| | | Effective PR

Where "first world" banks can learn from developing countries.

BIScom Subsection: 
Editorial Staff

The extraordinary case of an elderly man who was forced into expensive legal proceedings to recover almost GBP200,000 accidentally paid into the wrong bank account could have been so easily avoided if UK banks operated, under the auspices of regulators, a simple cross-check of information. It happens elsewhere.

The story of the pensioner is here: https://www.express.co.uk/fina...

In summary, seventy-four year old Peter Teich was expecting to receive a share of in inheritance. His sister's share arrived; his did not. Mr Teich had written down his account details and got it slightly wrong. In the UK, branches all have a "sort code" and it is possible for the same account number to be used at different branches. But if the account number is present related to a specific sort code, that passes checks. It was a pure coincidence that the correct account number was for an account at a different branch with the accidentally incorrect sort code.

In these days of ultra-high definition of account information for e.g. international transfers, it is remarkable that, for domestic deposits and transfers, the name of the recipient is not required.

In Malaysia, for example, when setting up a new payee in internet banking, there is a second step where the creation of the payee record is confirmed by dual authentication. Next, when a payment is made, the account number and name are checked and, if they don't match, the payment is rejected. How long does this take? It's as near to instant as is practicable.

There is clearly no technical reason why it cannot be done in the UK. And bank secrecy laws in Malaysia are considerably stronger than those in the UK yet there was sufficient power in the central bank to make such a thing happen - but only at the stage where a payment is to be made which would reduce (but not eliminate) the risk of fishing (with an f) for bank account information.

The story says that Mr Teich ran up bills of some GBP46,000 to recover the money. Barclays, the bank concerned, has agreed to refund the costs in full and to make an ex gratia payment of GBP750 for his inconvenience. The bank claims that it could not reveal the identity of the customer who had received the money and that it was not the bank's responsibility because it arose from Mr Teich's own mistake. We pass no comment on the bank's attitude: it speaks for itself. Weasel words such as " It is evident that on this occasion we have failed to meet the high standards that Mr Teich can expect to receive from Barclays, and for this, we have offered our sincere apologies." Hm.. the bank's initial response? To offer him GBP25.

He has now, several months later, got his money back and has no personal liability for the legal fees.

---------------- Advertising ---------------- | | | --------------------------------------