Consumer heavyweight Len Dastard tackles "misapplied credit"

Hola queridos lectores y lectoras! For your entertainment and legal quandaries, I am Len Dastard, a very real legal executive with the very unreal personae of a retired Mexican wrestler to shield my true identity. You doubt my word? I shall bury your face in the canvas and spit on your neck, tonto feo!

Avid Bitterwallet reader Pascal has contacted Bitter Wallet in relation to a balance that was incorrectly applied to their bank account.

Briefly, Pascal holds some shares through the bank's “share dealer” scheme. A few days before this mysterious amount appeared in their account, Pascal had received payment from a company who had bought some of his shares. He then received a further balance and withdrew it as he did with the previous amounts.

An email was then received from the bank's audit team to inform them that this misapplied credit was all down to an “IT error” and he must pay back the amount that he had withdrawn.

Usually in this situation the banks stance will not change – they want their money back. You must then ask the bank for a copy of their complaint procedure. If the matter escalates and you are not able to resolve the issue then you will be advised to take the matter up with the Financial Ombudsman Service. This is what they have to say on the matter:

We receive a number of complaints each year concerning ‘misapplied credit’, where a bank has incorrectly credited a customer’s account with money that was meant for someone else. When the bank subsequently attempts to reclaim the money, the customer may object – arguing that since the error was not theirs, they should not be required to pay anything back.

In the board game Monopoly it is good news if you get a card telling you that the bank has made an error in your favour – as you get to keep the money. But in real life, things are different. When dealing with complaints about misapplied credit, we generally take the view that consumers are required to return any money paid to them by mistake.

In certain circumstances, however, we may sometimes think it fair for the consumer to keep some or all of the money. This will usually be where the consumer reasonably believed that the money was theirs to spend – and spent it in a way they would not otherwise (or usually) have done.

The last paragraph would be important to our reader. Did Pascal genuinely believe that this was his money to spend based on his usual dealings with the bank? Their dealing would consist of share dealing and then withdrawing money right away.

What would you, the ideal “moral” person do in this situation? Pay it back to the bank or take it to the ombudsman? I would spend it on tequila for you all, aves atractivas del sexo!


  • mein c.
    The ideal moral person would have raised the issue with the bank before spending any of the money (seriously, it's not hard to keep track of your own finances) and then donated all his own money to the bank too because they need it in these times. Three cheers for the struggling banks!
  • Elias
    Well, frankly, if you've got someone elses money through a genuine error, why should you keep it? If someone gives you 20 quid too much change or cashback in a shop, should you be allowed to keep it? If the bank makes a mistake at this point and says that the wrongly applied money genuinely belongs to the customer, sure I can understand being peeved, and as the FOS reasonably says it may be fairer for the customer to not have to pay (all) of it back. But at the end of the day, its still not the customers money. I do hate this attitude that well, if its a bank standing the loss, they're bigger than me and richer so its OK. Sorry, no - if you wouldn't like it done to you, don't do it to anyone else, even if they are richer.
  • James D.
    IMO it depends on the circumstances, mainly how long did they take to notice the error? If straight away then there has been no inconvenience to you. I do understand however that some people just look at their cashpoint balance and take out what is left and spend it. That's not how I handle my finances but it is for some people. So in some cases a person may have received a material disadvantage because of the mistake made. It would be kind of hard to argue "I didn't notice I had an extra 8k from somewhere" However if I was transferring a company some money via online banking (as I do sometimes) and I entered an extra 0 somewhere I would expect them to give it back. However I probably wouldnt if it was 6 months down the road and I realised I overpaid them £50
  • The T.
    If it isn't yours, you should not spend it. If it has been a misapplied credit, they have the right to take it back. I'm sure you would all kick off big time if say you paid in £10,000 and they mistakenly credited your account with only £5,000. Would you expect them to repay you the difference or do they keep it if they have spent it already?

What do you think?

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