Bank lost savers money i the past. Should the rectification include inflation correction ?

dodgyhodgy

I was an executor for my mother's will a few years ago. I sent cheques to the beneficiaries having collected together monies from the estate.

One of the beneficiaries (my sister), who is of questionable attention to detail, paid her cheque into her bank account (she knows she did it because she diarised the event). Now, five years later, she has realised that the money never got into her account.

It clearly went somewhere, because I closed the executor account once all cheques had been cashed.

I have approached the bank with whom I had set up the executor account - to query the transaction. They printed me a copy of my cheque & told me that indeed, the cheque had been presented the day after my sister recorded paying it in (& by the bank that my sister uses).

There is currently a 'trace' being run on the cheque to see exactly where the cash went (result expected in 2 weeks).

It seems clear to me that my sister's bank (let's call them BankS) have taken the money but NOT put it in my sister's account & I suspect & hope that - in the face of the evidence, they will not hesitate to pay it back, but here's the crunch . . .

according to 'inflation calculator' on the Bank Of England's website, £10,000 in January 2020 is worth £12,300 in today's money. Should the bank be expected to pay today's value for the missing cash ?

Undervalued

dodgyhodgy said:

I was an executor for my mother's will a few years ago. I sent cheques to the beneficiaries having collected together monies from the estate.

One of the beneficiaries (my sister), who is of questionable attention to detail, paid her cheque into her bank account (she knows she did it because she diarised the event). Now, five years later, she has realised that the money never got into her account.

It clearly went somewhere, because I closed the executor account once all cheques had been cashed.

I have approached the bank with whom I had set up the executor account - to query the transaction. They printed me a copy of my cheque & told me that indeed, the cheque had been presented the day after my sister recorded paying it in (& by the bank that my sister uses).

There is currently a 'trace' being run on the cheque to see exactly where the cash went (result expected in 2 weeks).

It seems clear to me that my sister's bank (let's call them BankS) have taken the money but NOT put it in my sister's account & I suspect & hope that - in the face of the evidence, they will not hesitate to pay it back, but here's the crunch . . .

according to 'inflation calculator' on the Bank Of England's website, £10,000 in January 2020 is worth £12,300 in today's money. Should the bank be expected to pay today's value for the missing cash ?

"Expected" maybe but unlikely to be upheld that level by the FOS. Interest certainly plus a nominal amount for inconvenience but I think you will struggle to get more.

nyermen

I think it might depend on the account it was being paid into. 

If they’d wanted to pay it into a savings account, arguably they could claim for the missing interest.

No interest Current account?  The bank could argue its 0%, and since they didn’t notice for 5 years, they clearly weren’t planning to move it on.

But I can’t say if there’s any regulatory entitlement to statutory rights (maybe the 8%?). Someone else might know?

Keep_pedalling

Sounds like your sister’s problem, how the hell can you not notice a large deposit went missing for 4 years?

LightFlare

If after 5 years she has only just noticed - can we assume that the amount wasn’t “life changing”

If so, she has probably miss recalled and already spent it

If it was a large amount - why hasn’t she noticed sooner ?

Is this another of those “such and such happened x years ago” posts we seem to be getting more of ?

Ergates

dodgyhodgy said:

according to 'inflation calculator' on the Bank Of England's website, £10,000 in January 2020 is worth £12,300 in today's money. Should the bank be expected to pay today's value for the missing cash ?

No.

You could expect them to pay interest at the rate of the account the cheque was paid into.  

Given your sister didn't notice for 4 years, it would be hard to argue you she had any plans for the money other than to let it sit in that account.

TELLIT01

If there is solid evidence that the bank made the error and paid the cheque to an account other than the one requested by the sister there may be interest paid by the bank.

A somewhat different situation, but when my brother died various financial institutions were contacted with the information we held on accounts with them.  The letters sent to them included a request for them to check for other accounts.  Fast forward 10 years and I received a letter from one of them with a cheque enclosed.  They had done an audit and discovered another account for my brother.  The interest paid by them was more than the original amount in the account.  If I recall correctly they had to pay 8% per annum, compounded, as it was their error.  I don't know if the same would apply in the OPs case if it is a bank error.

DullGreyGuy

The reverse of the cheque, at least in the days before you could deposit them by photo, would have the account details that it was deposited into. 

What should happen will depend on where the error happened. If she filled in the deposit slip incorrectly then it's her own fault. If it's an error by the bank then interest should apply; were it to go to the FOS they would apply statutory interest which is 8% simple interest (ie you dont get interest on your interest) 

PHK

DullGreyGuy said:

The reverse of the cheque, at least in the days before you could deposit them by photo, would have the account details that it was deposited into. 

What should happen will depend on where the error happened. If she filled in the deposit slip incorrectly then it's her own fault. If it's an error by the bank then interest should apply; were it to go to the FOS they would apply statutory interest which is 8% simple interest (ie you dont get interest on your interest) 

This is correct. Also the FOS will likely not award any other payment as your sister won't be able to show that she lost out on anything else because she didn't even notice the money wasn't there. 

TELLIT01

Apologies for my comment about interest being compounded.  Nice as that would be, as others have said it's simply 8% per annum.

dodgyhodgy

Thanks for your comments folks - very interesting.

I haven't paid any money into a bank account for sometime - but last time, I simply put my bank card in the slot & then the machine swallowed the cheque. I can't see how the system can get that wrong !

Before that were the days when one filled in a 'paying in slip' - she would surely have correctly named herself as the recipient. If she then miss-spelled (or digited) her account number or sort code & the details all together didn't 'match' - surely the bank should have sent her a letter telling her there had been an error - rather than sitting on the cash.

I take the feedback about what an idiot she's been - but had she, later, seen the money in her account - it would have reminded her to move it somewhere more sensible. The absence of the cash meant that she wasn't reminded of the need to act (I know, I know, over-protective brother!).

I was interested to hear of the FOS flat 8% - that would have returns better than the BoE calculator  I cited originally.

I'll let you know how it goes ;o)