The Blue Bank

[Martinco]

A customer of a business deposits a cheque of R 90,000.00 into the business account. ( A mistake on their behalf as the amount owed was only R 9,000.00 )
A day later the customer discovers the mistake and stops the cheque and deposits the correct amount.

So............what happens at the bank ?

Firstly the R90,000.00 gets put on "hold" till it is cleared.( Not available )
Upon getting the stop payment advice on the 90K, they immediately debit the account with the amount effectively putting the account into o/d.
There are not sufficient funds in the account to take care of the 90K and the "system" at the bank freezes the account with the result that debit orders are not processed and returned unpaid. Also no funds available to pay wages which puts the business owner in an awkward position..

The only response from the bank was that " Sorry but that is how the system works and we cannot change it."

Now the question is: Will changing banks be any different ?

[Dave A]

Something smells off here.

The account holder can only draw against cleared funds and the bank claims they took the return entry as being out of cleared funds?
The entry should be a deposit reversal and not treated as a payment, so the stop payment order should have been matched against the relevant cheque deposit which would still be in uncleared funds.

Are you sure this is not a situation where the account holder has applied and been granted access to draw against uncleared funds? In that case if the bounced payments arose from the account holder relying on uncleared funds, well that's the account holder's fault (and problem).

But if the account holder can only access cleared funds, the stop payment should not have caused a problem as it is an uncleared deposit that is being reversed.

[Martinco]

Hi Dave.

No definitely no request for special clearance and the reversal was debited against the normal cleared balance.
I do not know if it complicates matters but the payment was made from Nam ?

[IanF]

Martin
Sometimes asking on social media helps try their facebook page or twitter.

[Dave A]

This isn't about special clearances necessarily. Having access to uncleared funds can be a standing arrangement, and a very common one on business accounts at that.

I suppose the way to make absolutely sure is to check that at no point the account went over limit (including allowing for transaction timing issues in a business day).

EDIT: Ian's proposal sounds like a good one. If that's the way the bank is processing unpaid deposits, I think it's fair to say no person at arms length is going to find their conduct reasonable.

[Martinco]

Thanks Dave, Ian,

I checked again with the account holder. No arrangement to access uncleared funds and the account was not in debit before this happened.

As a consequence of the above a vehicle debit order for another bank bounced and as we all know, the black mark remains even if the Blue Bank send a letter of apology admitting their "mistake".

The suggestion of Facebook and Twitter sounds inviting !

I also think the management of a branch contributes to the success of dealing with a bank but as in the above case they failed miserably.

[IanF]

Martin
When I tried forex payment with the thorn tree bank, I found using Social Media got some attention as the drones just follow the bank's rules and you need to get attention of the decision makers then things happen. But it took a while so it pays to be persistent.

[Blurock]

Now the question is: Will changing banks be any different ?

All banks have idiots, some only have more. Even people that have been there for more than 20 years are unable to apply their minds and still paint by numbers.

I managed to close an account with the red bank today after blowing my top 2 months ago. They gave me the run around about 2 signatories having to be physically present. I eventually gave up as there was no manager available and the regional manager was on leave.

I went in again today and found an empty banking hall. At month end!!? After some initial difficulty, the manager soon realised that they had a slip signed by TWO signatories and that they were not giving me cash, but a cheque made out to the business. It was not necessary for TWO people to come in to the bank to close an account. The banks sometimes make rules for their own convenience and not because it is required by law. Stuff the clients!!

[Martinco]

I heard today that the "business manager" handling this particular account has "departed" and somebody else now handles the account.

[Dave A]

If it was over this, that's a good start. Still the issue of repairing the damage though.

And the systems that allowed it to happen, come to think of it. I doubt stop payment instructions are processed manually.