclaim Fund Ltd.  This secret conspiracy is made possible by The Dormant Bank and Building Society Accounts Act (https://www.legislation.gov.uk/ukpga/2008/31/contents), so having been through the full scrutiny of Parliament it's not really a conspiracy, it's more of a law. And it's optional for banks and building societies to use the scheme. The Act of Parliament just allows the scheme to operate lawfully.

Have a look here for more details: https://www.gov.uk/government/publications/the-dormant-accounts-scheme
 £600m is the figure on the website as to how much has been passed from Dormant Accounts to good causes. The banks don't get to keep any of the money, unless they are outside of the scheme. 

That said, any funds in dormant accounts still remain the property of their original owner, and can be claimed at any time if there is evidence of the account. Banks and Building Societies that use the scheme are supposed to keep enough details of the account to allow them to validate any claims on the money. You might ask the bank concerned if they participate in the Dormant Accounts Scheme. 

All the information given in the previous posts is correct and provides the most likely explanation. 

Rab125

Thanks for all your comments folks. Without going into massive details: in both the main cases above it was proved that it would have been impossible for the account holder to have closed the accounts: in my mother's case she was in residential care, with severe Alzheimers and was only able to leave the secure home when taken out by a responsible person. My brother and I were in charge of her financial affairs, she had no money in her possession or any ability to travel 8 miles across a city to the nearest branch to close the account, let alone prove her identity. The statements etc. were from before she went into care and, as the account was not known about until after her death presumably statements went to her old address until the bank stopped sending them. The bank provided, despite being asked, no evidence of when, where the account had been closed - simply that they had no record of the account - this was deemed by the ombudsman to be overwhelming proof that the account had been closed. I again asked was it possible that when the accounts were migrated from the taken over building society that some records had been 'lost'; no answer; this again was deemed ok by the ombudsman. In the case of my friend his father's passbook had a deposit made the day before his father was rushed to hospital. The son worked with his dad and his father had left work saying he was going to the bank just before closing time. His father was in hospital before the bank opened the next day and sadly died without ever leaving hospital. Again the ombudsman took the view (this was a takeover scenario as well) that as there was no record of the account it must have ben closed. In neither case was it possible for the account to be closed by the account holder, both involved takeovers, both (though different banks) used the same 'we have no records' which was accepted as final proof by the ombudsman. Given that these were after the year 2000 when computer storage was pretty cheap, and previously microfiche was not that expensive, it seems incredible that an ombudsman can take the view that a simple 'no record found' beats all other evidence to contrary. The other cases I alluded to were exactly the same - passbook accounts, impossible for the account holder to have closed - no account found so must have been closed.

NottinghamKnight

So it's court though a media campaign could also be effective.

caper7

Could you write in to The Times/Telegraph etc, they have money pages that investigate this sort of thing?
Find the story pretty worrying, hope you get it resolved. 

eskbanker

Rab125 said:

In neither case was it possible for the account to be closed by the account holder, both involved takeovers, both (though different banks) used the same 'we have no records' which was accepted as final proof by the ombudsman. Given that these were after the year 2000 when computer storage was pretty cheap, and previously microfiche was not that expensive, it seems incredible that an ombudsman can take the view that a simple 'no record found' beats all other evidence to contrary. The other cases I alluded to were exactly the same - passbook accounts, impossible for the account holder to have closed - no account found so must have been closed.

While computer storage costs obviously continue to become cheaper, that's not really the point here - increasing regulation of financial services, combined with more stringent data protection regimes, mean that financial institutions have to implement data retention policies that involve purging of older data after a certain number of years, so when they say there are no records, that effectively means that the records were too old and have been wiped.  Obviously such data purging shouldn't wipe records of the existence of open accounts, but when a bank says to a customer (or FOS) that there is no record of an account, they'll be relying on auditable data management processes that have some credibility - no doubt these won't be absolutely 100% bulletproof but in the context of the balance of probabilities it's perhaps understandable that FOS would side with a bank saying that there's no record of an account remaining open, when presented with an ancient passbook suggesting otherwise.  However, as mentioned above, if you've exhausted the FOS process, including escalation to an ombudsman rather than just the standard adjudicators, and still feel that you have a compelling case, then court (or publicity) is the only remaining option.

Have any of the cases you refer to involved passbook updates or statements within a few years of the later request for details?

ElephantBoy57

I have lived at my abode for 7 years, I still get yearly letters about a previous tenents zero sum bank account.