CHAPS payment failed to arrive

Ballard

It’s impossible to say with any degree of certainty with the information supplied but my suspicion is that the MT103 was not formatted correctly. Perhaps an incorrect beneficiary account number, for example. This would explain why there was a delay and also why the funds were returned less an admin fee by the receiving bank (Starling unless the sort code was incorrect).

Lloyds should be able to provide the answer.

OceanSound

Ballard said:

It’s impossible to say with any degree of certainty with the information supplied but my suspicion is that the MT103 was not formatted correctly. Perhaps an incorrect beneficiary account number, for example. This would explain why there was a delay and also why the funds were returned less an admin fee by the receiving bank (Starling unless the sort code was incorrect).

Lloyds should be able to provide the answer.

I would've thought that the admin fee would appear as an admin fee (on the lloyds customer account transactions - even though it may have been charged by starling) when the money is returned. Not just be deducted from the money returned and that fee becomes unaccountable. 

As for the account number and/or the sort code being incorrect, I found this on the lloyds bank BUSINESS banking website :

When you make Faster Payments or CHAPS payments to a person or business for the first time, we check the account details with their bank. This helps:

• ensure your money gets to the right place

• protect you from fraud

This is called Confirmation of Payee. 
The details we check with their bank are:

• The name on the account

• The account number

• The sort code

• Account type – to confirm if it’s a personal or business account

• Reference – some accounts require a reference to identify who the account belongs to.  You’ll be asked to provide this if needed.

Since it's on the business banking website, does that mean it doesn't happen for personal banking? Doubt it. 

If the sort code is incorrect it would stick out like a sore thumb, as I'm pretty sure the receiver bank name and branch name needs to be entered alongside the sort code for CHAPS payments. If they don't match then obviously something is amiss and Lloyds would need to speak to the customer BEFORE sending the CHAPS transfer. 

edit: In the OP it says: 

The CHAPS receipt from Lloyds states "payee name matches" and confirms the correct target sort code and target account number (both mine) were used.
Lloyds confirmed the money left his account before 15:00 and was now with Starling.

So we can put to bed this idea of wrong account number and/or sort code!

As for Llloyds 'confirming' the money was now with Starling - well, the Lloyds staff member doing the 'confirming' may have made a mistake. They may have just assumed that the money was with Starling since it had left Lloyds. 

born_again

MarkC61 said:. 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.

On the house purchase side. As the payment was to you, & not a solicitor I think that would be a hard case to win.

Is this the case here?
If it is not, then it's a bit pointless question. As we do not know the exact reason for rejection. If it is AML, then it is not something that either bank will say.
AML to a solicitor for house purchase would be unusual as it is part of the questioning by the bank making the payment.

kaMelo

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.

@Daliah gave an answer on page one of the thread, how the FOS look at failed CHAPS payments, indeed one of the examples they give is relating to a house purchase.

Daliah said:

Some CHAPS case studies from the FOS: https://www.financial-ombudsman.org.uk/files/2829/42.pdf

In short, compensation is not guaranteed even if the house purchase fails. They look at each case on it's own merits.

OceanSound

kaMelo said:

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.

@Daliah gave an answer on page one of the thread, how the FOS look at failed CHAPS payments, indeed one of the examples they give is relating to a house purchase.

Daliah said:

Some CHAPS case studies from the FOS: https://www.financial-ombudsman.org.uk/files/2829/42.pdf

In short, compensation is not guaranteed even if the house purchase fails. They look at each case on it's own merits.

I wonder if any of those cases were referred to the independent assesor by the complainant or business. Of course, the independent assesor cannot look at the merits of the case or the outcome reached, only things like service received and if the level of compensation was adequate.

Ballard

OceanSound said:

Ballard said:

It’s impossible to say with any degree of certainty with the information supplied but my suspicion is that the MT103 was not formatted correctly. Perhaps an incorrect beneficiary account number, for example. This would explain why there was a delay and also why the funds were returned less an admin fee by the receiving bank (Starling unless the sort code was incorrect).

Lloyds should be able to provide the answer.

I would've thought that the admin fee would appear as an admin fee (on the lloyds customer account transactions - even though it may have been charged by starling) when the money is returned. Not just be deducted from the money returned and that fee becomes unaccountable. 

As for the account number and/or the sort code being incorrect, I found this on the lloyds bank BUSINESS banking website :

When you make Faster Payments or CHAPS payments to a person or business for the first time, we check the account details with their bank. This helps:

• ensure your money gets to the right place

• protect you from fraud

This is called Confirmation of Payee. 
The details we check with their bank are:

• The name on the account

• The account number

• The sort code

• Account type – to confirm if it’s a personal or business account

• Reference – some accounts require a reference to identify who the account belongs to.  You’ll be asked to provide this if needed.

Since it's on the business banking website, does that mean it doesn't happen for personal banking? Doubt it. 

If the sort code is incorrect it would stick out like a sore thumb, as I'm pretty sure the receiver bank name and branch name needs to be entered alongside the sort code for CHAPS payments. If they don't match then obviously something is amiss and Lloyds would need to speak to the customer BEFORE sending the CHAPS transfer. 

edit: In the OP it says: 

The CHAPS receipt from Lloyds states "payee name matches" and confirms the correct target sort code and target account number (both mine) were used.
Lloyds confirmed the money left his account before 15:00 and was now with Starling.

So we can put to bed this idea of wrong account number and/or sort code!

As for Llloyds 'confirming' the money was now with Starling - well, the Lloyds staff member doing the 'confirming' may have made a mistake. They may have just assumed that the money was with Starling since it had left Lloyds. 

You’ve posted quite a long reply but I’ll try to answer your points. 

If Starling have taken a fee and returned the rest then I wouldn’t necessarily expect Lloyds to account for this separately. If Starling have added details to the returned payment then Lloyds should advise the customer. In the rare occasions where I’ve received a CHAPS payment I’ve had something through the post at a later date with further details. 

For CHAPS payments there’s nowhere to put the branch name as the BIC goes in that field rather than free format. In my experience (although this is - good 7 years old) you can put the main BIC (eg NWBKGB2L) rather than the specific branch BIC as the sort code drives the routing. 

Confirmation of payee is completely knew to me for CHAPS and unless any warnings were overridden I agree that this should make it all but impossible for the scenario I suggested.

I think, although I don’t work in this area, that there’s a fairly new process whereby banks have to confirm that the customer has been credited within a certain time period. I am very prepared to be corrected on this though. 

MarkC61

I have just received an admission from Lloyds that the reason the CHAPS failed was that someone made a clerical error at their end. They simply didn't type in correctly the recipient sort code (one digit wrong).

So Lloyds have said that our money never reached Starling. They (Lloyds) recovered the money when "someone discovered an amount they weren't expecting" - I'll say.

So it is clear that CHAPS (certainly at Lloyds) involves manually entering data twice - therefore that introduces the likelihood of mistakes and is precisely what I am now taking up at Exec level with Lloyds and with the regulator. In addition, both banks have major lessons to learn about customer service. It has taken 9 days for this error to come out.

I shall report the final outcome in this forum, but shall wait for the formal report from Lloyds. Given the fact that this is a flawed process, I still want answers about liability & accountability.

Thank you all for your constructive comments.

Mark

xylophone

I have just received an admission from Lloyds that the reason the CHAPS failed was that someone made a clerical error at their end. They simply didn't type in correctly the recipient sort code (one digit wrong).

So Lloyds have said that our money never reached Starling. They (Lloyds) recovered the money when "someone discovered an amount they weren't expecting" - 

Then it would seem that Ballard was correct.

It’s impossible to say with any degree of certainty with the information supplied but my suspicion is that the MT103 was not formatted correctly. Perhaps an incorrect beneficiary account number, for example. This would explain why there was a delay and also why the funds were returned less an admin fee by the receiving bank (Starling unless the sort code was incorrect).
Lloyds should be able to provide the answer.

Has your father been offered an apology, repayment of the £50 fee and compensation for the worry and inconvenience caused?

phillw

MarkC61 said:

It has taken 9 days for this error to come out.

That sounds quick. I look forward to seeing what comes out of your efforts to improve things

OceanSound

Ballard said:

OceanSound said:

Ballard said:

It’s impossible to say with any degree of certainty with the information supplied but my suspicion is that the MT103 was not formatted correctly. Perhaps an incorrect beneficiary account number, for example. This would explain why there was a delay and also why the funds were returned less an admin fee by the receiving bank (Starling unless the sort code was incorrect).

Lloyds should be able to provide the answer.

I would've thought that the admin fee would appear as an admin fee (on the lloyds customer account transactions - even though it may have been charged by starling) when the money is returned. Not just be deducted from the money returned and that fee becomes unaccountable. 

As for the account number and/or the sort code being incorrect, I found this on the lloyds bank BUSINESS banking website :

When you make Faster Payments or CHAPS payments to a person or business for the first time, we check the account details with their bank. This helps:

• ensure your money gets to the right place

• protect you from fraud

This is called Confirmation of Payee. 
The details we check with their bank are:

• The name on the account

• The account number

• The sort code

• Account type – to confirm if it’s a personal or business account

• Reference – some accounts require a reference to identify who the account belongs to.  You’ll be asked to provide this if needed.

Since it's on the business banking website, does that mean it doesn't happen for personal banking? Doubt it. 

If the sort code is incorrect it would stick out like a sore thumb, as I'm pretty sure the receiver bank name and branch name needs to be entered alongside the sort code for CHAPS payments. If they don't match then obviously something is amiss and Lloyds would need to speak to the customer BEFORE sending the CHAPS transfer. 

edit: In the OP it says: 

The CHAPS receipt from Lloyds states "payee name matches" and confirms the correct target sort code and target account number (both mine) were used.
Lloyds confirmed the money left his account before 15:00 and was now with Starling.

So we can put to bed this idea of wrong account number and/or sort code!

As for Llloyds 'confirming' the money was now with Starling - well, the Lloyds staff member doing the 'confirming' may have made a mistake. They may have just assumed that the money was with Starling since it had left Lloyds. 

You’ve posted quite a long reply but I’ll try to answer your points. 

If Starling have taken a fee and returned the rest then I wouldn’t necessarily expect Lloyds to account for this separately. If Starling have added details to the returned payment then Lloyds should advise the customer. In the rare occasions where I’ve received a CHAPS payment I’ve had something through the post at a later date with further details. 

For CHAPS payments there’s nowhere to put the branch name as the BIC goes in that field rather than free format. In my experience (although this is - good 7 years old) you can put the main BIC (eg NWBKGB2L) rather than the specific branch BIC as the sort code drives the routing. 

Confirmation of payee is completely knew to me for CHAPS and unless any warnings were overridden I agree that this should make it all but impossible for the scenario I suggested.

I think, although I don’t work in this area, that there’s a fairly new process whereby banks have to confirm that the customer has been credited within a certain time period. I am very prepared to be corrected on this though. 

For CHAPS payments there’s nowhere to put the branch name as the BIC goes in that field rather than free format. 

I was going by the form available on the Lloyds corporate website. It has the fields:

• Receiving (beneficiary) sort code
• Receiving (beneficiary) bank and branch
  

In the 'bank use only' part of the form (last page), it has four tick boxes. The four options (for staff to put check box against) are:

• Personal
• Comm*
• Corp*
• Business

Which makes me think the same form is valid for personal use also. Oddly enough the place to put BIC is nowhere to be seen.