In April, Hayden's bank asked the bank to return the three payments, which totalled $56,000. The bank said no. It argued that no funds were available because the stopped account was overdrawn. When Hayden complained, the bank took more than two months to respond. It then said the payments had reduced the company's overdraft and could not be returned.

Hayden complained that the bank had wrongly kept the money. He wanted it returned and asked for what he described as a penalty.

Our investigation

Hayden said both accounts were saved in his internet banking and that he had selected the wrong account each time because he was under stress at the time. The bank suggested Hayden either meant to pay the stopped account or was induced to do so by the company. It pointed to the repeated payments and to Hayden's role as a director. We found no evidence Hayden intended the payments to reduce the company's debt. The company and Hayden had promptly asked the bank to move the first payment to the new account, and the payments referred to wages. We considered all three were genuine mistaken payments.

Interbank payment rules require a bank that receives a recovery request to ask its customer to consent to the return. This must happen by the end of the next business day unless the two banks agree otherwise. The bank did not ask the company. The money had not been withdrawn, and the company had not changed its position because of the payments. The account was overdrawn before the payments, so returning them would only have put it back where it was. The bank also said it could have used any credit in the new account to reduce the debt on the stopped account. In our view, this possible course of action concerned the bank's rights against its own customer. Those rights did not give it a basis to keep money paid by a customer of another bank.

We recommended the bank should return the money. We also recommended it pay him $1,500 for the inconvenience and disruption of being without the money for over six months, and also for the bank's delay in responding to his complaint.

Outcome

The bank and Hayden agreed with our recommendation, and the bank returned the money and paid him $1,500.