Why did bank stop my cheque after 60 years of business?
Mrs J.D. writes: I am a partner in my family’s farming business. We received a cheque for £23,256 for shares in Dairy Crest, which had been sold. The cheque was made out to my husband. But after it was deposited in the business account, Lloyds Bank rejected it, even though for 60 years the bank has accepted cheques made out to family members without a problem. The bank then destroyed the cheque instead of returning it to us. THE bank’s decision to reject the cheque was annoying. Its decision not to return the cheque was incomprehensible. But what happened next was even worse.
As all this was going on, your husband sadly died. And the firm that issued the cheque refused to provide a new one until you obtained a Grant of Probate covering his estate. Given the complexities of valuing an interest in a family-run farm, you reckon this is likely to take about a year.
Meanwhile, your farm is being run by two remaining partners and the business is out of pocket to the tune of more than £23,000.
But here is a bit of detail that most bank customers won’t know. Your cheque went through a recently introduced process known as the ‘Image Clearing System’.
This takes an electronic copy of the paper cheque and three days later the cheque itself is destroyed. The need to store paper cheques for only three days instead of far longer is a big step forward for the banking industry.
So, the basic mistake was not so much the destruction of the cheque, but the bank’s refusal to accept it in the first place. Your farm is run as a partnership and it is not at all unusual for business cheques to arrive showing the name of just one partner, particularly if the customer has only been dealing with that one person.
Your family has been banking in this way for many years and Lloyds has been happy to accept cheques into the partnership account even if they show only one partner’s name.
I asked officials at Lloyds to look into what had gone wrong with this one cheque and what could be done to put things right. An obvious answer that sprang to mind would have been for the bank to lend your farm the missing £23,256 free of interest until the Grant of Probate was obtained. Happily, Lloyds went much further.
It began by making an immediate payment of £500 to make up for the distress and inconvenience, and then it added a further £ 517 to cover lost interest.
But the icing on the cake was that Lloyds persuaded Equiniti, which was involved in organising the Dairy Crest deal, to allow i ts account to be debited with the £23,256 without there having to be a new cheque. And that £23,256 has now popped up in the account of your family’s farm.
A spokesman for the bank told me: ‘Unfortunately, human error led to the cheque being rejected. We are extremely sorry for the distress and inconvenience this has caused. The cheque has now been paid to Mrs D, as well as an additional payment in recognition of her experience.’