CHAPS guarantee not worth the paper it's written on

phillw

Sensory said:

It's just easier to write "my bank", "your bank" and "their bank", as others have done. We understand the meaning conveyed in this context.

Except they were trying to suggest that because it was in a holding account at the bank that their account is in, that they had some claim to the money. I am not convinced you understand their meaning or mine.

It makes no difference that they got the sort code correct, but the account number wrong. If the money wasn't sent to your account, it's not yours.

Daliah

Sensory said

Irrelevant, because they froze the wrong account. How was the OP's account details actually obtained for it to be frozen? Obviously not by tracing the payment or auditing its trail. The in-laws could have had any random account frozen just by giving their bank a random 8-digit number of the receiving bank. You could freeze the account of your solicitor by reporting fraud, just because you entered one digit wrong when trying to pay them and they contacted you saying the money hadn't been received; that's how ridiculous this is. Bank B froze an account that didn't even receive the money, so on what authority can they freeze it? Can they freeze the account of Adele because some random person got luck with the numbers?

None of us know the real reason why the account got blocked. None of us has the full story as we have only seen the post by the OP. The OP’s bank will have their version of what happenedThe bank may or may not have had justifiable grounds for doing what they did. The blocking might have nothing at all to do with the misdirected property money. We just don’t know and can’t know whether there was good reason for what the bank did. The OP should take their case to the FOS if the response from the bank isn’t satisfactory as the FOS will be able to see the full facts from both sides and act as an independent arbiter.

Sensory

phillw said:

Sensory said:

It's just easier to write "my bank", "your bank" and "their bank", as others have done. We understand the meaning conveyed in this context.

Except they were trying to suggest that because it was in a holding account at the bank that their account is in, that they had some claim to the money. I am not convinced you understand their meaning or mine.

It makes no difference that they got the sort code correct, but the account number wrong. If the money wasn't sent to your account, it's not yours.

Of course the money isn’t theirs, and the OP is obviously upset they didn’t receive it, but they're not suggesting they had some claim to the money because the money was sent to a holding account at ‘their’ bank (which should have been denoted as ‘Bank B’ but the syntax turned into an emoji). They believe they had a claim to the money because it was supposed to be sent to them as part of a conveyancing transaction, which is incorrect. I’m not convinced you simply aren’t nitpicking an interpretation that no one else perceives.

Daliah said:

Sensory said

Irrelevant, because they froze the wrong account. How was the OP's account details actually obtained for it to be frozen? Obviously not by tracing the payment or auditing its trail. The in-laws could have had any random account frozen just by giving their bank a random 8-digit number of the receiving bank. You could freeze the account of your solicitor by reporting fraud, just because you entered one digit wrong when trying to pay them and they contacted you saying the money hadn't been received; that's how ridiculous this is. Bank B froze an account that didn't even receive the money, so on what authority can they freeze it? Can they freeze the account of Adele because some random person got luck with the numbers?

None of us know the real reason why the account got blocked. None of us has the full story as we have only seen the post by the OP. The OP’s bank will have their version of what happenedThe bank may or may not have had justifiable grounds for doing what they did. The blocking might have nothing at all to do with the misdirected property money. We just don’t know and can’t know whether there was good reason for what the bank did. The OP should take their case to the FOS if the response from the bank isn’t satisfactory as the FOS will be able to see the full facts from both sides and act as an independent arbiter.

We can only respond based on what has been presented thus far, otherwise we could speculate on any number of possible facts. I already suggested what they should complain about (not the missing money) if making a complaint was their choice of action.

paul_c123

skiandsail said:

Subsequently it turned out the transaction was corrupted by an erroneous digit being entered by my in-laws bank causing the money to be placed in a holding account at my bank (Bank .

Interestingly the Bank of England who I think operate or oversee the CHAPS system state on their website, CHAPS payments are irrecoverable between participants (Banks). It appears the CHAPS guarantee can be overridden. 

Hence, the OP has suffered a loss due to the error of Bank A (if the first paragraph is truly accurate). The OP is  entitled to complain and if investigated and true, receive financial compensation from Bank A. The loss isn't £70k though, its the loss of banking facility with their own bank, Bank B, IF the fraud investigation was incorrectly instigated due to the inappropriate actions of Bank A. Bank B seem innocent here (they acted upon the incorrect report of Bank A?) so aren't at fault.

This particular payment isn't "settled", the CHAPS Guarantee kicked in and your in-laws got their money back. In theory, they could wait until your account is unfrozen and do the payment again - or pay into a different account of yours if you have one. Or you could sell the Spanish holiday home to someone else if you wanted to.

If Bank A made the boo-boo and "lost" the £70k by transmitting it to Bank B with the wrong account details so that it enters a holding account, Bank B are under no obligation to pay it back and are going to have a hell of an Xmas party this year in that particular department!

Ergates

Sensory said:
Irrelevant, because they froze the wrong account. How was the OP's account details actually obtained for it to be frozen? Obviously not by tracing the payment or auditing its trail. The in-laws could have had any random account frozen just by giving their bank a random 8-digit number of the receiving bank. You could freeze the account of your solicitor by reporting fraud, just because you entered one digit wrong when trying to pay them and they contacted you saying the money hadn't been received; that's how ridiculous this is. Bank B froze an account that didn't even receive the money, so on what authority can they freeze it? Can they freeze the account of Adele because some random person got luck with the numbers?

The In-Laws' bank would have gotten them from the In-Laws, obviously.  Why they didn't cross check those details with the details that were used for the transfer is anybody's guess.

The OP's bank got them from the In-Laws' bank.  They had no way of knowing the transfer details were entered incorrectly, or how the In-Laws' bank got the details, all they would have known is that they received a fraud alert for one of their accounts from another bank and acted on it in good faith.  That is the authority on which they froze it.   If some random person walked into a bank and said "Freeze this account", then obviously they wouldn't.  If, however, they get such a request from another *bank* then they will probably act on it because they trust other banks not to make such requests without good reason.   In this case it seems that their trust was misplaced, but that doesn't make their actions wrong from their perspective.   The error here was made by the In-Laws and the In-Laws' bank.

If you want an analogy:  You're a police officer.  You see someone running down the street towards you.  Before they pass you another police officer appears and shouts "Stop that man" pointing to the running man.  In that scenario, you don't wait for a full explanation about why the other police officer wants the man stopped, you just grab him and ask questions later.

Sensory

Ergates said:

Sensory said:
Irrelevant, because they froze the wrong account. How was the OP's account details actually obtained for it to be frozen? Obviously not by tracing the payment or auditing its trail. The in-laws could have had any random account frozen just by giving their bank a random 8-digit number of the receiving bank. You could freeze the account of your solicitor by reporting fraud, just because you entered one digit wrong when trying to pay them and they contacted you saying the money hadn't been received; that's how ridiculous this is. Bank B froze an account that didn't even receive the money, so on what authority can they freeze it? Can they freeze the account of Adele because some random person got luck with the numbers?

The In-Laws' bank would have gotten them from the In-Laws, obviously.  Why they didn't cross check those details with the details that were used for the transfer is anybody's guess.

The OP's bank got them from the In-Laws' bank.  They had no way of knowing the transfer details were entered incorrectly, or how the In-Laws' bank got the details, all they would have known is that they received a fraud alert for one of their accounts from another bank and acted on it in good faith.  That is the authority on which they froze it.   If some random person walked into a bank and said "Freeze this account", then obviously they wouldn't.  If, however, they get such a request from another *bank* then they will probably act on it because they trust other banks not to make such requests without good reason.   In this case it seems that their trust was misplaced, but that doesn't make their actions wrong from their perspective.   The error here was made by the In-Laws and the In-Laws' bank.

If you want an analogy:  You're a police officer.  You see someone running down the street towards you.  Before they pass you another police officer appears and shouts "Stop that man" pointing to the running man.  In that scenario, you don't wait for a full explanation about why the other police officer wants the man stopped, you just grab him and ask questions later.

The error is most certainly, at the very least, with the in-laws and the sending bank, but I will re-iterate, is the bank at which the account is held powerless to act whilst they wait several days for others to determine the veracity of a fraud claim against one of their own customers? Why could they not immediately ascertain that the account they were compelled to freeze did not match the payment details of the account to which the money was actually sent and received? Perhaps they did, but were unable to act? Both accounts belong to Bank B, so Bank B must have been an active participant to facilitate the investigation.

These are questions that can most certainly be raised in a complaint; that they were following fraud procedures does not mean compensation cannot be paid. I know of a case where it took a business over a year to transfer money from a closed account to a new account with a different provider, because HSBC believed the request was fraudulent and stalled every attempt with false promises despite the business doing everything that was asked of them. The business eventually received several thousand in compensation after complaining to the FOS (the sum included loss of interest).

eskbanker

paul_c123 said:

Hence, the OP has suffered a loss due to the error of Bank A (if the first paragraph is truly accurate). The OP is  entitled to complain and if investigated and true, receive financial compensation from Bank A.

As pointed out last night, OP isn't entitled to complain to bank A under the FCA's rules (unless you've identified something relevant under DISP 2.7.6?), and that doesn't change even if bank A were ultimately responsible for some of OP's losses - OP should claim against the in-laws (who seem to be primarily liable anyway), and in turn, if the in-laws believe there's a claim against their bank (e.g. for the original keying error) then they can complain.

paul_c123

I agree - strictly, under the FCA rules. However there's other regulations which are relevant, for example PSD2 (I've not trawled all the way through it though). So a bank may choose to use its existing complaint procedure which tends to be very thorough and well structured, for non-customer complaints to avoid further (legal) action taken against them. It is not just for regulatory compliance, there is reputational damage and broader aims to consider.

eskbanker

paul_c123 said:

I agree - strictly, under the FCA rules. However there's other regulations which are relevant, for example PSD2 (I've not trawled all the way through it though). So a bank may choose to use its existing complaint procedure which tends to be very thorough and well structured, for non-customer complaints to avoid further (legal) action taken against them. It is not just for regulatory compliance, there is reputational damage and broader aims to consider.

A bank obviously could voluntarily choose to entertain a complaint from a non-customer, but in this particular case, where bank A has already advised that they won't do this ("Bank A flatly refuse to engage with me, as I am not their customer"), OP has no way of forcing them to, so isn't 'entitled to complain' to them as such....