Case Studies

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Upon checking his bank statements, Mr F noticed that a number of withdrawals were effected from a joint account he held, without his approval. He lodged a complaint with his bank. The bank noticing its mistake refunded the amount in full.

Mr F was not satisfied with the outcome and lodged a complaint with MFSA. He claimed that the bank was not right in withholding information regarding the unauthorised person who had provided the co-signature for the withdrawals.

Due to the sensitivities of the case, the Unit informed Mr F that the bank was right in not divulging information about third parties and the whereabouts of those funds. It also informed Mr F that, although he rightfully had a duty to know that the bank took action to reclaim back those funds which were withdrawn without his co-authorisation, it was not his prerogative to know the details of any arrangements which the bank made with the other joint holder for the amount to be repaid.

The Unit, however, felt that although the bank refunded the account to the amount it was prior to the unauthorised withdrawals, it was duty bound to ensure that such mistakes do not recur. It recognised that Mr F suffered inconvenience as a result of the bank’s mistake. Mr F, in fact, was claiming a hefty amount in compensation which was substantially higher than the amount which had been withdrawn. The Unit explained to Mr F that it had no remit to impose a decision on the bank to compensate for moral damages. If he wanted to pursue the matter in court Mr F was at liberty to do so. The Unit explained that Mr F had to have a strong legal basis to sustain his argument that the level of compensation he was requesting was fair and reasonable in the circumstances.

After long discussions with Mr F and the bank, a small amount which did not exceed €175 was awarded in full and final settlement.

In January 1993, RR opened an account in her name with a bank in the United Kingdom. The opening balance was £1000. In September 1997, the bank closed RR’s account and transferred the funds to another account. At the time, RR was unwell and did not quite understand what had happened.

In 2006, her brother, Mr UR, returned from Australia to take care of RR.. He tried to take stock of RR’s deposits and investments and came across this bank account. Mr UR wrote to the bank on several occasions as to the whereabouts of the funds. RR contended all along that she had never authorised the bank to close the account. Given the fact that the account closure happened many years back, the bank had quite a difficulty in trying to access information on its system. Worth noting is that in the meantime, the bank had been taken over and new IT systems were deployed.

After some months of waiting, the bank replied that the account into which funds had been deposited had been closed and transferred to another bank in the United Kingdom. Mr UR was not satisfied with the bank’s reply. He also tried eliciting a response from the bank to which his sister’s account had been transferred but, for some reasons, the bank did not give much information except that this second account had also been closed.

Mr UR resorted to MFSA for assistance. Given that the banks involved were located in the United Kingdom, the MFSA did not have jurisdiction to contact these banks directly and referred the case to the Financial Ombudsman Service in the United Kingdom for assistance.

From investigations carried out, it transpired that the branch where RR opened her account in 1993 had been closed and the bank transferred the accounts to another branch. During this process, the bank tried to link account holders of the “closed” branch” with accounts (which might have had the same name) of the other branch.

It so happened that an account holder with the same name as that of RR held an account at the new branch. For unknown reasons, the bank’s system assumed that the persons were the same. To further complicate matters, the account into which funds were deposited was closed some about three months after and all proceeds transferred to another bank. What the bank however failed to notice was that the account holder into which funds had been transferred had a “Dr” preceding her name.

Indeed, when the bank sent copies of the bank statement belonging to this other person, the MFSA noticed (and the UK Ombudsman confirmed) that “Dr RR” and “RR” were not the same person and, essentially, mixed up two customers with the same name.

In light of the circumstances of this complaint, the bank, on the Ombudsman’s recommendation, accepted to reimburse RR with the full amount of the account at the time it was closed, together with interest, simple interest at 8% from 1997 when the account was closed and £400 compensation in light of the inconvenience.

Mr XYZ held a joint account with a business partner of his. At the moment of opening of the account, Mr XYZ had given specific instructions to the bank that both signatures would be needed for a withdrawal to be made from the account.

However, XYZ’s business partner decided to withdraw approximately 95% of the funds held in the account using solely his signature. Contrary to instructions given to the bank, the bank clerk authorised the withdrawal without XYZ’s signature.

XYZ’s business partner was not Maltese and left the island and hence the bank could not trace him. After the Unit’s intervention, the bank agreed to credit the account with the full amount, however clearing stating that XYZ could not withdraw the funds in question as he would need the signature of his former business partner.

After numerous attempts to locate the former business proved futile, the bank agreed to release half the amount of the funds held in the account to XYZ, with interest.

Mr and Mrs A took out a mortgage reducing policy in name of Mr A in 2001. Subsequently the policy was replaced by an endowment policy in their names in 2007. In 2008, Mr & Mrs A were told by a bank clerk that they were paying for two different life insurance policies, rather than for one. Mr and Mrs A claimed that this was incorrect since the endowment policy was meant to replace the mortgage reducing plan. Upon further enquiry, it was established that Mr and Mrs A were indeed paying for two policies and the bank, following an internal investigation, established that Mr and Mrs A’s version of events was correct.

The bank refunded the excess premium in full, with interest, and agreed to pay a token for the inconvenience caused to complainants.

Mr F and Mrs Y had two credit cards issued by the same bank. The main card was on the husband’s name and the supplementary card was issued on the wife’s name.

Mrs Y’s card was stolen and various ATM withdrawals had been affected before the theft of the card had been reported to the bank. Furthermore, the PIN had been successfully entered for the ATM withdrawals. The bank, on the basis of its systems, noted that the card withdrawals could only have been successful had the

PIN been successfully entered at the ATM where the card was inserted. It rejected Mrs Y’s pleas that the PIN had not been kept with the card and quoted its standard card conditions as the basis for rejecting a refund.In their complaint with the Unit, Mr F and Mrs Y also blamed the bank for their loss because they claimed that it failed to send them SMS alerts to make them aware that the card had been used.

During review of the complaint, the bank exhibited correspondence wherein the supplementary card holder had confirmed that both the PIN and the card had been held together in her handbag. Furthermore the bank had checked its records and had confirmed that Mr F and Mrs Y had never applied for SMS alerts on the supplementary card.

What was particularly interesting was the manner in which Mrs Y’s card had been stolen. According to Mrs Y’s statement, she and her husband had finally managed to change their residential address for all the bank accounts they held with three different banks. However, for some reason, her supplementary card was sent at the address of her in-laws (Mr F and Mrs Y were newlyweds) and she first went to collect her card from them, then proceeded to collect the PIN from the branch. With both card and PIN, in her handbag she proceeded to her place of work, which was a mobile office on a construction site.

On that same day, Mrs Y claimed that an intruder had entered her workplace and stolen her handbag.Sometime had passed until she noticed that her handbag went missing and called immediately the bank to report the theft. She also went personally to her branch and spoke to a bank representative to make sure that all her cards and the cheque book were stopped.

Mrs Y requested the bank to investigate the CCTV footage installed at the ATM were the alleged fraudulent withdrawals took place. The footage was deemed useless as the alleged fraudster covered the keyhole camera with a piece of black tape.

The bank confirmed that the withdrawals had been affected and approved by means of the customer’s card.The encrypted data on the chip signalled that the correct PIN had been used at time of withdrawal. The bank claimed that the loss of the card was reported to the bank around 50 minutes after the fraudulent withdrawals allegedly took place.

The Unit tried to convince the bank to waive part of the hefty loss on the basis of the unfortunate circumstances which led to this incident. The bank, however, stood its ground and replied that Mrs Y was negligent by keeping (even momentarily) card and PIN together and leave her personal belongings unattended in a busy on-site office.

Spouses G decided to transfer their banking facilities to another bank. Since spouses G held a number of savings accounts with their bank apart from their loan, they decided to set-off these amounts and in fact met with the bank’s notary and agreed that the final amount due to their bank was €110,000.

A couple of days after the transfer of their facilities was registered, spouses G were contacted by their former bank and were informed that another €2,500 were due. The bank also informed them that unless the amount due was paid immediately, the life policies held by the bank as pledge would not be released to the new bank. The complainants thought that this was very unfair since they had already settled all amounts due which, for all intents and purposes, had been agreed to by the bank’s notary. Spouses G further maintained that the bank’s actions might prejudice the relationship with their new bank as the latter was requesting a pledge on the life policies.

The Unit contacted the bank and setup a meeting in order to discuss the complaint in detail. It transpired that the amount due of €110,000 was calculated on the day the contract was signed, but a day before that, and in the morning prior to the signing of the contract, spouses G had carried out a number of ATM withdrawals and online purchases using their debit cards and the transactions were not showing on the statements as at the date when the contract to transfer all banking facilities was signed. Apparently, the bank’s systems were not real time and it relied on the services of a third party to update, on a daily basis, its core banking system.

This delay was clearly noted on the bank’s terms and conditions, indicating that it could take up to three working days for transactions to feature on the statement. Furthermore, the delay in the bank’s system was one of the reasons cited by spouses G to justify the termination of their relationship with the bank thus confirming that they were aware of how the system worked. The Unit had no other choice but to reject the complaint and confirm that the amount of €2,500 was due by the complainants.

Mr A approached the Unit seeking redress in regard to the application of a charge by a local commercial bank for the outgoing transfer of interest accrued on a fixed deposit held with the same bank to a foreign bank. Mr A complained that he engaged on a fixed term deposit for five years with the local bank because at the time the bank was offering a very attractive interest rate. Mr A claimed that when he finalised the fixed term deposit, this was on the understanding that there would be no charges during the five year contract, further maintaining that the local bank had not notified the altered interest rates or new charges.

The Unit became aware that the local bank was instructed by Mr A to transfer the interest earned from the fixed deposit to a savings account held with a foreign bank and hence the contested charge was applied to the savings account in the name of Mr A and not on the fixed deposit account. The local bank paid interest on the five year fixed deposit on a yearly basis and the bank indeed confirmed that the contract stipulated for the funds to be held for the full five years at an agreed rate. The dispute that had arisen was around a €2 fee which the local bank had introduced, three years following the opening of the fixed deposit account, for the transfer of funds from a savings account to an account held with a foreign bank. The local bank deemed that it was within its right to assess its costs and have these covered - as long as these are notified to its customers. The local bank admitted however that the introduction of a €2 fee was not duly notified to Mr A and the bank conceded to refund this fee but clarified that any future outgoing payments would trigger charges.

The Unit maintained that charges applicable on the transfer of monies to or from the savings account are extraneous to the contract signed in respect of the fixed term account. Furthermore a savings account, which is in effect a payment account, is regulated under the Payments Services Directive (PSD) and hence can become subject to a tariff of charges that a local bank may apply and amend from time to time, binding the bank to notify its customers two months prior to the application of such charges.

Mr S inherited a plot of land when his parents passed away. Mr S wanted to develop this plot to build his residence and he applied for a bank loan. His request for finance was approved by the bank and a sanction letter explaining the terms and conditions of the loan was issued. As per normal practice, the bank charged the legal and processing fees on the same day it issued the sanction letter. The sanction letter was, however, issued on the condition that planning permits and approved plans over the plot being purchased were to be verified to the satisfaction of the bank.

Mr S was informed that despite the bank’s effort to carry out all possible Land Registry searches, it still could not verify the title over the plot of land. It appears that the plot in question had been purchased many years before and no proper records existed at the time. Consequently, the contract of sale could not be signed as the bank had reserved the right to withdraw from the loan contract if it was not given a Land Registry Certificate of Title attesting to good title over the property.

The bank withdrew the offer for finance and therefore the loan was not availed of. Mr S felt that this was unfair and he asked the bank to reimburse him with the processing and legal fees which had been deducted from his account. The bank initially refused to refund these charges on the basis that details of such charges were clearly indicated on the loan quotation, the European Standard Information Sheet (which is a pre-contractual information document given to clients before signing the loan application form) and also on the sanction letter itself. Nevertheless, the bank then decided to refund Mr S a part of the charges as a gesture of goodwill. Mr S was not satisfied with this and he referred his complaint to the Unit.

Upon careful consideration of all the paperwork and the fact that there was no obligation by the bank to reimburse Mr S with any of the processing and legal fees charged, the Unit felt that the compensation given to Mr S constituted a just and fair settlement. The Unit explained to Mr S that verification of searches involve a lot of administrative work and ultimately even if the loan is not availed of, the bank could still be entitled to charge the processing fees. The complaint was not upheld.



Last updated: Sep 07, 2016