2015 - 2016

Bank accounts

Transactional account

Ms D had two bank accounts, one of which had an overdraft facility of $2,000. At Ms D’s request, the bank increased the limit to $2,500 and transferred the facility to her other account. However, it did not, as agreed, remove the overdraft facility on the original account. On realising this, Ms D spent up to the limit on both accounts.

The bank attempted to recover the money from Ms D and eventually referred the debt to a collection agency. By then, interest charges and collection agency fees had pushed up the debt to $5,900. Ms D acknowledged she had spent the money, but believed she should not have to repay the original $2,000 overdraft because the bank should have removed it.

The bank accepted it made a mistake by failing to remove the $2,000 overdraft.  It therefore agreed to reduce Ms D’s debt to $4,500 – the combined value of the two overdrafts before interest and other charges.  We considered Ms D should be liable for this amount because she had spent the money, and we encouraged her to accept the bank’s offer – which she did.