CHAPS payment failed to arrive

MarkC61

Good morning all - I can report that without any notification from Lloyds, or any explanation from either bank received to date, the money was simply put back into my father's account late yesterday afternoon (less a further fee of £50 for some as yet undetermined service ;-))
My original post asked two specific questions - 1. What actually are the guarantees with CHAPS if banks lose the customer's money? 2. And what if they cause a house completion to fail, even if they belatedly 'find' the money?
I still do not have answers to those questions. If I get them, I shall post here.
Please let me find out why the transfer failed - bear in mind that we do have a correctly completed CHAPS receipt.
Starling tell me that there should still be an MT103 form, which we shall try to find. But it now appears that the money never reached Starling after all (contrary to what we were told by Lloyds - not in writing, of course - which is why there was no AML investigation launched by them. For those, who asked if we had rung our respective banks or checked our account balances etc. Yes we did - please note that I did not state every step we took. (And have you ever tried ringing Starling at all, or ringing Lloyds on a bank holiday weekend?)
But I come back to my original questions. Many house purchases rely on completion balances being transmitted via CHAPS. So I still want to know what happens if such payments don't go through? Thank you for all your comments to date.

OceanSound

MarkC61 said:

Good morning all - I can report that without any notification from Lloyds, or any explanation from either bank received to date, the money was simply put back into my father's account late yesterday afternoon (less a further fee of £50 for some as yet undetermined service ;-))
My original post asked two specific questions - 1. What actually are the guarantees with CHAPS if banks lose the customer's money? 2. And what if they cause a house completion to fail, even if they belatedly 'find' the money?
I still do not have answers to those questions. If I get them, I shall post here.
Please let me find out why the transfer failed - bear in mind that we do have a correctly completed CHAPS receipt.
Starling tell me that there should still be an MT103 form, which we shall try to find. But it now appears that the money never reached Starling after all (contrary to what we were told by Lloyds - not in writing, of course - which is why there was no AML investigation launched by them. For those, who asked if we had rung our respective banks or checked our account balances etc. Yes we did - please note that I did not state every step we took. (And have you ever tried ringing Starling at all, or ringing Lloyds on a bank holiday weekend?)
But I come back to my original questions. Many house purchases rely on completion balances being transmitted via CHAPS. So I still want to know what happens if such payments don't go through? Thank you for all your comments to date.

About:

...I can report that without any notification from Lloyds, or any explanation from either bank received to date, the money was simply put back into my father's account late yesterday ...

Financial Conduct Authority (FCA) rules on payments:

Payment refused
Your bank can only refuse to make a payment if:

• you do not have enough funds available in the account

• you have broken the agreed terms and conditions, such as needing to provide two signatures for a joint account payment

• making the payment would be unlawful

If your bank refuses to make a payment (such as by ‘bouncing’ a direct debit), it must generally tell you at the earliest opportunity that it is doing so and, if possible, explain why.

Notice how the rule is sufficiently vague with the 'generally' without any examples given of when it doesn't apply. If you're dad complains to his bank and they rely on the 'generally', maybe something to take up with the financial ombudsman (and also notify the FCA - although they cannot look at your dad's case specifically, they encourage consumer's to report shady practices).

FCA rules from the same page: 

The bank can charge for not making a payment if the refusal is reasonably justified.

Again really vague. Also, this doesn't excuse the bank from not stating what the fee is for. 

xylophone

My original post asked two specific questions - 1. What actually are the guarantees with CHAPS if banks lose the customer's money? 

As far as I can see, whether through CHAPS or any other system, if a bank actually loses a customer's money through no fault or error of the customer, then without question the bank must refund the customer and quite probably pay compensation on top?

With regard to the failure of the transaction, the OP's father must contact Lloyds without delay for an explanation of exactly what has occurred and on what basis the extra fee has been charged.

Is it possible that the fee relates to the request for a copy of the MT103?

MarkC61

@xylophone - nope. The fee was automatically debited by Starling when they returned the original sum (less the £50) to Lloyds. Nothing to do with the MT103 which my father has requested of Lloyds. Both banks have frankly been shocking in failing to communicate to the respective account holder what is going on (or actually not going on as it transpires).
A salutary lesson - don't simply rely on a CHAPS transaction to complete and definitely don't expect [certainly these two] banks to keep you informed.
Because we fortunately left a decent margin of time, we are now making the transfers alternatively ourselves.
And when we find out why the transfer failed, I shall inform the group. Thanks @OceanSound for the rules.

xylophone

Starling tell me that there should still be an MT103 form, which we shall try to find. But it now appears that the money never reached Starling after all (contrary to what we were told by Lloyds - not in writing, of course - which is why there was no AML investigation launched by them.

The fee was automatically debited by Starling when they returned the original sum (less the £50) to Lloyds.

I'm confused.

masonic

It does on the face of it look like Lloyds held it up for fraud checking, and they weren't willing to let it through and therefore re-credited it to your father's account. This sort of thing has been known to happen with faster payments from First Direct, and it's pretty bad form. Cue, "we tried to call you but couldn't get through" from Lloyds.

xylophone

It does on the face of it look like Lloyds held it up for fraud checking, and they weren't willing to let it through and therefore re-credited it to your father's account. 

But in that case, how came it that Starling is alleged to have deducted £50?

How could they deduct a fee (?) from money that they didn't receive? 

masonic

xylophone said:

It does on the face of it look like Lloyds held it up for fraud checking, and they weren't willing to let it through and therefore re-credited it to your father's account. 

But in that case, how came it that Starling is alleged to have deducted £50?

How could they deduct a fee (?) from money that they didn't receive? 

There is nothing to suggest that the origin or reason for that deduction has been confirmed. The allegation that Starling deducted £50 seems to be an assumption. Best to keep an open mind until it is confirmed by either bank why £50 is missing from the returned money and which of them deducted it.

I'm making the assumption that MarkC61 and his father are now down a total of £80. Perhaps he could confirm that the £30 Lloyds CHAPS fee was paid separately (and didn't come out of the sum transferred). That would rule out the £50 being composed of a £30 Lloyds CHAPS fee plus a £20 Starling CHAPS fee, which could indicate the money went back via a second CHAPS transfer (the only way a £50 deduction can be made from the menu of relevant account fees).

OceanSound

Could be an intermediary bank or third-party sponsors fee. Starling website says this:

A bank doesn’t have to be a direct participant of the system to send and receive CHAPS payments. Many use third-party sponsors or intermediaries to process the CHAPS payments for them. This is currently the case for Starling.

then says: 

Our sort code checker will tell you if your bank accepts CHAPS payments. Just enter your bank’s sort code to find out.
According to the Bank of England, these are the direct participants of CHAPS:
.....

Lloyds is on the list but not Starling (they do say they use intermediaries and third-party sponsors).

masonic

OceanSound said:

Could be an intermediary bank or third-party sponsors fee. Starling website says this:

Anything is possible, but as they wouldn't normally deduct anything from a successful inward transfer they process it would be quite surprising if they keep a portion of money they bounce back to the sender. Lloyds would clearly need to reimburse their customer as there is no basis in their T&Cs for the charge to be made. This would not be conducive to good relations between the participants of the payment scheme.

It would explain a few things if this intermediary decided the money was too hot to handle and sent it back where it came from, less so that they would take a cut of it if they thought it was dodgy.