Bank error - any guidance welcomed!

shelle1988

Perhaps not quite the right page to post this on but looks to be the closest match and I am a newbie to the forum! I have access and look after two accounts for a family member. 

When checking online banking I noticed a couple of days ago that one had been emptied and the money transferred to the second. I knew I didn’t make this transaction and raised it with the bank. 

After looking into it they noted this was an “automated process by the system” and therefore it wasn’t a bank error and it couldn’t be upheld as a complaint nor the transaction reversed to send the money back to the original account. Compensation of £20 was offered for this. 

The issue is the account has a limit of how much can be sent each month and it would take around 8 months with that limit in mind just to send back what was in the original account from the second one. The interest rate is significantly higher in the account that was emptied too so £20 compensation won’t cover what would have been earned on the original amount never mind the regular monthly payments each month. 

Given the system belongs to the bank even though they are noting it was automated I can’t understand why this wouldn’t be a bank error if they are responsible for the system. 

I also can’t understand why it wouldn’t be possible to send the money back to the original account. Nor do I understand why the compensation offered would be less than the interest rate for the original amount in the account or why they would offer it if they claim it is not a bank error. 

Any guidance or pointers greatly appreciated as this is not an area I have knowledge in legally. Applicable to Scotland in case there may be differences. 

Brie

One would think that something must have triggered this "automated process".  Whether it was lack of action on the account, something in the T&Cs (e.g. X months after opening the money gets shifted), exceeded the account limit or a glitch.  I would also have thought that there would have been some communication to say it was about to happen.

But all of that aside I would be rejecting their offer of compensation and state back that it is not sufficient to make up for the "financial disadvantage" the account holder has/will suffer.  And then tell them how much financial disadvantage this is (£X interest over so many months) and also tell them how they can more easily and more cheaply rectify this (full immediate transfer back) at which point a smaller amount (but more than £20) will be accepted.

p00hsticks

shelle1988 said:

After looking into it they noted this was an “automated process by the system” and therefore it wasn’t a bank error and it couldn’t be upheld as a complaint nor the transaction reversed to send the money back to the original account. Compensation of £20 was offered for this. 

The issue is the account has a limit of how much can be sent each month and it would take around 8 months with that limit in mind just to send back what was in the original account from the second one. The interest rate is significantly higher in the account that was emptied too 

This description makes me wonder if the second account wasn't a fixed term regular saver of some description by any chance ?

We have one set up where the bank drip feeds a set amount from our current account to the linked regular saver (with the same bank) every month.

But at the end of each year the interest earned is credited and the whole lot automatically moved back into the current account for the process to start again the following year.

You are presented with various options as to what you want the bank to do with the money at the end of the term, but I'm pretty sure that retaining it in the regular saver at the better interest rate isn't one of them. 

born_again

shelle1988 said:

Perhaps not quite the right page to post this on but looks to be the closest match and I am a newbie to the forum! I have access and look after two accounts for a family member. 

When checking online banking I noticed a couple of days ago that one had been emptied and the money transferred to the second. I knew I didn’t make this transaction and raised it with the bank. 

After looking into it they noted this was an “automated process by the system” and therefore it wasn’t a bank error and it couldn’t be upheld as a complaint nor the transaction reversed to send the money back to the original account. Compensation of £20 was offered for this. 

The issue is the account has a limit of how much can be sent each month and it would take around 8 months with that limit in mind just to send back what was in the original account from the second one. The interest rate is significantly higher in the account that was emptied too so £20 compensation won’t cover what would have been earned on the original amount never mind the regular monthly payments each month. 

Given the system belongs to the bank even though they are noting it was automated I can’t understand why this wouldn’t be a bank error if they are responsible for the system. 

I also can’t understand why it wouldn’t be possible to send the money back to the original account. Nor do I understand why the compensation offered would be less than the interest rate for the original amount in the account or why they would offer it if they claim it is not a bank error. 

Any guidance or pointers greatly appreciated as this is not an area I have knowledge in legally. Applicable to Scotland in case there may be differences. 

Without knowing exactly what type of account's you are talking about(as per above)

Folks are just guessing, which is never a good idea. 🤷‍♀️

dunstonh

Banks have the right to use set off.   i.e. if you incur a debt in one account, they can use the proceeds from another move money across.   Others operate an automatic sweep that can be one way or two way.    

I also can’t understand why it wouldn’t be possible to send the money back to the original account. Nor do I understand why the compensation offered would be less than the interest rate for the original amount in the account or why they would offer it if they claim it is not a bank error. 

£20 is a throwaway amount to cover the inconvenience of having to complain. Even the most bizarre of complaints will get it.