Bank error in your favour?

Posted: 1st October 2015

RBS BankPlayers of ‘Monopoly’ are rewarded for bank errors in their favour – but that may not be so easy in the real world after a judge opened the way for banks to track down those whose accounts are credited by mistake.

In the high-volume digital age, banks inevitably make mistakes, sometimes sending payments twice, or after authorisations have been cancelled or even in ignorance that their customers have died. In many cases, payments are processed by other banks who are obliged to maintain their own clients’ confidentiality.

In those circumstances Santander bank launched proceedings to obtain the names, addresses and other personal details of customers of RBS, HSBC and Nationwide (the recipient banks) who had not voluntarily repaid their windfalls. Disclosure was said to be necessary to ensure that those customers were not unjustly enriched.

A judge initially refused to grant disclosure orders against the recipient banks on the basis that they had merely passively received the mistaken payments and had not facilitated their non-repayment. They understandably wished to maintain the confidence of their customers and there was no evidence that the latter had actively refused to repay the money or of any response from them at all.

A more senior judge subsequently reached the opposite conclusion in a similar case. He ruled that unjust enrichment was a wrong which was capable of justifying the grant of disclosure orders. In the light of that ruling, the original judge revisited his decision on the basis that it was important that the courts speak with one voice on an important point of principle.

In those circumstances, the judge ordered the recipient banks to disclose the names and addresses – although not the telephone numbers, email addresses or dates of birth – of the customers concerned. That was on strict condition that the information was used solely for the purpose of recovering the mistaken payments. In the light of the judicial difference of opinion revealed by the case, the judge urged that the issue should be considered at High Court level, or above.