skip to content

ombudsman news

issue 91

December 2010 / January 2011

a selection of recent financial complaints involving family disputes and difficulties in close personal relationships

This month we feature a variety of recent cases where consumers are in dispute with a financial business and also in dispute with a family member - or experiencing serious difficulties in a close personal relationship.

In some instances a difficult domestic situation - such as the aftermath of death, separation or divorce - has been the trigger that leads to a financial complaint. In other cases, underlying family tensions or communication breakdowns have contributed to - or complicated - a problem with a financial product or service.

It is, of course, by no means unusual for us to see complaints where the consumers concerned find themselves in difficult or distressing circumstances. Dealing with such cases requires a high degree of sensitivity - coupled with objectivity - as we disentangle the consumer's personal and family issues from those that relate solely to the financial complaint - in order to analyse the facts and reach a fair and impartial conclusion.

issue 91 index of case studies

  • 91/1 - bank ignores instructions to prevent withdrawals from joint account after married couple separate
  • 91/2 - consumer says bank failed to notify her of her brother's mortgage arrears on a property in which they both had an interest
  • 91/3 - consumer claims he had to pay increased divorce settlement because of bank's breach of confidentiality
  • 91/4 - dispute over unauthorised withdrawals from current account
  • 91/5 - consumer says credit broker misled her into signing an agreement that made her jointly liable with her son for any missing payments
  • 91/6 - consumer complains that finance business should have ensured loan repayments were affordable before approving her application
  • 91/7 - insurer refuses to pay claim for theft and damage caused by policyholder's former partner
  • 91/8 - insurer takes payments from third party's account on the basis of a fraudulent signature
  • 91/9 - consumer says bank incorrectly allowed his sister sole access to their late father's current account
  • 91/10 - bank wrongly allows withdrawal from joint savings account
  • 91/11 - consumer says bank gave a third party access to a joint account without authority
  • 91/12 - insurer declines claim for damage and theft relating to rented property

91/1
bank ignores instructions to prevent withdrawals from joint account after married couple separate

The relationship between Mr and Mrs G had deteriorated to the extent that they decided to separate. Mrs G moved out of the family home and told her bank that she and her husband were getting divorced.

Mr and Mrs G each had a personal current account at the bank - together with a joint account. Mrs G asked the bank to place a restriction on the joint account, preventing any withdrawals. She also gave the bank her new address and asked it to keep this confidential, as she did not want her husband to know where she was now living.

Just over a month later, Mr G caused a disturbance one night outside the flat that Mrs G was renting. And on several occasions over the next few days, Mrs G returned home from work to find that messages from her husband had been put through her letterbox.

When she emailed her husband to ask how he knew her address, he said he had seen it on a computer screen at their local branch. He told her he called in at the branch to discuss the direct debits on his personal account. A member of staff had taken him to a side office and had initially opened the screen showing Mrs G's details - presumably by mistake. The staff member had then been called away for a couple of minutes. While he was out of the room, Mr G was able to look at all the information on screen and to make a note of his wife's new address.

Mrs G then checked the transactions on the joint account and found that her husband had recently withdrawn £300. When she complained to the bank, it apologised for its "oversight" in allowing the withdrawal. It said it would refund £300 to the joint account and pay Mrs G £100 for the distress and inconvenience caused by its failure to keep her details confidential.

Mrs G thought the bank's offer was "insufficient", as she did not think the bank had "properly acknowledged the seriousness of its error". She therefore referred her complaint to us.

complaint settled
We said that once Mrs G had told the bank that she and her husband had separated, it had a duty to take particular care in its handling of their accounts. And we said the bank had been right to refund the £300. This restored the account to the position it was in before the bank mistakenly allowed Mr G to make a withdrawal.

We also thought the bank was right to compensate Mrs G for the distress and inconvenience caused by its failure to keep her details confidential. However, we said that in the particular circumstances of this case, £350 would be a more appropriate sum. The bank agreed to increase its offer and the case was settled on that basis.

91/2
consumer says bank failed to notify her of her brother's mortgage arrears on a property in which they both had an interest

Mrs K and her brother, Mr T, inherited a house from their aunt. The house had been remortgaged very shortly before their aunt's death and they took over the mortgage in joint names. However, they agreed between themselves that as only Mr T would be living in the house, he would be solely responsible for the mortgage repayments. If they eventually sold the house, they would split the proceeds between them.

Mrs K and her brother did not keep in touch and it was purely by chance, over a year later, that she found out the bank was about to repossess the house, as Mr T had fallen seriously behind with the repayments.

The bank was unable to sell the house at a high enough price to completely repay the amount outstanding on the mortgage. Mrs K reacted angrily when the bank told her that she and her brother were jointly responsible for clearing the remaining debt.

She said that if the bank had considered her to be "in any way" responsible for the situation, it should have told her about the mortgage arrears as soon as they began to build up. As it was, she said she had not known about the problem until it was too late for her to do anything about it.

The bank pointed out that the mortgage was in joint names and that all correspondence about it had been addressed jointly to her and her brother and sent to the mortgaged property. It said Mrs K had never queried this or asked it to send correspondence to her separately, at a different address.

In response, Mrs K insisted that she was not responsible for her "brother's problem". Unable to reach agreement with the bank, Mrs K eventually brought her complaint to us.

complaint not upheld
Mrs K said it had never crossed her mind to ask the bank to send correspondence about the mortgage to her at her home address. She had considered it Mr T's responsibility to "deal with all the paperwork", as he was the one who lived in the property. He had never shown her any of the bank's letters about the arrears or told her he was in difficulties with the payments. She said this was "no surprise" as they rarely spoke to one another.

There was no disagreement over the amount of the arrears. And Mrs K admitted she could not have afforded to contribute to the mortgage payments, or to pay the arrears, even if she had known about the situation at an earlier stage.

She did not dispute that when she had inherited the house and taken on the joint mortgage, she had been clearly informed that she and her brother were jointly responsible for the repayments.

We said the bank could not reasonably have known that she had never seen the letters it sent to her and her brother jointly at the mortgaged property. Nor could it be held responsible for the lack of communication between her and her brother. And we noted that she would not have been able to prevent the repossession by paying the arrears, even if she had known about them.

So we told Mrs K that the bank was not acting unfairly in refusing to waive her liability for the amount still outstanding on the mortgage. We did not uphold the complaint.

91/3
consumer claims he had to pay increased divorce settlement because of bank's breach of confidentiality

Mr and Mrs D had separated and were going through a divorce. They had agreed that, as part of the settlement, Mrs D would take over sole ownership of the business they had been running together for the past five years.

Not long before matters were finalised, Mrs D told her husband she would be asking the court for an increased settlement. She had discovered there was nearly £73,000 more in his current account than he had led her to believe. When he asked how she knew this, Mrs D said she found out when she asked the bank to confirm some details about their business account.

Mr D then complained to the bank. He said he had never shared the details of his personal account with his wife, even at the start of their marriage, so she could not have known the balance of his account unless the bank had told her.

He therefore thought the bank should reimburse him for the additional amount he would now have to pay in the divorce settlement.

Mrs D was unwilling to say exactly how she acquired the details of her husband's personal account. The bank conceded that she might have discovered this information when she came into the branch. However, it stressed that there was no evidence that it had been responsible for any breach of confidentiality. The bank also pointed out that full details of Mr D's finances would, in any event, be disclosed as part of the divorce proceedings.

The bank eventually offered to pay Mr D £250, to reflect any distress and inconvenience he had been caused. But it said it could not be held responsible for the increased settlement that he said Mrs D was now demanding. Unhappy with this, Mr D referred his complaint to us.

complaint not upheld
The bank had admitted that it could not be certain it had not inadvertently revealed information about Mr D's personal account. However, as it had noted, he could not have continued to keep this information secret from his wife. He was legally required to provide details of all his financial affairs as part of the divorce proceedings.

We told Mr D we thought the bank's offer of £250 was very reasonable, in the circumstances. We did not uphold the complaint.

91/4
dispute over unauthorised withdrawals from current account

Mr M complained that the bank had made some errors on his current account. His statement showed a number of cash machine withdrawals that he did not recognise and the balance was far lower than he thought it should have been.

The bank did not accept that it had done anything wrong. It said that all the disputed transactions had been made with Mr M's debit card and PIN - and on each occasion the PIN had been entered correctly at the first attempt.

When Mr M insisted that he knew nothing about these transactions, the bank said the only other possibility was that he must have been "grossly negligent" with his card and PIN. Mr M then brought his complaint to us.

complaint settled
We were satisfied, from information supplied by the bank, that the disputed withdrawals had all been made with Mr M's debit card and PIN. So we discussed the situation with Mr M and asked if anyone else might have had access to his card.

He told us that several weeks before he complained to the bank he had caught his teenage daughter stealing money from his wife's handbag.

He had thought this was just a "one-off" incident at the time. However, he had since discovered that his daughter had developed a drug habit. He said that "with hindsight", he now thought she was probably responsible for the cash withdrawals.

We then talked to the bank. From the evidence, it seemed more likely than not that Mr M's daughter had made the withdrawals without his authority.

We said that - in normal circumstances - Mr M could not be considered "grossly negligent" for having kept his card in his wallet, rather than under lock and key, in his own home. And it was quite likely that any close family member would have had plenty of opportunity to observe him using his PIN. So again - in normal circumstances - he could not be considered "grossly negligent" for not having prevented this.

However, we said that after he discovered his daughter stealing cash, he should have taken precautions with his card and changed or guarded his PIN - to ensure she could not get access to his account.

We suggested that the bank should refund Mr M's account with the cost of the withdrawals made before the date when he caught his daughter stealing. We said he should bear the cost of those made after that date. The complaint was settled on that basis.

91/5
consumer says credit broker misled her into signing an agreement that made her jointly liable with her son for any missing payments

Mrs E said she had been misled by the credit broker who set up a finance agreement so that her son could buy a car. The agreement had been taken out in joint names and Mrs E contributed the whole of the first monthly payment.

For the next three months, each payment was made by her son. However, he soon started missing payments altogether and eventually the finance provider began to pursue Mrs E for the arrears.

She refused to accept any responsibility for the missing payments. She said that before buying the car she had come to a clear understanding with her son that she would only pay for the first month. He would be responsible for all the subsequent payments.

The finance provider told her that whatever private arrangement she and her son had made, they had signed a joint finance agreement and she was therefore jointly liable for the arrears.

Mrs E then contacted the credit broker. She said he had "misinformed and misled" her about the nature of the agreement. She said her intention had always been that she would contribute the initial payment and that her son would make all the subsequent payments. She also said that by "setting up the wrong type of arrangement", the credit broker had caused her a considerable amount of stress. She and her son had fallen out over the situation and he was no longer speaking to her.

The credit broker rejected Mrs E's complaint. He said he had given her all the relevant information before she signed the agreement. And he said he had made it very clear that she would be jointly liable for the debt if her son defaulted on the loan. Unhappy with this response, Mrs E then came to us.

complaint not upheld
The credit broker sent us copies of the documents he had given Mrs E. These included a brochure describing the nature of the finance arrangement and a copy of the agreement that both Mrs E and her son had signed. We noted that the wording and layout of both documents was very clear.

We pointed out to Mrs E that she had signed a straightforward agreement that she was jointly liable with her son for the repayment of the whole loan. We asked her to explain why she thought the agreement had been misrepresented to her - and how the credit broker had misled her. She was unable to give us any plausible explanation.

We did not uphold the complaint. We said there was no evidence to suggest that she had been misled or that she had failed to understand the obligation she was taking on.

91/6
consumer complains that finance business should have ensured loan repayments were affordable before approving her application

Ms T complained that a finance business was pursuing her for a debt she was unable to afford. She maintained that the business should have checked that she could afford the repayments before it lent her the money.

She said her partner at the time, Mr C, needed to buy a car but had run into difficulties obtaining finance because of his poor credit rating. He had therefore persuaded her to take out a loan herself in order to buy the car.

She said he promised to give her a cash sum each month to cover the repayments. However, after a couple of months he started paying a smaller amount and eventually he left her, taking the car with him.

When the finance business contacted Ms T about the arrears, she argued that the fault lay with the business itself for never having made proper checks about her financial circumstances.

The business did not accept that it was in the wrong. It said it had acted entirely responsibly and had put her loan application through the normal process of credit checks and credit-scoring, based on the information she had provided. It therefore saw no reason why she should not be held liable to repay the amount she borrowed.

Unhappy with this response, Ms T came to us.

complaint not upheld
We noted that in processing Ms T's application, the business had fully complied with the Finance and Leasing Association code.

The application form, which Miss T had completed and signed, stated that she was in full-time employment. However, when she made her complaint to the business she had said she was unemployed. We asked Ms T to explain why she considered the loan to have been unaffordable from the outset. We also asked her to tell us more about her employment history.

We eventually established that she had been unemployed at the time she applied for the loan and had not been in work since then. She told us it had been Mr T's idea that she should say she was in employment, as it seemed unlikely she would get the loan otherwise.

We did not uphold the complaint.

91/7
insurer refuses to pay claim for theft and damage caused by policyholder's former partner

Six months before the date set for her wedding, Ms C moved in with her fiancée, Mr J. Shortly after that she discovered he was having an affair with a work colleague. Ms C decided to end the engagement immediately and after gathering up as many of her belongings as she could easily carry, she went to stay with her sister.

Three months later, Mr J returned home from a few days' holiday to find that someone had broken into his house. A considerable amount of damage had been done to the interior and all the clothes in his wardrobe had been sprayed with paint. A number of Mr J's personal possessions were missing, as were most of the items belonging to Ms C that she had left behind when she moved out.

The police confirmed that there was no sign of any forced entry and Mr J told them the most likely culprit was Ms C. He said he had not seen her since the evening she had left him but he thought she still had a key to the house.

In due course, the police arrested Ms C and brought charges against her for theft and for damage to his house and property.

Mr J was kept waiting for a number of weeks for any response after he submitted a claim to his insurer. When he asked the reason for the delay, he was told that his paperwork had been temporarily mislaid but that it had since been located. Then over the next few weeks he was twice asked for information that he had already provided. The insurer eventually told him it would not pay the claim. It said his policy did not provide cover where "damage and/or theft were caused by a person or persons legally entitled to be in or on the buildings".

Mr J argued that this was unfair, in the circumstances, but the insurer would not reconsider the matter. He then brought his complaint to us.

complaint upheld
We noted that the incident had occurred three months after Ms C had moved out of the house. It was clear that neither party wanted anything more to do with the other, and we saw evidence that all the wedding arrangements had been cancelled shortly after Ms C had left.

We said that the policy exclusion was not, in itself, unreasonable. However, we thought that in the particular circumstances of this case it had been applied unfairly. We upheld the complaint and said that the insurer should settle Mr J's claim in full.

We said it should also pay Mr J £250 for the stress and inconvenience he had been caused by its initial delay in processing his claim.

91/8
insurer takes payments from third party's account on the basis of a fraudulent signature

Mr V complained that an insurer took payments from his bank account without his authorisation after he helped his stepson, Mr H, by paying the first premium on his policy.

Mr V said his stepson needed to take out an insurance policy but was "temporarily unable" to pay the initial premium of £500. Rather than lending him the money, Mr V had made the payment direct to the insurer over the phone, using his debit card. Mr V said that there had never been any suggestion that he would pay for more than that initial premium - and Mr H had promised to pay the £500 back to him within the next few weeks.

A few months later, Mr V was still waiting for his stepson to pay back the money when he discovered that the insurer had taken a further payment from his account - this time for £1,600.

Alarmed to discover that Mr H had moved out of his flat without leaving a forwarding address, Mr V then contacted the insurer and asked why the money had been taken from his account without permission.

The insurer strongly denied having done anything wrong. It said that Mr H had fallen behind with his premiums and that the £1,600 payment had covered the arrears, together with associated charges. The insurer said it had a statement signed by Mr V that authorised it to take payments from his account if Mr H failed to pay his premiums. Very unhappy with the situation, Mr V then came to us.

complaint upheld
We established that when the insurance was first set up, Mr H had been sent details of the policy, together with several forms that he was required to complete and return. These included a statement agreeing that if he failed to pay any subsequent premiums, the insurer could take the money from the card used to make the initial payment. The holder of the card in question was required to sign this statement.

When Mr V saw a copy of the statement, he said his stepson must have signed it, using Mr V's name. Mr V said he would never have signed it himself, if he had been asked to do so.

We noted that the policy was applied for in Mr H's sole name and he was described as the "primary payee". Mr V was not mentioned at all on the form. In our view, this confirmed Mr V's assertion that it had never been his intention to pay the premiums for his stepson.

We also noted that the signature on the insurer's statement did not match Mr V's signature. We said that in the particular circumstances of this case, the insurer should refund the £1,600 to Mr V, together with interest.

91/9
consumer says bank incorrectly allowed his sister sole access to their late father's current account

Dr K, who was in his eighties, set up a joint current account with his daughter, Mrs G. Because of a disability he had become increasingly reliant on her to do his shopping and pay his bills, so this arrangement was convenient for both of them.

A couple of years later, Dr K died. He specified in his will that his estate should be divided equally between his son and daughter. However, his son was concerned to find that the bank had arranged for the joint current account to be transferred into Mrs G's name only.

Mr K complained to the bank, arguing that the account should never have been put in his sister's sole name as he was now entitled to half of whatever money was in it.

The bank did not agree that it had done anything wrong. It told Mr K it had followed standard procedure and that as Mrs G was the surviving joint account holder, the funds in the account were hers. Mr K then brought his complaint to us.

complaint not upheld
We noted that the funds in the joint account were not part of the late Dr K's estate and were not covered by his will. We explained to Mr K that the bank had correctly followed standard procedure when one of the parties to a joint account dies.

Mr K felt the situation still left him "seriously disadvantaged". He asked us to intervene on his behalf and to suggest to Mrs G that "as a matter of natural justice", she should share with him the contents of what had formerly been the joint account.

We explained that it was not for us to get involved in what was a private matter between him and his sister. We did not uphold his complaint.

91/10
bank wrongly allows withdrawal from joint savings account

Mrs Q complained to her bank after discovering that her husband, from whom she had recently separated, had withdrawn money without her knowledge from the savings account set up for the benefit of their young daughter.

She and her husband were joint trustees of the account and the bank should have required both their signatures before allowing the withdrawal of any money. However, following their separation Mr Q had been able to make several withdrawals, totalling £1,100, without his wife's signature.

The bank apologised for its error in not obtaining both signatures. It reimbursed the account with the £1,100 that Mr Q had withdrawn and it offered Mrs Q a payment of £100, "in recognition of the distress and inconvenience caused".

Mrs Q did not think this was sufficient to resolve the matter. Her husband had said he took the money from the account in order to pay for the holiday that he and his daughter had recently taken. Mrs Q had been under the impression he paid for the holiday "from his own money".

She thought it "quite improper" that the bank should have allowed him to "spend his own daughter's money to try and regain favour with the child". She therefore wanted the bank to force him to pay the money back.

She also thought the bank's offer of £100 for her own distress and inconvenience was "not enough to punish the bank for the seriousness of its mistakes".

Unable to reach agreement with the bank, Mrs Q brought her complaint to us.

complaint not upheld
We accepted that Mrs Q had been distressed that the bank had allowed her husband to withdraw money from the account without her signature. However, the bank had admitted its error and repaid the money. So we told Mrs Q that her daughter had not been disadvantaged by the bank's mistake.

We explained that it was not for the bank to specify how the funds could be spent - and the bank could not require her husband to repay the money, as she had wanted it to do.

We also explained that the bank's offer to pay her £100 was a reasonable one, in the circumstances. The purpose of such awards is to provide compensation for distress and inconvenience - not to punish businesses for their mistakes. We did not uphold the complaint.

91/11
consumer says bank gave a third party access to a joint account without authority

Mrs B complained that her bank had allowed "unauthorised access" to the joint account belonging to herself and her husband. She said that she usually left all financial matters to her husband. However, as he had now "moved away" she had started looking more closely at various aspects of their finances.

She had been very concerned to discover that six months earlier the bank had given a debit card to Ms Y, who at that time was the family's au pair. Mrs B complained that this card enabled Ms Y to spend money from the joint account "without restriction". She said that as she had never authorised this, the bank must have acted - incorrectly - solely on her husband's instructions.

The bank told her that, to the best of its knowledge, she had approved this arrangement and it sent her a copy of the authorisation that it said she had signed. However, Mrs B said the signature was not hers.

The bank maintained that there was no discernible difference between that signature and the one it held on its records for her accounts. It therefore refused to accept that it had acted improperly in adding Ms Y to the account.

Mrs B then referred her complaint to us.

complaint not upheld
We looked at the signature on the form that the bank said Mrs B had signed - and compared it with the signature the bank had on file for her. We agreed with the bank that there was no discernible difference.

We then asked the bank to send us details of the expenditure on the account for the six months before and after Ms Y had been able to use it.

The overall amount spent was approximately the same in both periods. However, we noted two significant differences. After Ms Y had begun to use the account, regular weekly debit card payments - of roughly similar amounts - were made at a supermarket near Mr and Mrs B's home.

In the six months before Ms Y was able to use the account, the debit card had not been used at any supermarkets. But there had been much larger cash withdrawals each week than was the case once Ms Y had access to the account.

We asked Mrs B for her comments on our observations. She said she was unable to offer any explanation. However, she admitted that one of Ms Y's responsibilities had been to do the family's weekly food shopping.

She also told us that she had suspected Mr B of having an affair with Ms Y, so she had asked the au pair to leave.

We concluded that Mrs B had probably agreed that Ms Y should have access to the account, in order to make it easier for her to pay for the family's shopping. We suggested to Mrs B that she might simply have forgotten signing the bank's authorisation form - after becoming concerned about the possibility of an affair.

We said there was no evidence that the bank had acted incorrectly. It had properly insisted on obtaining the signatures of both her and her husband before allowing Ms Y to have the debit card. We did not uphold the complaint.

91/12
insurer declines claim for damage and theft relating to rented property

Mrs W inherited a house in a town some distance from where she and her husband lived. The town had a large student population and she thought that instead of selling the house, she might instead obtain an income by letting it. She was still weighing up the options when her nephew asked if he could rent the house, as he had just obtained a place at the university nearby.

Mrs W later told us her husband had said she should "do things properly and formally" even though she was "dealing with family". She therefore arranged for her nephew, Mr T, and two of his friends to sign a one-year assured shorthold tenancy agreement. She insisted on their paying her a deposit of £2,500 against the cost of any damage to the property. She also took out a landlords' insurance policy.

For some months, everything appeared to be working out well - and the rent was always paid on time and in full. But then the student daughter of one of Mrs W's friends, who was at the same university as Mr T, said she had heard "disturbing rumours" about the rented property. All the downstairs windows of the house were boarded up and there were stories of "unusual activity" and of "much coming and going at unreasonable hours".

After trying without success to contact her nephew, Mrs W and her husband visited the house. They were unable to gain access to the property as the locks had been changed. Mrs W then contacted the police.

In due course the police entered the house and found it had been turned into a cannabis factory. The interior was substantially damaged and most of the furniture and fittings had disappeared. There was no indication that anyone had recently been living there.

Mrs W tried again to get in touch with her nephew but had no success. The university term had just ended and he and his friends were thought to have "gone off travelling".

Mrs W then put in a substantial claim to her insurer for malicious damage, vandalism and theft. The insurer refused to pay out, as it said the policy specifically excluded damage or loss caused by any of the tenants.

Mrs W argued that there was no evidence to suggest that her nephew or any of the other tenants had been responsible. She thought the scale of the enterprise suggested that a "criminal gang" was involved. And she suggested that this gang must have threatened the students and forced them to hand over the house and go into hiding.

The insurer told Mrs W that as there was no evidence to support her view of events, it was not prepared to reconsider the matter. Mrs W then referred her complaint to us.

complaint not upheld
We noted that Mrs W had discussed the situation in detail with the police. They had told her there was no evidence that her nephew and his friends had been approached by criminals. And there was no evidence that any "outsiders" were involved.

We said that, on the balance of probabilities, it appeared more likely than not that Mrs W's tenants had been involved in setting up and running the cannabis factory. Given the specific terms of the insurance policy, we said the insurer's stance was reasonable. We did not uphold the complaint.

image of ombudsman news

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.