Bank failed to get signatures before changing account ownership

Account mandates,
Dianne was terminally ill with cancer. She told her personal banker that she wanted to change her sole accounts into joint accounts with her sister, one reason being to ensure no family members would have to cover her funeral expenses while her estate was being wound up. Dianne’s ill-health meant she couldn’t physically get to her local branch to arrange this change. She was subsequently admitted to hospital for about a week, and then discharged into the care of her daughter Adele for her final days. Shortly after her discharge from hospital, a call was made to the personal banker asking him to visit Dianne to finalise the account changes. He did as asked, and Dianne’s sister and eldest son were present at the bedside meeting.
August 2020

The following day, the bank officer prepared the necessary paperwork, which needed the signatures of Dianne and her sister. In the afternoon, the bank officer received a call saying Dianne had died. Unsure what to do, he sought advice within the bank and was told he should proceed with the changes if he was satisfied this was Dianne’s wish. He followed that advice.

Dianne’s sister subsequently made payments from the accounts, including $7,000 to each of Dianne’s children apart from one, Adele. A family dispute arose about how the money was being spent. The estate’s lawyer asked Dianne’s sister to send him the remaining money in Dianne’s accounts, which she did.

Adele lodged a complaint on behalf of the estate’s executors about the bank’s action in changing Dianne’s accounts to joint accounts. The consequence of this was that on Dianne’s death, ownership of her funds (about $60,000) passed to her sister as the surviving account holder. 

Adele said her mother was in such a poor physical and mental state at the time that she would not have understood what she was agreeing to. Had she understood, she never would have agreed to such changes. Adele believed it was Dianne’s sister who had made the call to the bank after her discharge from hospital, and not Dianne herself.  Adele sought $330,000, which included payments to beneficiaries under the will for stress and anxiety. 

Our investigation

The bank belatedly accepted it had acted outside the terms and conditions of Dianne’s accounts by changing them to joint accounts without the necessary signatures. It apologised and agreed to pay legal costs incurred as a result of this change on production of invoices. We received confirmation from the estate’s lawyer that Dianne’s sister had largely accounted for the money from Dianne’s account, and had used the funds for estate payments.

We considered the bank had not followed the terms and conditions of the accounts – namely, to obtain the necessary signatures before changing the ownership of the accounts – and had not kept any records of its interactions with Dianne in the months before her death. We also considered the bank had not properly explained to Dianne how she could deal with her concerns about her funeral expenses. The bank’s website said funeral expenses could be made from a deceased customer’s account and detailed the process for making such payments. Knowing this, Dianne’s concerns might well have been alleviated, and she might have decided against changing the ownership of her accounts.

We found the estate had suffered no direct loss, but we did consider the executors had suffered substantial inconvenience. The bank’s action in changing the account ownership without proper documentation caused them significant difficulties in managing their roles as executors. We recommended compensation of $6,000. We also recommended reimbursement of legal costs of $12,000; the executors and Adele had obtained legal advice because of the bank’s poor process in changing the account ownership. 


Adele and the executors accepted our finding concerning the bank’s wrongdoing, however considered the claim of $330,000 for losses was justified and decided to pursue the case through another forum.

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