Customer opened joint account, allowing acquaintance to make big withdrawal

Home Guides & cases Case notes Bank accounts - 83248

Customer opened joint account, allowing acquaintance to make big withdrawal

Categories:

Joint accounts,

Summary:

In 2022, Caleb and his acquaintance Zion went to a bank branch to open a joint account. Caleb’s marriage had recently broken down and he was emotionally vulnerable. Zion, who encouraged him to open the account, was the other account signatory. Caleb left the room several times while a bank staff member was helping set up the account, and he believed it was during this time that the staff member asked Zion whether to set up an account mandate requiring both of them to approve any withdrawals, and that Zion said no. Caleb believed the account should have been set up with a “two-to-sign” account mandate to prevent large transfers from the account without his knowledge.

Published:

February 2025

Later that day, Caleb transferred $145,000 into the joint account. Shortly after this, Zion transferred $135,000 to his own personal account. Discovering the transfer, Caleb contacted the bank, but was told it could not help because he and Zion jointly owned the funds.

Five months later, Caleb asked the bank to freeze Zion’s personal bank account. At that time, the bank indicated it was unable to do so. Caleb also asked for a copy of the account mandate. Caleb believed the bank should have asked questions at the time the joint account was opened to determine whether he was vulnerable and acting under duress.

Our investigation

Caleb brought his complaint to us. We asked the bank for a copy of the account mandate, but the bank could not find it. However, Caleb and Zion told the staff member they intended using the account to cover everyday living expenses, so a two-to-sign account mandate would have been impractical.

The bank told us the staff member would have only asked questions to determine whether a customer was being exploited if there were grounds for asking such questions. In this case, it said, there weren’t any. The staff member had noted the pair were in a hurry, but they hadn’t otherwise said or done anything to raise any suspicions. The staff member could not have been aware of the size of the funds Zion was pressuring Caleb to deposit into the account, or that Caleb would be the only one putting money into the account.

We asked to listen to the phone call Caleb had made when he discovered the $135,000 transfer, but the bank could not find it. Caleb then realised he had made the call in a panic to his own bank, not the bank where the joint account was held.

We asked the bank to consider a goodwill offer in recognition of delays in responding to Caleb’s request for information about the account set-up and its failure to locate the account mandate. The bank offered Caleb an apology and $1,600 in recognition of the stress and inconvenience he had suffered.