Warning: Scottish Widows lost £20000 mortgage payment!

I tried to transfer a payment from my Santander ISA into my new Scottish Widows offset mortgage account. Unfortunately Scottish Widows say that they refused the payment because it did not come from my "nominated" bank account. They say they attempted to return the payment but of course the ISA would not accept it as this would create an ISA oversubscription. So the money has now disappeared into some holding account that neither bank can trace.

Scottish Widows can't say when or where they sent the money and haven't responded to my written complaint or my request to speak with a manager.

I guess it will be sorted eventually by obtaining faster payment reference numbers from both banks' back offices to stop them playing tennis with my £20k, but it's a bit rich that Scottish Widows will be charging me mortgage interest in the meantime on money that I have already paid to them.

So two lessons learned really:

1) Avoid Scottish Widows with their "computer says no" approach

2) If you're sending a big payment it could be a good idea to send a small test payment, say £1.00 first of all to make sure there are no bureaucratic blockages in the system.
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  • dunstonh
    dunstonh Posts: 115,612
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    edited 12 December 2023 at 11:34AM
    I tried to transfer a payment from my Santander ISA into my new Scottish Widows offset mortgage account. Unfortunately Scottish Widows say that they refused the payment because it did not come from my "nominated" bank account. 
    It would also have appeared as a third party payment and the lender may not accept third party payments or require extra hoops to be jumped through.

    They say they attempted to return the payment but of course the ISA would not accept it as this would create an ISA oversubscription. So the money has now disappeared into some holding account that neither bank can trace.
    Sending it back is logical.   Santander should have it in a suspense account and it should not have disappeared.

    I guess it will be sorted eventually by obtaining faster payment reference numbers from both banks' back offices to stop them playing tennis with my £20k, but it's a bit rich that Scottish Widows will be charging me mortgage interest in the meantime on money that I have already paid to them.
    It probably wouldn't have been faster payments but either CHAPS or BACS

    .So two lessons learned really:
    1) Avoid Scottish Widows with their "computer says no" approach

    2) If you're sending a big payment it could be a good idea to send a small test payment, say £1.00 first of all to make sure there are no bureaucratic blockages in the system.

    1 - Don't try and circumvent the normal process.  SW would not be alone here.  Most would have done similar either for nominated bank account reasons or third party payment reasons.
    i.e. get the money from the ceding scheme sent to you first.   Then you send the money to the receiving scheme.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Further update on Scottish Widows customer service. Unable to provide transaction number from when they returned the money, unable to say when or where the money was returned, unable to provide senior manager to discuss, written formal complaint not acknowledged, complaints department don't speak to people by phone!
  • ACG
    ACG Posts: 23,605
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    I used to work for RBS, if a payment ended up in a suspense account everything would be corrected once it hit your account. If it is anything like RBS, your statement at some point will show the payment hitting your account on the date it hit their suspense account and any additional interested will be refunded automatically... This was maybe 15 years ago so I cant see any reason why it would be any worse of a process. 

    But I imagine the wondering where £20k has gone is a bit stressful. As you say, it will get sorted. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Hoenir
    Hoenir Posts: 1,113
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    Further update on Scottish Widows customer service. Unable to provide transaction number from when they returned the money, unable to say when or where the money was returned, unable to provide senior manager to discuss, written formal complaint not acknowledged, complaints department don't speak to people by phone!
    The money will resurface. Suspense accounts will be be worked through in chronological order.  Complaining isn't going to speed matters up unfortunately. 
  • penners324
    penners324 Posts: 2,573
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    The money will be with Santander. Get them to find it
  • kingstreet
    kingstreet Posts: 38,596
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    When you discussed doing this with them, didn't they warn you about the possible pitfalls and provide workarounds?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • No, I would have heeded any such warnings. The lesson learned here is to check up on any transactions, because had I not taken that precaution, I would have been completely unaware that the money wasn't where it should have been. As mentioned, next time I will test the water with a small transaction before committing any large amounts.

    Close of play update - the manager callback promised by Scottish Widows for this afternoon has still not happened. They have promised it for tomorrow. Astonishing that they have been unable to provide any reassurance as to what they have done with the money.
  • amnblog said:
    Point Two - makes sense.

    Point One - Scottish Widows Bank use a nominated bank account of yours as the sole source to feed and draw from your Offset account. This is designed to protect you (and them) against fraud. Hence their system rejected funds from an unlinked account.
    How is the bank preventing fraud by restricting payments from an account in my name to another account in my name?

    Seems to me more like the system is designed to create confusion and delay, during which time they rake in extra interest.
  • dunstonh
    dunstonh Posts: 115,612
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    How is the bank preventing fraud by restricting payments from an account in my name to another account in my name?
    How do they know its in your name?
    An ISA surrender, for example, would be drawn on the bank of the ISA provider.  Your name won't appear on the cheque.

    Seems to me more like the system is designed to create confusion and delay, during which time they rake in extra interest.
    Seems to me that the system is designed to comply with anti-money laundering regs and reduce fraud.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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