Bank Mis-processes Solicitor's Payment for Sale

Armorica

Ah - in terms of liability, I'm referring to the payments legislation, that's the bit I understand (and is highly standard). 
If it was simply solicitor -> Lloyds -> HSBC UK -> you it would be without any question.  The complication is that HSBC is only an intermediary. 
If Lloyds can evidence to your solicitor that HSBC UK has received the funds, then under the PSRs, HSBC UK is required to immediately credit the funds to your account. (And from an earlier post, I think you suggested your solicitor had received information from Lloyds that the payment had been correctly made?)
The payments regulation doesn't go into the relationship between you and your solicitor; the focus is on the solicitor and its bank; the two banks; and you and your bank. 

naedanger

My thoughts on the legal position is that the solicitor won't be responsible to you directly for the loss if he carried out your instructions with sufficient diligence. I think the solicitor is acting more like an agent than a contractual supplier - their contract with you being that they will arrange certain services etc. But I don't think they themselves are supplying the services (in this case a money transfer service) and then subcontracting that service out. (However this is just my thoughts.) I do think the solicitor has a professional responsibility to help resolve the situation efficiently.

What I am confident about is that you will not be held liable. [Who could have confidence in the bank transfer system if money could fail to reach its destination through no fault of the sender.]

xylophone

M&S Bank is not a direct participant in CHAPS (but Lloyds is).

https://www.bankofengland.co.uk/payment-and-settlement/chaps

How does CHAPS work?

Payment obligations between direct participants are settled individually on a gross basis in RTGS on the same day that they are submitted. The transfer of funds is irrevocable between the direct participants.

CHAPS payments for customers

Indirect participants access the CHAPS system through one of the Direct Participants based on a commercial and contractual arrangement. The Direct Participant makes and receives payments on behalf of indirect participants and other customers including business and individuals. 

• Various organisations provide advice to help prevent fraudOpens in a new window and implement security policiesOpens in a new window to help reduce the risk of successful cyber-threats .For issues with specific payments, users should contact their bank, building society or other payment service providers.

xylophone

A couple of weeks ago, the money had not arrived. I took this up with my solicitor and they confirmed that they had made the payment and they confirmed with their bank (Lloyds) the payment had cleared and the details were correct.

Lloyds have confirmed that the payment went to their co Direct Participant and so feel that their obligation is discharged?

Thrugelmir

cpx2 said:

We have what we think is original documentary evidence that Lloyds gave the correct instructions and that they were told the funds cleared. (I'd have assumed that this would be that the funds reached the nominated account).

No, this will be confirmation by HSBC that the CHAPS transfer has reached them. The rerouting occurred after the funds reached HSBC. This would have required use of the SWIFT transfer system. There's no way that a UK bank account could be confused with one overseas. 
The conclusion to be drawn is that fraud has been attempted. There'll internal investigations to ascertain the possibility of collusion with connected parties. 

cpx2

Armorica said:

Ah - in terms of liability, I'm referring to the payments legislation, that's the bit I understand (and is highly standard). 
If it was simply solicitor -> Lloyds -> HSBC UK -> you it would be without any question.  The complication is that HSBC is only an intermediary. 
If Lloyds can evidence to your solicitor that HSBC UK has received the funds, then under the PSRs, HSBC UK is required to immediately credit the funds to your account. (And from an earlier post, I think you suggested your solicitor had received information from Lloyds that the payment had been correctly made?)
The payments regulation doesn't go into the relationship between you and your solicitor; the focus is on the solicitor and its bank; the two banks; and you and your bank. 

Hi Amorica,
Yes, the solicitors gave us a report from Lloyds that their CHAPS payment had cleared (I assume cleared with HSBC, not M&S - whoever designed the system needs to have their knuckles rapped). We shared this with M&S Bank as soon as we had it, so quite a while ago.
My reading of the legislation is like yours, that there is a chain of responsibility - and one needs to follow the chain.
I find it odd that the solicitor sees no need to advise/ask Lloyds bank to inform HSBC that the payment has not arrived. I also wonder whether M&S Bank as part of HSBC group doesn't want to (or doesn't know how to) remind HSBC of their legal responsibility. Anyway, I think (thanks to you) I have now laid this out. Let's see what way the system reacts now. 

cpx2

xylophone said:

A couple of weeks ago, the money had not arrived. I took this up with my solicitor and they confirmed that they had made the payment and they confirmed with their bank (Lloyds) the payment had cleared and the details were correct.

Lloyds have confirmed that the payment went to their co Direct Participant and so feel that their obligation is discharged?

Hi, I don't think this is quite right.
Let's say you gave me £1000. Then I gave someone £10 to carry the £1000 back to you. And they decided they would spend it partying. I guess you would think I've not got a leg to stand on if I say I paid someone else to pay you and it is not my problem anymore. At an extreme, I could just pay the £10 to pay you £1000, rather than giving them the £1000. The contract is between you and me - if you don't get it to me, then you are at fault.
Or think it terms of Amazon. You buy this stuff, then are Amazon within their rights to say we gave it to this guy to give to you - you need to ask him now, nothing to do with us. 

born_again

Steves2 said:

 which is why I cannot understand the banks taking it more seriously.  We will certainly be seeking compensation. I am finding it incredibly stressful.  

Believe me they will be taking this seriously. but the people you talk to will not know what is being done. Any loss of customers funds like this will involve higher management and some serious butt kicking once they find the issue.

Thrugelmir

cpx2 said:

Armorica said:

Ah - in terms of liability, I'm referring to the payments legislation, that's the bit I understand (and is highly standard). 
If it was simply solicitor -> Lloyds -> HSBC UK -> you it would be without any question.  The complication is that HSBC is only an intermediary. 
If Lloyds can evidence to your solicitor that HSBC UK has received the funds, then under the PSRs, HSBC UK is required to immediately credit the funds to your account. (And from an earlier post, I think you suggested your solicitor had received information from Lloyds that the payment had been correctly made?)
The payments regulation doesn't go into the relationship between you and your solicitor; the focus is on the solicitor and its bank; the two banks; and you and your bank. 

I find it odd that the solicitor sees no need to advise/ask Lloyds bank to inform HSBC that the payment has not arrived

Because HSBC has the money. The system operates in such a way that the each CHAPS payment once made is irrevocable. If the details supplied by you to the solicitor , then passed onto LLoyds are correct. Then they have nothing further to with the transaction. It's entirely out of their hands. 

Thrugelmir

cpx2 said:

Armorica said:

Ah - in terms of liability, I'm referring to the payments legislation, that's the bit I understand (and is highly standard). 
If it was simply solicitor -> Lloyds -> HSBC UK -> you it would be without any question.  The complication is that HSBC is only an intermediary. 
If Lloyds can evidence to your solicitor that HSBC UK has received the funds, then under the PSRs, HSBC UK is required to immediately credit the funds to your account. (And from an earlier post, I think you suggested your solicitor had received information from Lloyds that the payment had been correctly made?)
The payments regulation doesn't go into the relationship between you and your solicitor; the focus is on the solicitor and its bank; the two banks; and you and your bank. 

Yes, the solicitors gave us a report from Lloyds that their CHAPS payment had cleared (I assume cleared with HSBC, not M&S - whoever designed the system needs to have their knuckles rapped). 

Only the major UK clearing banks and some international ones are members of the Clearing House Automated Payment System (CHAPS) . Secondary banks and finance organisations etc use the main clearing houses for their processing. Been this way for decades. 

Send money abroad and it can be routed through numerous banks before arriving at it's final destination.