Bank mistake... undercharging!

A friend of mine purchased a product by arranging for his High Street bank to transfer the funds to the sellers account. It appears that the funds arrived in the said account but he still appears to have them in his account too!?! It's been a while now and he's heard nothing from the bank. Knowing that I work in an associated industry he confided in me to try and establish the likely outcome.

As it appears that the bank have made a mistake, does anyone know how long they have to 'realise' this and claw back the funds? He's since moved the money into another account but is sitting on it just in case the bank contact him... I'm sure I read something somewhere about a time period in which they can reclaim the money?

Thanks, Mike

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Have a look at this thread:

You will notice that many of the legal professionals are of the opinion that by moving the funds into another account your friend has already committed theft.

Yep, and by moving it you are highlighting the fact you know it's there!! at the very least they will also take any interest you earn on it as well.

If I understood Francis Davey correctly (the barrister) it is an untested area of law, I hope the OP's friend isn't going to be the first to test it! The OP gives no indication how much money is involved, but there's no 6 year limit on theft. He also needs to be careful what advice he gives because (Fat Freddy's Cat-style) he could implicate himself.

"Troy Steadman" wrote

That's funny - I didn't see any of those "legal professionals" talking about

**the OP's friend** at all!! You really should compare like-with-like.

If person A transfers ownership of an item to person B, but person B doesn't collect the item straight away (as, effectively, in the case for this thread) - then surely you cannot believe that person A has committed "theft" ?

P.S. The limit is six years if the bank consider that it is just a mistake. However, under some circumstances they might consider he moved the funds to deprive the bank of them and if they could prove that then there would be no limit because his actions might be considered criminal. Not clear cut though!

That is not what is "effectively the case" here. Funds in a bank account are not like an "item" whose ownership you transfer. Ownership in the money has *already* been transferred by virtue of the purchase contract involved. All that remains to complete the deal is to transfer actual custody of the money.

If the bank accidentally took someone else's money to pay B, that does not entitle A to convert the money left behind in his account to some other use. It may still be there, but does not belong to him. Taking it is therefore theft, or if not technically theft (since that requires an intention to permanently deprive, and A could argue he was only, er, keeping it "safe", and had every intention of paying it all back), then surely it's at least "conversion", which is nearly as serious an offence as theft.

It's equally as bad as writing a cheque and then cleaning out the account before the cheque is presented.

"Ronald Raygun" wrote

OK, agreed - but it *is* closer to the situation that that discussed in the thread which Troy posted.

...

"Ronald Raygun" wrote

Indeed, some have argued that it is the holder's responsibility to obtain the best rate of interest they can on the funds - and even that if they do not, then the "true owner" is entitled to the better rate of interest when the funds are eventually passed on.

In that case, it would be the *correct* thing to transfer the funds to the better account until the true owner turns up ready for the transfer!

"Ronald Raygun" wrote

Agreed - but is *that* "theft" either ?

If you ask this on uk.legal, everyone there will tell you that the money is not yours/your friend's. That it belongs to the bank. You both have already accepted that.

Marcus

Phew. Another long boring battle averted! :-)

I wouldn't know. The thread was so vast I gave up trying to read any of it. The direct place his URL pointed to didn't appear to be relevant at all.

Doubtful, especially if it's the holder's intention to keep said interest for himself rather than pass it to the rightful owner (i.e. the owner of the principal sum).

Doubtful. That's the responsibility of the maker of the mistake. The holder's responsibility is to make the maker aware of it.

Not necessarily, but prima facie it's fraud - writing a dud cheque.

Without a hint of irony, "Troy Steadman" astounded uk.finance on 19 Aug 2004 by announcing:

They'd have to prove there was a dishonest intent to permanently deprive. The fact that the money has been moved would be less of an issue (or no issue at all) if he had notified the bank of their error.

Yeah the tinyurl was of the search I used to find the thread, not the thread itself. Try this:

Tim is right, the two situations are as unlike as twin peas. In one case money erroneously appears in the wrong bank account, in the other case a wrong bank account appears erroneously to have money in it:

As bystander puts it:

'This issue makes a regular appearance on Usenet legal groups, usually along the lines of "can I keep it?"'

And you are guilty of incitement to the theft (or as a secondary party). I am assuming this is a troll because I can't believe someone would so openly admit to a serious criminal offence in a public forum such as this. Saying its "hardly the crime of the century" is misleading, by definition most crimes aren't, but they are serious enough and most impact on all of us, one way or another.

My advice to you, as a lawyer, is do not give this advice to anyone again. What you may not have realised is that if the bank were to have discovered the error and asked for the money back, you (or your friend) would almost certainly be constructive trustees of the money for the bank and liable to account for it, which might mean paying more interest than was actually earned on the money in the meantime.

In the scenario above you would be guilty of assisting in a fraudelent breach of trust, and would therefore be liable to pay over all the money the bank lost (plus compound interest). The bank could pursue you for the money if they wanted to.

There is no limitation period for such an action.

Well, a good general rule is: something that is unidentifiable and likely to have been abandoned (eg 2p in a gutter) should be picked up and used.

Anything of low value (such as a glove or scarf), should be left where it is: the owner can then come back and find it.

Anything of a higher value (notes, wallet, bag with money in etc) should be taken to the police (or whoever).

Surely this is Standard Operating Procedure?

If it doesn't belong to you and it hasn't been abandoned by its owner, then you don't take it. Simple.

Francis Davey

The time period shouldn't really come into the equasion. What should come into the equasion that if your friend is trying to do the bank out of this money he is a THIEF. If your friend is a decent person at all he should put the money back in his account and tell his bank they've made a mistake right away.

In message , mikesierra writes

It would be interesting to know exactly how this 'transfer' was arranged, was it by cheque, bank giro credit, a 'one off' standing order or a payment of some sort to another country?

Its not likely, but technically feasible, that there is a cheque still in circulation somewhere.