One slip is all it takes to transfer money into the wrong account and while your bank should help you, there are no guarantees you’ll get it back.
Our online survey of 2,059 members of the public found that one in ten (10%) people have made an accidental payment, and 16% lost some, or all of the money.
If you realise you’ve mistyped an account number or sort code, you can’t recall the payment, even if you notice the mistake immediately.
The best-case scenario is that the incorrect numbers won’t match an existing account (in which case the payment should bounce or sit in a holding account).
But, if the numbers correlate to a live account, you may have a fight on your hands to get your money back.
Will your bank help?
Banks aren’t legally liable to cover losses if the mistake was yours.
However, electronic payments are covered by the Credit Payment Recovery (CPR) process, which means:
- a) Your bank/building society will take action within two working days of you reporting a misdirected payment.
- b) It will contact the receiving bank on your behalf and, as long as there is no dispute, you can expect a refund within 20 working days.
- c) If you report it within two months and there is clear evidence of a mistake, you have a good chance of getting your money back because the receiving bank can protect the money (i.e. prevent withdrawal) and return it to you, even if they don’t hear back from their customer.
- d) After two months, the receiving bank needs formal consent from its customer to freeze or withdraw the money. If the recipient insists the money is theirs, or doesn’t respond at all, you may have no choice but to give up, or take court action.
Why can’t banks check?
If the account details entered don’t match the name of the payee, you might assume your bank could spot the error – but it can’t.
Even though banks usually ask for the recipient’s name, the payment is directed solely by the account number and sort code (just as the address and postcode directs a letter).
This is set to change, thanks to industry plans for ‘confirmation of payee’. This will finally let you check the name associated with the account details before any money leaves your account.
This could be achieved using a Paym-type solution, or through banks sharing information securely.
There’s no official delivery date, but it’s expected by 2020.
Should banks be doing more?
Banks could help protect their customers now – by reminding them at the point of payment that the account holder’s name won’t be checked.
During my research for this investigation, I was surprised to learn that some banks (Barclays, Clydesdale Bank, NatWest and Royal Bank of Scotland) also recycle old account numbers.
This could cause problems if you saved the details of a friend who no longer holds that account.
What do you think about the processes in place to deal with misdirected payments? Could banks do more to protect customers or is it down to the individual?