Bank had enough reason to lock funds but failed to do so

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Bank had enough reason to lock funds but failed to do so

Categories:

Joint accounts,

Summary:

Rose's husband unexpectedly left her in 2019 after withdrawing large sums of money from their joint accounts, putting her in overdraft. Rose went to a branch of the bank to explain what had happened. The bank helped her with her mortgage repayments and set up an account in her own name. However, it failed to ask about, or put a stop on, a joint term deposit of $12,000 that was to mature in five days. The money was an insurance payout for earthquake repairs to their home. When the term deposit matured, Rose’s husband immediately withdrew the money. Rose complained to us that the bank should have been aware this money would be subject to dispute, and it should not have let her husband withdraw it.

Published:

November 2021

Our investigation

We considered that Rose’s description of her husband’s behaviour was sufficient to make the bank realise the funds in the joint account were more than likely to be the subject of a dispute between her and her husband. Rose had described how he had left her, was on the run from police and had “cleaned out” their joint accounts. Knowing that, it should have told Rose it was putting a lock on the funds. We could find no evidence of the bank ever having discussed with Rose the possibility of taking such a step. The bank agreed to repay Rose the $12,000 so she could undertake earthquake repairs. In turn, Rose agreed to repay the money if she recovered it in a relationship property settlement. She also agreed to give the bank evidence of the repairs undertaken.