Our investigation

The bank was required to act on the notice of receivership.  However, putting an individual, as opposed to a company, into receivership is rare and significant event. It leaves an individual with no access to funds or operational bank accounts, so a bank should take particular care to ensure it acts fairly and reasonably in such circumstances. A fair and reasonable approach would be to place a block on a customer's accounts while reviewing the situation and obtaining any relevant documentation or court orders. We would also expect a bank to promptly notify a customer of its actions.

We found the bank did act fairly and reasonably when told of Lloyd’s receivership. It did not verify the basis on which the receivers were appointed, despite the fact its usual process required this. The bank also transferred all of Lloyd’s money to the receivers very shortly after receiving the notice and without telling him it had done so.

We also found the bank’s subsequent dealings with Lloyd were neither fair nor reasonable. He learned about the bank's actions only when he called the bank to find out why there was no money in his account. The staff member he spoke with initially gave him incorrect information, suggesting it was a transaction error.  It was only when Lloyd maintained that this was inconsistent with the disappearance of all his funds that the staff member discovered his receivership and the steps taken by the bank and shared this information with Lloyd.   

Lloyd was directed to deal with the receivers, including when he asked the bank to supply him a copy of the receivership notice that the bank had acted on. When Lloyd raised concerns about being unable to access his benefit payments the bank ought to have recognised he was in particularly vulnerable circumstances and responded appropriately.  However, it failed to do so and again referred him back to the receivers. The bank also failed to respond to his later complaint and incorrectly told him it had acted on a court order.

We shared our concerns with the bank. It maintained that it had followed its usual process for receiverships but acknowledged that it failed to take account of the fact that it was an individual being placed into receivership. It offered Lloyd $3,000 to settle the matter in full and final settlement of his complaint. We found that this was an appropriate remedy for the bank's wrongdoing and recommended accept the bank's offer.

Outcome

The bank and Lloyd agreed with our recommendation, and the bank paid Lloyd $3,000.