Hacker News Reader

Barclays, knowing that they had committed to doing name checks by "mid 2019" and had to delay on their end, and knowing that this situation occurred because they gave multiple people the same account number, could have had their lawyers deal with this (or directly pay for his lawyers otherwise) instead of basically telling him to bugger off.

Maybe some details are missing but for such a sum, maybe Barclays should have had someone in legal helpfully call the problem customer and explain that they were never going to get away with it, it would cost them more in the long run, and oh yeah, that they weren’t going to be a Barclays customer if they didn’t return the cash?

Yes, that's how you handle such a thing!

The UK doesn't have any banking secrecy laws — protection of account details falls under the Data Protection Act 2018 but the general principle was established in common law by Tournier v National Provincial and Union Bank of England [1924] KB 461

Okay, I was mistaken there, that seems to be country-specific; and according to http://www.legislation.gov.uk/uksi/2017/752/regulation/90/ma... they should have disclosed the contact info (or sufficient information to sue) at the payer's request. That would have prevented the need for the first (but not the second) lawsuit.

Yes, I agree that S90(4) was breached there.

I don’t think this is necessarily true, since account numbers are bound to people. If I transfer money to Jim, then the most important part is that it arrives with Jim, not that it arrives on account nr xxx.

What part don't you think is true? The bank only has to match on the account number and sort code by law. It's not required to do name matching (and even the proposed name matching scheme will be voluntary).

It might be important to you that the money goes to Jim, but from the bank's perspective they executed the instructions correctly.

I once took a call in our office, looking for a "mrs x y". I said sorry noone of that name here. The others come back from lunch, turns out "x y" is a legal alias of colleague "v w", and it was the bank calling.

> But the payment laws pretty much implicitly assume that the account numbers are unique, and they weren't in this case

I don't see how the situation would be relevantly different if Teich had mistakenly provided the wrong account number and the correct sort code.

> there really aren't good solutions if the (unintended) recipient disputes the reversal and claims that that's money intended for them.

I also don't see why this is a question we ask the recipient. Wouldn't it make more sense to ask the payor?

> I also don't see why this is a question we ask the recipient. Wouldn't it make more sense to ask the payor?

Because at that moment that's the recipients money as far as the bank is concerned - it might have been a payment for some valuable item and the payment order used as proof of payment, it might have been a gift or anything, and the beneficiary is legally protected from the payer changing their mind after the fact, the bank isn't allowed to take their money without the beneficiary's consent just because the payer wants it. There are specific legal exemptions that may apply for cases where the payer didn't actually order that payment (e.g. some types of fraud, or technical faults such as a single order getting executed twice), but they don't apply here, because they did order that payment to that account, so it pushes this situation into the same box as all the other (quite frequent) issues of the payer changing their mind after the fact and wanting the money back.

If there's a dispute and the payer claims that the beneficiary shouldn't have that money and they owe it back - well, the banks don't get involved in disputes about who owes whom what, they can only execute payments when ordered by the owner of the money or a court order resolving that dispute. It's just as with a cash payment, if someone has gotten your pile of cash because there's been a misunderstanding, or mistake, or a change of mind, or even actual fraud - you can't simply take the cash away from them if they disagree or dispute the issue, they'll keep the cash until the dispute is resolved, or possibly the police will seize/freeze that cash following due legal process.

There are very many cases where there might be a dispute between a payer and the beneficiary, someone demanding their money back for all kinds of reasons - those cases far outnumber situations like this one. We have a process for resolving disputes about money, and that involves civil claims in court. After a correctly executed payment is completed (and a payment credited exactly as the payer ordered, even if they wanted to order differently or changed their mind) it can be reversed only if the beneficiary agrees or by a court order taking the money from the beneficiary and returning it to the payer, as in this case, that's the law.

This payment was not credited exactly as the payer ordered. There was no account matching the information the payer provided, and Barclays sent the money to a different, non-matching account:

> Teich had given his correct name, address and Barclays account number in Cambridge to his solicitor – but the wrong sort code.

> At the moment, anyone wanting to transfer money is asked for the recipient’s account name, account number and sort code. However, it’s typically the case that the bank does not check if the account name is correct.

> The mistaken transfer – called “misapplied funds” in banking parlance – could not have occurred if UK banks matched up sort codes and account numbers with the account holder’s name. But they do not. A recipient’s name could be given as Mickey Mouse and the bank would still process the payment, using the sort code and account number alone.

That's the whole point, legally the payment is explicitly considered "executed correctly" if it's credited acording to the account numbers (and not the names or addresses) provided by the originator; possibly (but I'm speculating) to avoid a nontrivial number of rejected payments because of typos and variations of spellings for company names.

Actually, pretty much all relevant law for this thing is on this single page - http://www.legislation.gov.uk/uksi/2017/752/regulation/90/ma... (with some additional info at http://www.legislation.gov.uk/uksi/2017/752/regulation/83/ma... stating that the payer can't simply revoke the payment)

The other account was the unique account matching the account number + sort code (this combination is presumably what Barclays deems the 'unique account number') - so that's "executed correctly" according to "Where a payment order is executed in accordance with the unique identifier, the payment order is deemed to have been correctly executed by each payment service provider involved in executing the payment order with respect to the payee specified by the unique identifier."

The payer had also specified the name and address, but the law explicitly states that the bank is not liable for mismatches of the name or address, it's only required to execute it according to the account number. "(5) Where the payment service user provides information additional to that specified in regulation 43(2)(a) (information required prior to the conclusion of a single payment service contract) or paragraph 2(b) of Schedule 4 (prior general information for framework contracts), the payment service provider is liable only for the execution of payment transactions in accordance with the unique identifier provided by the payment service user. " is quite a mouthful but it essentially says that even if you provided extra information, that information can be ignored.

However, the article implies that Barclays did not fulfil their requirements of "(3) The payee’s payment service provider must co-operate with the payer’s payment service provider in its efforts to recover the funds, in particular by providing to the payer’s payment service provider all relevant information for the collection of funds." which does seem to require them provide sufficient information to sue the mistaken recipient to return the money.

There's a good chance it was a 'no win, no fee' type lawyer.

They charge extra because they know they don't get paid if they loose. Also, there was a good chance they wouldnt get paid if the recipient of the money took it all overseas, or if the 74 year old died before the issue was resolved.

That just gave me a terrible idea. Legal fee underwriters who basically bet on winning cases.

This is a thing. There are plenty of people who will fund your lawsuits against others and take proceedings.

Source: I'm a plaintiff in a lawsuit that is very likely to win damages, and get contacted all the time asking if I need funding for the case.

This does already exist https://en.wikipedia.org/wiki/Litigation_funding

It's a huge business! Not sure if that makes your idea terrible or not though...maybe both?

Seems like a perversion of the criminal or tort system. So yeah, both!

Burford Capital, LCM Finance, Manolete Partners are all publicly listed companies in the UK that do this (iirc, there was a change in the law a few years ago that meant this industry really started at scale in the UK).

I have never liked the business, frankly lawyers are scummy and will (if given enough time) screw you eventually, but it exists (btw, Burford Capital are known for taking liberties with their reporting to investors...which kind of proves the point).