Bank errors lead to repayments to customers…

In a couple of recent cases the Banking Ombudsman has upheld complaints regarding bank errors.

In the first case the complaint was from the parents of a child account holder. The child accessed the account and withdrew $3000 without the parent’s knowledge. The account set up was supposed to be so only the parents could make withdrawals but a bank error allowed the child to withdraw the money.

Initially the bank offered only $250 compensation to the parents but following the Ombudsman’s findings agreed to pay $1500 compensation. This was accepted by the parents.

In the second case one shareholder in a business had died. The bank froze the account pending receiving proof that the other shareholder now owned all the shares and could operate the account. The proof was provided within 2 weeks of the person’s death but the bank still refused to unfreeze the account for a further 2 weeks. This caused the business to miss repaying loans and it had to pay penalty interest on the unpaid amounts.

The Ombudsman arranged for the bank to repay $9500 (80%) of the penalty interest, plus $2500 in legal fees incurred by the business.