Large Amount Transferred Abroad - The Fault is Ours, But Bank Could Have Done More?

WestLondonOlga

Sold my late mother's house recently, and went to the bank to transfer my siblings their share.  The issue is with the amount I transferred to my older brother in Switzerland...

I checked the account yesterday and the money had gone out, but then straight back in again, minus almost £5k.

I phoned the bank (I don't know what the rules are here about naming names, so won't, for now) and in the meantime emailed my brother, and basically he had got one digit wrong on his IBAN (Aaaargh!  And he worked in banking for YEARS!!!), hence the money going out and then back again.  The discrepancy is the exchange rate fees changing the amount to CHF and then back to Sterling.

Long story short, the fault is ours (my brother's).  HOWEVER, why was the amount converted, before being (not) transferred to a non-existent account?  Have we a leg to stand on here?  I am not an expert in foreign currency transfers.

I also have an issue with the bank's customer service.  I went in branch to do the money transfers, and had to answer many questions on the phone to make sure I was not being defrauded or scammed.  I wish the same due diligence was shown to help me with a large foreign transfer; for example I was asked whether I wanted to do the transfer in Sterling or CHF and when I asked what difference it would make (eg to fees) the assistant couldn't answer me.

On the phone yesterday I was transferred a couple of times and eventually got through to an assistant who sounded extremely inexperienced and admitted she didn't know about foreign transfers, and put me on hold for ages while she spoke to the foreign transfer team.  I asked to speak to them directly but apparently they don't do that.

I have requested a call-back from the Complaints team, which will be "in 2 or 3 days", and obviously when I go on the bank's website there is the usual list of FAQs, and no contact email.

Anyway, any advice would be appreciated.

MorningcoffeeIV

WestLondonOlga said:

Long story short, the fault is ours (my brother's).  HOWEVER, why was the amount converted, before being (not) transferred to a non-existent account? 

Did you ask for the transfer to take place in CHF?

If so, that's why they converted it. They can't convert it once it's been sent to someone else, for obvious reasons.

TheBanker

When you send funds overseas, you have to tell the bank which currency to use. 

If you ask them to send the funds in Sterling, the bank at the other end will convert them to local currency using their exchange rate (unless they are being credited to an account denominated in Sterling, in which case no conversion is necessary).

If you ask them to send the funds in the overseas currency, then your own bank will perform the conversion.

It is impossible to say which exchange rate will be best, because it will be the rate that applies on the date of the conversion. And the overseas bank may apply a fee for receiving the payment, which may vary depending on the currency received. As some of the fees are levied by the recipient's bank, it is impossible for your bank to tell you exactly what they will be. 

The reason you might want to send a payment in a specific currency is if you've been invoiced in that currency. For example if you wanted to be sure the recipient received CHF1,000 you would need your bank to do the conversion. If you wanted to make sure they received GBP1,000 then you'd need to let their bank do the conversion. The currency of the account is also relevant - if you are sending funds to a GBP account held in a foreign currency, then obviously nobody should be doing a conversion. 

In this case, the funds appear to have been converted to CHF, but rejected by the beneficiary bank due to invalid details. So your bank has had to convert them back to GBP in order to credit them back to your account. It is unlikely that your bank would have known the transfer would reject as they rely on the customer to supply valid account details.

Unfortunately, this is a situation of your making as you provided the bank with incorrect details. I don't mean to be harsh in saying this but I don't think there's any obligation on the bank to make good your loss. Any refund your bank decides to make will purely be a gesture of goodwill on their part.

WestLondonOlga

TheBanker said:

When you send funds overseas, you have to tell the bank which currency to use. 

If you ask them to send the funds in Sterling, the bank at the other end will convert them to local currency using their exchange rate (unless they are being credited to an account denominated in Sterling, in which case no conversion is necessary).

If you ask them to send the funds in the overseas currency, then your own bank will perform the conversion.

It is impossible to say which exchange rate will be best, because it will be the rate that applies on the date of the conversion. And the overseas bank may apply a fee for receiving the payment, which may vary depending on the currency received. As some of the fees are levied by the recipient's bank, it is impossible for your bank to tell you exactly what they will be. 

The reason you might want to send a payment in a specific currency is if you've been invoiced in that currency. For example if you wanted to be sure the recipient received CHF1,000 you would need your bank to do the conversion. If you wanted to make sure they received GBP1,000 then you'd need to let their bank do the conversion. The currency of the account is also relevant - if you are sending funds to a GBP account held in a foreign currency, then obviously nobody should be doing a conversion. 

In this case, the funds appear to have been converted to CHF, but rejected by the beneficiary bank due to invalid details. So your bank has had to convert them back to GBP in order to credit them back to your account. It is unlikely that your bank would have known the transfer would reject as they rely on the customer to supply valid account details.

Unfortunately, this is a situation of your making as you provided the bank with incorrect details. I don't mean to be harsh in saying this but I don't think there's any obligation on the bank to make good your loss. Any refund your bank decides to make will purely be a gesture of goodwill on their part.

Thank you for taking the time to explain, I didn't think we had much hope.  Yes I was asked what currency I wanted the transfer to be in, and did say CHF.  At least the whole amount didn't go into a complete stranger's account.

DullGreyGuy

I am by no means an expert but having spoken to the Treasury department in a number of clients... not all bank transfers are as simple as you'd assume. Admittedly we were talking about a customer living in a country on the US sanctions list but their monthly pension in principle was transferred from our bank to theirs but in reality it had to bounce through about 4 other middleman banks to ultimately get to their account. Given the nature of the client we had more controls but still some months one link in the chain would break saying they no longer deal with the other bank and a new route had to be found.

tightauldgit

At the end of the day I think the bank have just followed their processes. You'd have to look and double check exactly where the £5000 has gone to see if there's maybe a justification for a goodwill payment from the bank. They may be willing to waive any fees or commissions that they've charged - especially if you are going to have to send it again and incur them again.

This does re-emphasise though the necessity to get things right first time when dealing with money transfers etc.