In a recent article in The Telegraph, Ms Parkinson a customer of MBNA, made a transfer which resulted in funds being sent in error to a third party. The banks and the financial ombudsman have not provided a refund and she has been left with no recourse.
The law is clear in this area in that if you receive monies in error, they do not belong to you and you can not consciously keep receipt of monies that do not belong to you. In law you have a right to trace monies and assets which have been misapplied. The issue in this case is that the customer does not have the identity of the recipient and so she can not pursue the refund nor issue a claim against them.
The article stipulates that the only way the customer could obtain the third parties details was to make an application to the court. The customer would have to pay the newly increased court fee of £280 and the banks legal costs as well as her own. All this to obtain the third parties details, there would then be further cost in issuing the small claim and pursuing the third party. In this instance the amount transferred in error was £1700, it would certainly cost more than that to issue the application and then the small claim making litigation not cost proportionate.
This case does not give a good perception for the bank, in law they do not have an obligation to refund their customer for the mistaken transfer (unless the terms of the account stipulate otherwise). Could they have done more to provide the details of the recipient so that their customer could pursue the third party? Probably.
Keren Parkinson attempted to send £1,700 from her MBNA credit card to her Santander current account – but it went to another Santander customer. The bank knows the recipient, who has even repaid a small amount. But the payments have stopped, the bank will not claw back the money and the police haven't helped either. Mrs Parkinson calls it “legalised theft”.