Can the bank ‘UNCLEAR’ cleared funds?

[leclerc]

Re: Hello Lovely People!

I've joined the discussion late but the 2 4 6 rules relates to working days and earlier in the thread the timescale that was given was within that timescale, ie 5th December paid in and 13th December cheque amount debited despite it likely to be shown as being available after the basic clearing timescale of three or four working days.

Will re read backwards(to see what has been said as I know the 2-4-6 rules back to front) but a lot of bankworkers in banks are crap with actually knowing the 2 4 and 6 day rules. Working days are only Monday to Friday so you discount weekend days.

[leclerc]

Re: Hello Lovely People!

Presumably you have a receipt showing date of deposit and under the "certainty of fate" rule I would have anticipated the banks honouring their "mistake".
However you mention that you and the bank (which bank, yours or the drawer's?) knew the cheque would bounce when it was presented for payment.
I'm not clear why you would present a cheque which you knew would be dishonoured (potentially an attempted fraud) and if your bank was aware that you knew the cheque would be returned unpaid, (although it was credited to your account), they would not allow you to draw against those funds.
I'm not surprised at their action.If you were aware that the cheque would be dishonoured you would not be allowed to profit from the bank's mistake.
One cannot knowingly take advantage of another's error, it is illegal! cf Rhind v commercial bank of Scotland (1860)
I suspect you would gain nothing by making a court claim.

Des8, if the bank believed that there was collusion between the payee and a potential fraudster then they can return the cheque after the 2-4-6 timescale....

[leclerc]

Re: Hello Lovely People!

The other observation I have is that if the cheque is from your mother at NatWest then your mother could get a copy of both cheques(or probably does) and the encoding on the back would show when it was received for processing. They would not have anything to give you on a SAR if you are not a customer of the said bank imho.

[des8]

Re: Hello Lovely People!

Des8, if the bank believed that there was collusion between the payee and a potential fraudster then they can return the cheque after the 2-4-6 timescale....

There has been no suggestion of fraud or collusion. I brought that point up early in the thread.
As I read the situation the cheque was paid in by depositor via the post office 05/12/2012
When it did not appear on the account OP queried it and was told " that the funds had been 'entered onto the account as cleared funds due to the time it had taken for them to appear on the account', and were mine to use." That was on 14/12/2012.
I am not sure if cash was withdrawn that day (the seventh) or later.
As it was paid in at thePO it would need 8 days for certainty of fate to kick in, but the op was told by the bank it was her cash!
However in post 45 the OP confirms that on 17th Dec the bank confimed the funds were cleared.

[Nicola Bell]

Re: Hello Lovely People!

hello,

thank you for your comments Leclerc and Des8's explanation. There is no question of fraud, if the bank process had worked properly this situation simply would not have arisen, the cheque would have been deposited on my account, presented to my mother's account and the funds transferred.

I had no idea of how the system worked until the 14th when I spoke to the call centre advisor and I did not believe him when he explained it, (in fact, the rules still seem mad and I cannot understand why the bank does not change their T&Cs). I thought about it and discussed it that evening. On the following day (Saturday 15th) I did some research via Wikipedia etc and found the 2-4-6 rules seemed to back up what the advisor had told me. I used a link to the C&CCCL web site and they have a little automated programme where you put in the relevant dates and it tells you if the money is yours to keep or not. When I put in the dates it said the funds were mine. Not convinced, but I thought I would see if it could be true and if I could transfer the funds, so I went back to the bank account. I found I was able to transfer the Ł35,000 to my other account at the Co-op with no problem. I then tried to transfer them to another account I have at the Nationwide and I found I was able to do that too!! As the transactions were over the weekend, they show as taking place on Monday 17th on the bank statement.

On Monday 17th I saw that there was an overdrawn balance shown on my account and I immediately rang the bank to ask what happened. Whilst on the phone I received a call from the money management team on my mobile. The Money Management person said that there was an overdrawn balance because a cheque had been returned, but he was unable to tell me which cheque he was referring to. He said that he could see that one cheque had definitely cleared and that the other was due to clear on Wednesday the 19th. He was unable to tell me what had happened. I asked for an explanation in writing of what had happened to my account but he refused. I asked to speak to his line manager but he refused, so I didn't get anywhere.

On the 19th I received a letter saying that the first cheque had been returned, enclosing the cheque. Later I received the second cheque saying it had been returned and that is when the overdraft showed. I sent a fax to the bank, which was lost (and only much later found). The bank then started bouncing direct debits etc and so I had to effectively close the account down. In late January I finally received a letter from the bank saying that it had investigated and the money was considered an unauthorised overdraft and they put on the fees and charges, I realised I was out of my depth and so I returned enough to put the account into a Ł0 balance to give time without being under pressure.

I did a lot of research and it seemed to me that there is no legal precedent for this issue (to be found via google or wikipedia anyway). I also found that the C&CCCL is not likely to be unbiased because it is made up solely from members of the banks, it initially told me in writing that the funds were mine to keep but later said that the time doesn't start until the money is shown on the account. The rules in fact are that the 246 doesn't apply at all, but the bank's own rules must be 'clear'. I think that this bank's rules are clear. The C&CCCL website has loads of information about the process and there are many reports available on line about the history and development on the 246 rules. I also read about the physical processes that cheques go through, starting with being delivered to the processing centre, in my case one in Northampton.

I wrote to the post office to see if there was any delay in the post that day and they wrote back to confirm there was no problem with the post, so there was no reason to think there was a delay with the cheque arriving at the processing centre. I read on the C&CCCL website that cheques over Ł500 are pulled out of the automated system and subject to human scrutiny and I think that this cheque should have attracted attention based on their stated criteria. As my mother had a stroke 2 years ago, I write her cheques but she signs them, so 2 handwritings on a cheque is apparently one red flag for the staff at the centre, the shaky signature is apparently another red flat and the large sum involved is another red flag. As it seems that all of these 3 things should cause concern at the clearing centre, I wonder if there was concern leading to delay over how to deal with it there and that was what caused the problem? When the first cheque was stopped and the second taken by me to the bank, I wonder if this re-assured them that it was all genuine and they took the commercial risk of clearing the cheque??

Remember that all the time between the 8th and the 14th the bank refused to check its suspense account or to begin any procedure to look for the cheque. Why would it refuse to do that unless it knew where the cheque was? I have 'lost' a cheque before when I put a wrong digit for the sort code on the paying in slip, (luckily there was no sort code with that number) on that occasion the cheque was put in the suspense account so when I rang the bank they looked for it and found it immediately. Why would they refuse to look for this cheque? This was a very big sum for me and I was naturally anxious to find it, I asked my mum to cancel the cheque the same day the bank asked me to.

I am keen to look at every angle as obviously there is no point in me going to a court if there is an obvious flaw in my case. I have now spent a long time on this and so appreciate any view that can convince me that that I should not win, I have found it interesting both in researching and thinking about this and am very open to opinions about it. The ethical bit would be about what I would do with the money if I were to be successful, but I haven't started to think about that yet.

thanks againg

[Nicola Bell]

Re: Hello Lovely People!

Perhaps I overdid the detail??

[des8]

Re: Hello Lovely People!

Normally we work with a dearth of information, never too much!

I'm hoping Leclerc comes back with his opinion, for even if we disagree it helps to have an alternative constructive view and he has an insider's knowledge of banks. masroll:

However Christmas is fast approaching and peeps are finding they are busy!

[leclerc]

Re: Hello Lovely People!

hello,
I've had a quick look but doesn't seem like anyone has the same issue as me.
My issue is that I took funds from a cheque that had cleared in my account. The cheque bounced - both the bank and I knew that it would when they cleared the cheque but they cleared it anyway as the 6 days were up and a replacement cheque was on its way. However, the replacement cheque bounced too and they then wanted the money back from the first cheque and so helped themselves to it from my account leaving me overdrawn. Am I entitled to keep the funds, (which would be a windfall for me) as the cheque was cleared and the money was legally mine? If yes, then how can I enforce this? Any thoughts?????

Nicola the first post you made was the one that caught my attention because of the bit I will highlight. Your later post appears to say that even though you knew that the cheque would bounce you moved the funds around various places. To me, that is fraud ie moving funds you knew would not be there.

However, the second point, I am interested in is about the second cheque bouncing and why?

Another point that interests me is the date the the cheques were presented for payment? I have to admit one thing, I do not understand why the post office accepts cheques from one bank for another. I was not aware that they could accept them. I know when I worked in the bank we could accept RBS account holders money but that it did take time to appear in their account.

You've said the FOS have offered Ł500.00 compensation, is that right? What is their reasoning? I am still trying to understand what has happened and how it has happened and who, if anyone, is at fault? At the moment, I'm still not sure.

Having said that, we are nearing Christmas which is a busy time of year and over the next week or so, I will probably revisit the thread and recheck everything to ensure I understand it myself and to check terms and conditions of accounts, etc ,etc

[Nicola Bell]

Re: Hello Lovely People!

Thank you Des8 and Leclerc,

I appreciate that this is a busy time of the year and I’m glad that I didn’t just overwhelm you.

I knew my mother had stopped the first cheque as I took her to the bank on the 13^th to do that in person. When the cheque appeared the next day on the account I rang the bank and when the bank told me that it had cleared because of the 6-day rules, as you know, I did not believe it initially. However, as I say the adviser was very insistent.

My mother lives with me and was very aware during the week of the Co-operative Bank’s failures when I had been chasing the bank over the whereabouts of the original cheque. For example, one advisor told me that if I had put the wrong sort code on the paying-in slip that the cheque would be put in the bin!! Clearly nonsense. There were many examples of such misinformation. The bank told me on the 14^th that both cheques would be presented to her bank and when I told her that she decided to cancel the second cheque too because of the incompetence at the bank that she was aware of during the week.

As the call centre advisor had told me that the cheque had been put on the account as cleared funds due to the time it had taken to hit the account, the next day I started to do my research. I found that it appeared that this was true, irrespective of anything else – including common sense - the rules say that 6 days after deposit the funds are mine to keep. It was more than 7 days by this point and so the point of no return had passed. The second cheque was irrelevant; the bank had cleared the first cheque, so, irrational though it seemed to me, I tested it by seeing if I could remove the funds.

I only moved the funds after I had done the research that began to encourage me that the call centre advisor had been correct – ironically it seems he is the only one that the bank will be re-training! When I moved the funds I was aware that the second cheque would bounce but I thought it possible that the first cheque had actually cleared and that the funds were mine and available to use. There is no real relationship between the two cheques, I did nothing with the second cheque, I only moved the funds from the first when they had cleared and I was able to do so in line with the account rules.

If the relevant start date is the date that the cheque appears on the account then the 14^th would have been day one, however the bank would not let funds be withdrawn on day 1, it cannot have been day 1 so the funds must have been cleared.

I don’t know the meaning of the terminology of ‘presented for payment’, I think both cheques have a printed date on the back of the 13^th December but I don’t know the importance of that date.

With regard to the post office, the cheque is not paid into a post office account, the post office simply receives a sealed envelope provided by my bank, I add my bank sort code and account number on the front of the envelope and the envelope is put in the bag for collection by the courier, the post office has no idea of what is inside and no money goes through its accounts, it just receives the sealed envelope and gives me a receipt. The post office will presumably have a service level agreement with all of the banks that it accepts ‘payments’ from.

Yes the Financial Ombudsman Service offered Ł500 compensation for the ‘inconvenience and trouble’ due to the catalogue of errors that the bank made, (e.g. throwing the cheque in the bin as above). They did not award the proceeds of the cheque. The ombudsman decision is under reference:

DRN8243330 25^th September 2014 Mr F and Ms M

The nub of the decision is:

“I am satisfied that the cheque in
question did not reach The Co-operative Bank until 14 December as a result of delays that
were outside of its control. The cheque could have easily arrived a day later. Mr F and
Ms M’s argument means a cheque could clear under the “certainty of fate” principle before
The Co-operative Bank had even received it, let alone begun the clearing process. More
importantly, I am satisfied that Mr F and Ms M had arranged for the cheque to be cancelled
before it had even been received by The Co-operative Bank. In the circumstances, I cannot
agree with them that the cheque had cleared under the “certainty of fate” principle. I remain
of the view that 14 December was day two of the cheque clearing cycle”.

I agree with the logic of this, i.e. it is clearly not sensible for a bank to have a policy that means that it is obliged to honour a cheque that it may never receive. However, the way to deal with this is not to simply override the 6-day principle, clearly the bank needs to change its Terms and Conditions so that the terms reflect the reality. In addition, it would make sense for the bank to give some explanation of what happened, but there is none. There is no reason to believe that the bank did not have the cheque.

The other point though is that there is no evidence of any delays that the ombudsman refers to. In fact the ombudsman refused to check the evidence that might be available, the ombudsman refused to check with the processing centre when the cheque arrived there. As far as I am aware, even it were relevant, there is no evidence that the cheque was delayed.

The ombudsman also says that he is satisfied the cheque did not reach the Co-operative Bank until 14 December, though the cheque is marked the 13^th. The ombudsman also says that the cheque could easily have arrived a day later than it showed on the account – where is the logic in that?

Anyway, enough ranting from me for now,

Nicola

[des8]

Re: Hello Lovely People!

I think one problem with the ombudsman's decision is that it does not take into account the position of the PO .
From the Co-op's T&C it is clear that the PO is acting as an agent of the bank, and that receipt by the PO is the start date of the six day rule, which actually becomes an eight day rule.
The T&Cs don't make mention of delays, within or without the Bank's control.
Others with knowledge of agency law might like to comment, but it seems to me that receipt by PO kick starts the process, not receipt by the bank itself.

Also bear in mind the "competence" of the adjudicator who examined your case. He may not be as qualified as you'd expect and so not grasped your arguments.
Presumably you did not use professional advice when complaining (the service discourages this) and you did not see the Bank's evidence, though in all probability the Bank saw your
submission before making their response.

As I have intimated previously IMO you have an arguable case, but whether it is winnable is another thing.

[Nicola Bell]

Re: Hello Lovely People!

hi Des 8,

I think you're right on all counts, I spoke to the om and asked for a hearing as it is complicated and he decided it on an issue that had not been discussed before so I had no chance to comment. He said his job is not to take a legal line but a 'reasonable' one and I can see the problem he has addressed, but it is not the right problem, hey ho :christmas3:

[Nicola Bell]

Re: Hello Lovely People!

Des8,

I've re-read your last comment, can I ask what you mean by the 6 day rule becomes an 8 day rule? Using the Om's logic it would presumably become an indeterminate time rule, or did you mean something else?

NB

[leclerc]

Re: Hello Lovely People!

Nicola, when we talk about 6 days we are talking about working days, ie a cheque paid in on Monday is day one so Thursday is day 4 and the following Monday is day 6 and the wording is the end of the day so the following Tuesday(which is the 9th straight day incl weekends, the money is cleared for fate with one exception which is fraud. The bank must believe you to be in collusion with the fraudster on this exception).

My personal opinion, is the the FOS have awarded you the maximum award that they can under time and inconvenience and that the bankworker's you spoke with are incompetent. You do not throw a cheque in the bin if the sort code and account number is wrong, that is utter nonsense. The information that the bank gave was pretty poor which is why I think the award has been given. You have no right to the full funds as both cheques were stopped and to believe you do is nonsense.

[Amethyst]

Re: Hello Lovely People!

Co-Op
Cheques deposited after 4:30 or via the Post Office will be subject to one day's delay.
For postal deposits, T is the day the cheque is received by the financial institution and credited to the account.

RBS say 2 days. Other banks say 1 to 2 days.

ref Des

From the Co-op's T&C it is clear that the PO is acting as an agent of the bank, and that receipt by the PO is the start date of the six day rule, which actually becomes an eight day rule.

THEN you add your weekend/s in.

Personally I make it that the bank were fine removing the money until the end of Monday 17th Dec.

That is JUST MY OPINION.

[Nicola Bell]

Re: Hello Lovely People!

Hello Leclerc,

so am I right in thinking that you think that Des8's reference to 8 days means 8 calendar days and the reference to 6 days is just the 6 working days?

Do you think it likely that the bank would not tell the Ombudsman (let alone the police) if they were alleging fraud? I don't know what makes you think that fraud could possibly be involved. This set of circumstances could not possibly be created by me, it is the bank not meeting its own T&Cs that has created. It was the bank not chasing the cheque, it was the bank clearing the cheque etc. that has created this seemingly unique set of circumstances.

I agree that throwing the cheque in the bin is nonsense, (but I have the copy of the recording), but during the week, I was also told other nonsense, so when I was told about that the funds were cleared on a cheque that would bounce, that seemed to me to be similar nonsense. Please bear in mind that the bank is, in my opinion, deliberately withholding the recording of the final call as it so strongly supports my case. I told them it was nonsense, I asked how it would apply if it were for a million and they said it was just the same. A fraudster would presumably have gone straight to the bank, removed the cash and closed the account on the 14th.

However, the facts are the facts and you have not suggested any legal base to your view, the fact that it seems ridiculous does not make it a legal truth, so unless you do have some proper base to your view you are not bringing anything useful to the discussion, so I will leave it until you can.