Can the bank ‘UNCLEAR’ cleared funds?

[Nicola Bell]

hello,
I'm new to the forum. I read about one of the successful court cases in the paper and thought I'd take a look at your site.
I do have an issue relating to the 6 days and cheque clearing timescales but I'll come back to that after I've had a little look at what you've already go going on,
thanks for letting me in!
best wishes,
Nicola

[Nicola Bell]

Hi,

you too Des8, thanks for your comment and glad to see you are still 'beagling' away helping others.
Yes, you're right, the risk was partly abuse of process and 'res judicata'. However, I really think it would have come down to the opinion of the judge on the day as I had been able to show that the sum I claimed in the small claims was already clearly mine and the bank had no right to take it and the second amount would have been the 'mine by default' money. Obviously the cost of trying to win this (in my view cast-iron ha ha) case was that it was too big an expense to risk from the start, the banks only risk customers' money.
Still, good one to have tested it and maybe it will be useful for someone else who has a similar case and where the sum involved is less than £10,000 so small claims can be used.
NB

[des8]

Hi and nice to hear from you again.

IMO going for a second bite of the cherry would have been fraught with risk as it may well have been regarded as an abuse of process.
A judge, assessing and balancing all the circumstances of the case. could well regard the second claim as being something which should have been raised in the original claim.
After all, the second case would be based on identical arguments and facts as the first, saving only the amount claimed.
The risk was not in the soundness of your original claim (altho' I seem to recall there were many doubters!) but the risk of it being struck out and damages awarded against you.

But what do I know compared to a lawyer?

[Nicola Bell]

As a postscript for this case, I did get legal advice that it would be worth pursuing the £26,000 that was not included in the original claim. However, the 'ethical' co-op bank said they would seek punitive charges ("Should your client decide to issue the Proposed claim we put you on notice that the bank’s costs will be sought against your clients on the more punitive indemnity basis") and the lawyers said that it could cost £100,000 if I lost. Whilst I was confident of the case my long-suffering hubby was not so I withdrew my case. However, it was an interesting journey and thank you to Legal Beagles.

[MIKE770]

Re: Can the bank ‘UNCLEAR’ cleared funds?

co-op gobbledygook!

[des8]

Re: Can the bank ‘UNCLEAR’ cleared funds?

"The bank does not agree with the judgment and believes it is wrong in law,” says a Co-op spokesperson. "

If they are so convinced why did they not appeal (over the judges refusal to allow an appeal)? commercial decision,or concern that a lost appeal would produce a precedent?

[Kati]

Re: Can the bank ‘UNCLEAR’ cleared funds?

Annoyingly it won't let you read the Observer article without registering, but here's the link to the pressreader version

http://www.pressreader.com/uk/the-ob...82574492570432

[Nicola Bell]

Re: Can the bank ‘UNCLEAR’ cleared funds?

I can't see a link as such but I googled 'Observer Co-op cheque-mate' and you can access the article, also printed below
Cheque-mate as Co-op bank takes rap for £35,000 deposit mix-up

‘I hope other people, obliged to wait for their cheques to clear, can take heart from the court’s decision’
In 2013 I published a letter from CH of Christchurch in Dorset who reckoned she was entitled to keep £35,000 from a cheque that was cancelled eight days after she had paid it in. The bank, the Co-operative, disagreed and, in spite of its own terms and conditions, reclaimed the payment from her account.
CH appealed to the Financial Ombudsman Service, which awarded her £500 because of the Co-op’s delays and misinformation. However, the ombudsman declared that, despite those terms and conditions, it would not be “reasonable” for her to keep the full £35,000.
CH took her case to the small claims court and, in a ruling that has repercussions for banks and consumers, she won. The argument centered on the little-known and whimsically named rule, “certainty of fate”, introduced by the Office of Fair Trading in 2007.
It allows customers to keep the proceeds of a cheque once six working days have passed since it was paid in, even if that cheque bounces. Up to then, the bank can debit a deposit if the cheque fails to clear.
The rule was designed to protect customers from fraudulent transactions, but this case shows that it can also lead to customers reaping huge rewards from a bank’s incompetence.
CH had deposited a cheque for £35,000 made out by her mother on 5 December 2012. When it had not appeared in her account eight days later, the bank admitted that it did not know where it was. Concerned it had gone astray, on 13 December the mother cancelled the original cheque and CH paid in a replacement. The next day two credits of £35,000 showed on the account.
The bank confirmed that one of the cheques had cleared, but it couldn’t be certain which one. However, it assured CH, over several phone calls, that the first £35,000 credit was hers to keep under the “certainty of fate principle”, but that both sums would be debited from her mother’s account.
CH therefore advised her mother to cancel the second cheque so that she would only be liable for one payment, and withdrew the first sum.

Two days later the bank changed its mind about honouring the first cheque and debited £35,000 from the account, claiming “unjust enrichment” and, as CH wrote at the time, “applying massive fees for what it now called an unauthorised overdraft”.
She discovered she was overdrawn by £26,154.
The Co-op, while still insisting that one of the cheques had cleared, reclaimed the £35,000 which she had already withdrawn by helping itself to £9,000 of savings left in the account and imposing fees and interest for the “unauthorised” overdraft to cover the balance. After CH contacted The
Observer the Co-op repaid the fees and interest and awarded her £150 in goodwill, increased by the ombudsman to £500.
CH decided to apply to the small claims court for her £9,000 of savings that the bank had taken, although given that she had already withdrawn the £35,000 she was not out of pocket.
“Banks make the rules and the rules are clear that I was entitled to keep the money under the ‘certainty of fate’ principle,” she says. “It seems that banks manipulate their own rules to avoid losses made by their inefficiency.”
The judge at Bournemouth county court agreed. Not only has he awarded the £9,000, he concluded that she would have been entitled under the Co-ops’ own terms and conditions to keep the entire £35,000.
The Co-op was refused leave to appeal. Since then, CH has asked the Co-op for the balance of the £35,000 under the six- day rule, but has been refused. “The bank does not agree with the judgment and believes it is wrong in law,” says a Co-op spokesperson. “However, the bank has paid the amount awarded by the court and will not be offering any further sums and considers the matter closed.”

CH says she pursued the matter as a point of principle. “I hope that other people who have been obliged to wait, at their bank’s pleasure, for their cheques to be cleared whilst being told a lot of nonsense about clearing times can now take heart from the court’s decision.”


regards,
NB/CH

- - - Updated - - -

Hi,
I've learnt that to comment you have to access 'Pressreader' via an app but, frustratingly, I have no device to enable me to do that. I've tried to post a comment on the Observer but I can't see if it has been added to the comments or not, will keep trying
NB

[EXC]

Re: Can the bank ‘UNCLEAR’ cleared funds?

I couldn't find it online, can you post a link?

[Nicola Bell]

Re: Can the bank ‘UNCLEAR’ cleared funds?

Thanks for circulating that EXC,
I have tried to add a comment to the Observer article, but it isn't clear how to do it.
There are a number of factual errors and I note that the Observer say the bank refunded costs after its intervention, but to be fair to the bank, they had refunded the costs before the Observer covered the story,
regards
NB

[EXC]

Re: Can the bank ‘UNCLEAR’ cleared funds?

Article.

[Nicola Bell]

Re: Can the bank ‘UNCLEAR’ cleared funds?

Hi,

just in case there is any interest still in this issue, I wanted to let you beagles know that the issue may be raised in Sunday's observer in the Anna Tims consumer section as I have given an update following the court case. Not quite sure what they will write though....

Out of interest, the Co-op now says on it's website that customers should allow 15 days for cheques to appear on the account before the 6 days start counting but the actual terms and conditions on current accounts say:

If you pay a cheque in at a Post Office

®
it will normally take two business days for us to receive it.

The above timings will begin when we receive the cheque.

Given that the bank is obliged under the banking code to be 'clear' on the terms that will apply when payments are made via the post office, I think the co-op has a bit of the road to travel yet.

best wishes,

Nicola

[Nicola Bell]

Re: Can the bank ‘UNCLEAR’ cleared funds?

Hi Amethyst,

thanks very much, just to re-assure you, I didn't take any comments as negative, I am aware that you need to counsel caution and the comments that challenged my view were invaluable to show me what other people thought of the case. Luckily I was in a position to make the challenge without it ruining me if I had lost and I was lucky enough to get a very interested and helpful 'beagle' called Des8, without whom it would not have happened, so thanks to him (and the site for finding him for me). I was lucky enough to have a considerate judge too.

I haven't had anything from the court yet, I didn't even think about that to be honest, no doubt that will come in due course if that is the normal procedure,

best wishes,

Nicola

[Amethyst]

Re: Can the bank ‘UNCLEAR’ cleared funds?

Wonderful News Nicola Well done for pushing forwards with it despite our ( my ) negative arguments xxxxxxxxx Definitely job well done.

Have you received a copy of the judgment from the court yet?

[Nicola Bell]

Re: Can the bank ‘UNCLEAR’ cleared funds?

Hi,

just to let you know that the bank did not appeal, they have paid the amount claimed (and court costs and interest!), so job done. Thanks so much to everyone for their comments and time spent on this, I have appreciated it all and enjoyed the challenge.
I will be writing to the FoS, as suggested by Des8 and hope that they add it to their collective wisdom to influence decisions to others making similar claims,

thanks again,

Nicola xxx