The power to settle financial complaints.
The power to settle financial complaints.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.
February 2003
In last month’s issue, we outlined our approach to disputes about cash paid in to bank accounts. This month, we look at complaints about cash withdrawals. Normally in these complaints, the customer has queried a cash withdrawal from their account, made either over the counter or via a cash machine.
Feelings can run high in these disputes. Customers are often angry that someone appears to have access to their account and – if we fail to uphold their complaint – they can feel very aggrieved. They may assume we have concluded that they acted dishonestly. This is not normally what happens.
We will often have to reach a decision on the balance of probabilities – in other words, on the basis of what we think is most likely to have happened, given the evidence. Sometimes we may conclude, on the balance of probabilities, that the customer did withdraw the money, but then forgot all about it. Memory can play tricks, and the customer may have forgotten the withdrawal – especially if it was made at a time when the customer was particularly busy, or if there was a lengthy period of time before the customer queried the withdrawal.
Factors we will look at when dealing with disputes about cash withdrawals will differ slightly depending how the withdrawal was made.
In general terms, it is up to the firm to satisfy us that it had the customer’s authority for the withdrawal. But where the customer queries the withdrawal a long time after it was made, the firm may well no longer have the withdrawal slip. That does not mean we will automatically find in the customer’s favour. In such cases we decide, in the light of the information and evidence that we have, the likelihood of the customer having made or authorised the withdrawal. In some cases, although there is a signed withdrawal slip, the customer does not accept that the signature is genuine. Where this happens, we are likely to have to decide whether the signature is a forgery.
When we look into disputed cash withdrawals, we may need to ask the customer details of everything they were doing around the time of the withdrawal, in order to build up a picture of all the circumstances. We may also ask for details of the customer’s wider financial position. Some customers resent this, feeling that their honesty is in question. But in order to consider a case properly, we do have to establish the facts; we cannot simply take the word of either the customer or the firm.
We need, too, to consider the possibility of dishonesty by the firm’s staff and we may make enquiries about the history of individuals or of a particular branch.
Customers who are certain that they did not make the disputed withdrawal often hope that video footage from the branch security cameras will settle matters. Such footage is not always available, particularly if some time has elapsed since the disputed withdrawal took place. And its main purpose is not to provide a record of customer transactions. However, where it is available, video footage can sometimes be helpful.
Disputed withdrawals from the accounts of elderly — or otherwise vulnerable — customers can be especially complex to deal with, and may involve decisions about what the branch staff knew of the customer’s circumstances. Where a carer or helper is alleged to have made unauthorised withdrawals, we may have to consider whether the money was used for the customer’s benefit (for example, to pay the customer’s bills).
Occasionally, we may decide that the complaint is more suitable for consideration by a court if, perhaps, the disputed withdrawal is part of a wider dispute between joint account holders or involves third parties, and cannot fairly be decided on its own.
When a customer withdraws money from a cash machine, the machine produces an electronic audit trail. This shows the card and personal identification number (PIN) used to make the withdrawal. But the bank has no signed cheque or slip authorising the withdrawal, as it would have if the transaction was carried out over the counter.
The audit trail will also record other information which helps us build up a picture of the circumstances in which the withdrawal was made.
Customers who dispute cash-machine withdrawals often say that thieves must have used information from discarded mini-statements or withdrawal receipts to construct a "duplicate" card and use it in the cash machine. However, in our experience, thieves can only get into an account through a cash machine if they have had access to the genuine card and they know the associated PIN.
When we look into disputed withdrawals from cash machines, we will question the customer about his or her movements around the time of the disputed withdrawal. We will also ask how and when the customer usually withdraws money. Where relevant, we will check if the firm has any record of the card having been reported lost or stolen.
In some circumstances, the customer claims never to have received the card used for the withdrawal. Where this happens, we make enquiries of both the customer and the firm to help us establish the facts.
Having built up a picture of the circumstances in which the disputed withdrawal was made, we then need to decide the extent to which the customer is liable for the amount withdrawn, if at all. We do this by considering:
In looking at these matters, we may have to decide whether the customer was "grossly negligent". We consider each case individually, in the light of its particular facts and circumstances. But we view gross negligence as being more than carelessness – and bordering on recklessness. The Banking Code says that it is for the firm to prove gross negligence, not for the customer to disprove it.
£1,500 was withdrawn in cash from Mr B’s savings account. He said that he did not make or authorise the withdrawal, and that he had not been into the firm’s branch for over a year.
The firm had a signed withdrawal slip authorising the transaction. It said that the signature was genuine and that a staff member who knew Mr B had seen him sign the slip. The firm also said that Mr B had carried out other transactions at the branch during that year.
complaint rejected
The signature on the withdrawal slip looked like Mr B’s,
and the member of staff who witnessed it gave a clear statement.
Significantly, Mr B had written to the firm complaining
about other events he said had taken place in the branch
during the year in question. So he was clearly mistaken
in saying he had not visited the branch for a year. We therefore
rejected his complaint.
Mr T said that he paid £2,000 into his passbook account. The firm pointed out that his passbook showed he had withdrawn £2,000, not paid it in, and it produced the withdrawal slip he had signed.
Mr T accepted that he had signed the withdrawal slip. But he said the cashier had covered up the heading on the slip that showed the word ‘withdrawal’, so he had not realised it was not a paying-in slip. Mr T said that because the entry in his passbook had been misaligned, he had not realised for some while that the transaction was entered as a withdrawal.
complaint rejected
It was not only the heading on the signed form that identified
it as a withdrawal form. The text, which Mr T signed, confirmed
that he wanted to withdraw the money and acknowledged receipt
of it. And, though the passbook entry was misaligned, the
resulting balance was clearly £2,000 less than it
had been before the transaction. There were also significant
discrepancies between what Mr T said in writing to the firm
and what he said to us.
We therefore rejected his complaint.
Mr K, who frequently visits Greece to see family members, disputed three cash withdrawals made in Greece with his card, issued by the firm in the UK. Two of the withdrawals were from cash machines. The other was made over the counter in a bank.
Mr K said that he was in the UK at the time of the withdrawals and that his card never left his possession. The firm insisted that the cash-machine withdrawals had been made using Mr K’s card and PIN. And it said that before the over-the-counter withdrawal was made, the Greek bank had inspected and noted the number of Mr K’s passport.
complaint rejected
We checked the cash-machine records and the branch withdrawal
slip. All of these appeared to be in order, and the signature
on the withdrawal slip appeared to be authentic. Mr K was
unable to produce the passport that he had at the time of
the disputed withdrawals; he said he had lost it and had
subsequently obtained a duplicate.
We rejected the complaint and considered that the firm was entitled to debit Mr K’s account with the withdrawals.
Mr N disputed various cash-machine withdrawals from his account. He said that he did not make or authorise the withdrawals and had been at home at the time they were made.
The firm said the withdrawals had been made with the correct PIN and it considered Mr N to have been "grossly negligent" in allowing someone to discover his number. However, Mr N insisted that no one else could have known the number and that he had not written it down.
complaint upheld
The Banking Code says that it is for the firm to prove "gross
negligence", not for the customer to disprove it. We
did not consider that the firm had proved gross negligence
in this case. The circumstances and the nature of the withdrawals
led us to believe that the withdrawals had been made without
Mr N’s authority by a family member – who would
have been able to observe him entering his PIN for previous
cash-machine withdrawals.
Mrs E complained to the firm about a £200 cash withdrawal that she insisted she had never made. She said she had withdrawn £100 from the same cash machine the day before the disputed withdrawal. However, she said that her husband could confirm that they had been out of town on the day the £200 was withdrawn, so she could not have visited the cash machine.
complaint rejected
The film from the firm’s security camera clearly showed
Mrs E visiting the cash machine on two consecutive days,
including a visit at the time of the disputed withdrawal.
We did not accept Mrs E’s contention that the film
was "falsified" and we rejected her complaint.
Mr S, who has homes in London and Edinburgh, disputed three cash-machine withdrawals made in Scotland on successive days. These withdrawals increased by £600 the amount he owed the firm.
Mr S said he could not have made these withdrawals since he had been based in London on the days in question and had left the card in his flat in Edinburgh.
The firm said that since the correct PIN had been used for each withdrawal, Mr S must have either made the withdrawals himself, or been grossly negligent by leaving a note of his PIN with the card. Mr S angrily denied this, saying he had destroyed the notification of his PIN some months earlier, as soon as he had received it.
complaint upheld
Mr S produced sufficient evidence to prove that he was in
London at the time of the withdrawals and that he did not
make or authorise them. We did not need to consider whether
or not he had been "grossly negligent". The withdrawals
increased the amount he owed the firm, so under the Consumer
Credit Act, his liability was limited to £50,
regardless of any gross negligence.