Standing Order in to a Closed Bank Account?

Roy1234

I'm helping sort out the finances of an elderly relative who will soon be the subject of a Power or Attorney.  She has of late been confused and scarcely able to run her own financial affairs.

In 2020 she closed a Bank current account, but it appears she never stopped a monthly standing order going into it, from her Building Society current account.  This amounts to many thousands of pounds since then.

We'll know more on Friday when we can go together to the Building Society and ask questions, but for now, does anyone know how the banking system would handle a standing order into a bank account, once closed?  Are we likely to find the funds lost in some suspense account at that receiving bank, of which she is no longer a customer, or will it have bounced back to the originating Building Society and be lost somewhere there?

MIsterC72

Normally it would reject and then go back to the account it had come from. If you had another account open they could potentially transfer it to that one but in your case that's not applicable

Roy1234

MIsterC72 said:

Normally it would reject and then go back to the account it had come from. If you had another account open they could potentially transfer it to that one but in your case that's not applicable

Ok thanks, so most likely back with the Building Society.  Neither current nor savers account she has there has had any such credit in over 48 monthly failed standing orders.  Is that unusual/surprising?

MIsterC72

It does sound strange. I used to work for a bank and either payments bounced back automatically, especially when standing orders switched to faster payments (sometimes the rejection was immediate if there was no account open with the details supplied) or they would divert to an internal account. That account then had to be brought to zero each night so payments would be sent back manually 

born_again

Roy1234 said:

I'm helping sort out the finances of an elderly relative who will soon be the subject of a Power or Attorney.  She has of late been confused and scarcely able to run her own financial affairs.

In 2020 she closed a Bank current account, but it appears she never stopped a monthly standing order going into it, from her Building Society current account.  This amounts to many thousands of pounds since then.

We'll know more on Friday when we can go together to the Building Society and ask questions, but for now, does anyone know how the banking system would handle a standing order into a bank account, once closed?  Are we likely to find the funds lost in some suspense account at that receiving bank, of which she is no longer a customer, or will it have bounced back to the originating Building Society and be lost somewhere there?

It could be sat in a suspense account at closed acc, bank. As system does not know what to do with it.

But just how was it closed? If it was a current acc switch, then the funds would be moved to new account.

Roy1234

MIsterC72 said:

It does sound strange. I used to work for a bank and either payments bounced back automatically, especially when standing orders switched to faster payments (sometimes the rejection was immediate if there was no account open with the details supplied) or they would divert to an internal account. That account then had to be brought to zero each night so payments would be sent back manually 

@MIsterC72 - So from what you say, the money should have returned to the Building Society.  Would anyone, as the months became years, raise some manual query with the source Building Society, or are systems too automatic for that?

@born_again - The lady & her husband had long held a joint current & an ISA accounts (husband's name only) with the Bank.  After his death his ISA was closed and paid into the remaining current account, in her name only now, used for utility bills etc.  The standing order created from building society to that bank was to keep the latter topped up, as a billing account, as I'd advised her to separate out her utility bills and budget for them that way, leaving her BS account hers to spend.  A year later she decided she'd rather use her own preexisting building society current account for everything and closed the bank account, redirecting all utility DDs there, but forgetting about the standing order.  I believe that the closing bank balance was transferred to the building society, but that's to be confirmed.

Would a building society not have its own procedures for flagging regular failed standing orders?  The amount was not returned to either her BS current account or to her savings account, which kind of makes me suspect the bank still has it?

born_again

Roy1234 said:Would a building society not have its own procedures for flagging regular failed standing orders?  The amount was not returned to either her BS current account or to her savings account, which kind of makes me suspect the bank still has it?

As B/S (which one) are not banks, they will not have the same systems & may rely on 3rd party to handle such payments into banking system. The issue is, has it been returned or not.
I think 1st port of call is, B/S & question them on the matter & their processes, then get the closed bank account details & question them. Although the bank maybe a bit harder, as it's a closed acc & would need full details, as well as they may not deal with you.

Roy1234

born_again said:

Roy1234 said:Would a building society not have its own procedures for flagging regular failed standing orders?  The amount was not returned to either her BS current account or to her savings account, which kind of makes me suspect the bank still has it?

As B/S (which one) are not banks, they will not have the same systems & may rely on 3rd party to handle such payments into banking system. The issue is, has it been returned or not.
I think 1st port of call is, B/S & question them on the matter & their processes, then get the closed bank account details & question them. Although the bank maybe a bit harder, as it's a closed acc & would need full details, as well as they may not deal with you.

The B/S is Nationwide.  They've been very helpful in a tricky situation, i.e. a customer losing mental capacity.  The Bank, one of the biggies, was also very helpful when this lady lost her husband pre-Covid, and did more than they needed to in helping.  I quietly regretted her closing her account with them a year later, I like to stick with good service, but she wasn't one to take much advice.  I have full details of the closed bank account and an image of the closing statement.  How hard do you think it'll be if it's the bank that is sitting on a multi-thousand sum?

TheMysticBeaver

Best advice would be contact the Bank/BS who have been sending the S/O and ask for further advice. 

Usually banks can trace payments and offer confirmation if it has been received. They can also attempt to recall payments with a Payment in Error. This is purely down to each bank / BS protocol and I would recommend speaking to them first for further advice.

penners324

Nationwide is a bank not a building society.

The payments should have automatically returned to the source account.

Approach Nationwide to trace the payments 

Roy1234

penners324 said:

Nationwide is a bank not a building society.

The payments should have automatically returned to the source account.

Approach Nationwide to trace the payments 

No Nationwide is a Building Society not a Bank:

https://en.wikipedia.org/wiki/Nationwide_Building_Society

I'll report back after visiting Friday to trace the payments.