Case Notes
Search results
Elderly customer – daughter authorised to operate account – bank stopped access when concerned about proposed transactions – refusal to meet and discuss – customer unnecessarily distressed
Mrs F was an authorised signatory for the cheque account belonging to her elderly father, Mr C, and also held, jointly with her sister, a power of attorney to manage his affairs. In February 2006 the proceeds of the sale of Mr C’s property were paid into his cheque account.
Mrs F’s husband, also a customer of the bank, mentioned to his relationship manager at a different branch of the same bank that Mrs F intended to transfer funds from Mr C’s cheque account to other accounts to meet legally binding commitments already arranged by Mr C. He confirmed that Mrs F held an enduring power of attorney for her father. A meeting between Mrs F and the bank was arranged for the following day.
On reflection the relationship manager had some concerns arising from the discussion with Mr F about the proposed transactions on Mr C’s account, and went to her branch manager for advice. The latter was unaware that Mrs F was an authorised signatory on the account, but noted that Mr F had no authority over the account in question. He decided that it was necessary to act to protect Mr C’s account by putting a stop on the accounts to prevent access to any of Mr C’s funds.
A telephone call was made to Mrs F to advise her of the stop on the accounts and to cancel the following day’s meeting, thus allowing the bank time to seek advice and consider its position. Subsequently the bank agreed to transfer the bulk of the funds from the cheque account to an investment account and to remove the stop on the cheque account to allow Mr C’s everyday expenses to be met. It was only after the intervention of Mr C’s lawyer that the balance of the funds was released.
When Mrs F asked the bank for an explanation of the action it had taken, the bank wrote directly to Mr C. Mrs F took exception to that course of action, and complained that some of the information contained in the bank’s letter to her father was wrong.
I acknowledged the bank’s right and responsibility to take action as deemed necessary to protect the interests of its customer, but was concerned that the action taken in this case was not appropriate in the circumstances. The bank had emphasised that Mr F had no authority to act on Mr C’s accounts; there was no suggestion that he intended to do so. The bank contended that Mrs F intended to act under the power of attorney (which required her and her sister to act jointly); again there was nothing to suggest she actually intended to do so. She did not need to use the power of attorney, as she was entitled to operate the account anyway.
If the bank was concerned that funds could be removed from the account overnight, it was right to put a temporary hold on it, although its decision to cancel the meeting with Mrs F on the following day was difficult to understand. The obvious course of action would have been to meet with the person authorised to make transactions on Mr C’s accounts. Nothing would have been lost by meeting with Mrs F as arranged. If the bank still had concerns after the meeting, it would have been able to continue to block the account. It was possible that the bank’s concerns could have been resolved or agreement reached on a way forward. Instead, the involvement of Mr C’s solicitor was required before the funds were released.
While I accepted the bank’s right to contact any of its customers directly to discuss and explain any concerns about the operation of an account, some of the information contained in the bank’s letter to Mr C was inaccurate. Moreover, Mr C is elderly and infirm, and had asked his daughter, Mrs F, to manage the accounts on his behalf. The inaccurate information contained in the bank’s letter would have been likely to confuse him and cause him unnecessary worry and stress of exactly the kind that the arrangements had been put in place to avoid.
I recommended that the bank meet a proportion of the legal costs incurred by Mr C and also compensate him for the stress caused by the inaccurate information in its letter to him. My recommendation was accepted.