An honest mistake

A woman doing some online research about her health problem.
A woman doing some online research about her health problem.

So, you’ve gone online and transferred some cash to a friend to settle a debt.

But a while later, that friend says they never received the money.

Assuming they’re not out to scam you, you check the account details they gave you... and then realise with horror that you’ve made a mistake in typing them. Your money has flown not into their account but into that of a stranger.

So, what happens next? Well, in the past, the answer would vary from bank to bank, and in some cases the process of investigation could take months.

But a new voluntary code is being adopted by several banks and building societies, which should give people more certainty about the help they can get in clawing their cash back, should they accidentally send money to the wrong bank account.

The code will not guarantee you’ll be able to get your money back, because it has to balance the interests of the recipient in cases where people were genuinely entitled to receive the money. But it does mean you should know where you stand more quickly, which will then help you if you want to take your complaint further.

Under the code, which is being overseen by the Payments Council, as soon as you tell your bank or building society you have made a mistake, they should take action within two working days.

If the bank cannot reclaim the funds immediately, for example if the payment recipient disputes the return, it will investigate further and the customer will be told within a maximum of 20 working days what the outcome is.

The banks and building societies that have signed up to the code are Lloyds Banking Group, HSBC, Nationwide Building Society, Barclays, Santander, the Co-operative Bank, NatWest, Clydesdale Bank, Coventry Building Society, Coutts, Tesco Bank, the Royal Bank of Scotland, Ulster Bank and Adam & Company.

They have all pledged to incorporate the code by the end of May and more banks are expected to come on board in the coming months.

As online banking and mobile payments continue to grow, more of us are keying in bank account numbers and sort codes ourselves, which increases the danger that the money could end up in the wrong place. Sometimes these transactions bounce, but often the account number entered can actually belong to someone.

Payments that have been sent cannot be automatically reversed — and what you also may not realise is that payments are not cross-checked to make sure the recipient’s name is correct. The only information used to address payments is the sort code and the account number.

A spokeswoman for the Payments Council says: “Although more and more of us are making electronic payments every day and the vast majority of these are processed with no issue, unfortunately many people don’t realise that payments are processed purely on the sort code and account number rather than the recipient’s name — which is why it’s vitally important to double check the digits before pressing send.”

If you aren’t happy with the way your bank has tried to get your money back, you can take your case to the Financial Ombudsman Service. Last year, this service dealt with around 100 cases of “misapplied credit” and it expects consumer enquiries to rise as more people take to their mobile phones to transfer their cash.

Generally, it would expect banks to do all they reasonably can to help a customer to get their money back — but it is also important that people understand banks can’t just go fishing into other people’s accounts. In cases like this, your bank should get in touch with the person who has received the funds and explain what has happened.

If the money has stayed within the same bank, and the recipient confirms they weren’t expecting the money, the situation should be relatively straightforward and the funds can be withdrawn and returned.

But, if the transfer has happened between two different banks, this can add more complications - and further difficulties arise if the recipient has already spent the money.

If you find yourself in this situation, it’s best to act quickly and tell your bank as soon as you discover a mistake.