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Why Customers Must Be More Than Numbers

I read with some amazement a story in the London Daily Telegraph this week about a customer of NatWest Bank who sent £11,200 last month via online banking to an unknown company instead of his wife. Although Paul Sampson had correctly entered his wife’s name, sort code and account number when he first made an online payment to her HSBC account, he wasn’t aware that she had subsequently closed the account.

Mr Sampson thought he was transferring £11,200 to his wife: he clicked Margaret’s name among a list of payees saved in his NatWest banking profile and confirmed the transaction, but the payment went to a business in Leeds. Mr Sampson believes that HSBC had reissued his wife’s old account number to someone else, a company whose name they refused to tell him. NatWest told Mr Sampson it was powerless to claw the money back.

HSBC said it had contacted its customer, but it had no obligation regarding the money. HSBC insisted that the account number in question was not “recycled”, saying Mr Sampson must have made a typing error when he first saved the details, which he disputes. Although the money was in fact returned after the newspaper contacted HSBC, a very large issue has not been resolved.

Although news to most of us, it is apparently a common practice among banks in the UK to recycle account numbers, presumably because banking systems are so entrenched around 8 or 9 digit account numbers that they are concerned about running out of numbers. Apparently a recent code of practice suggests that banks should warn the customer making the payment if they haven’t sent money to this payee for 13 months, but according to the Daily Telegraph “No major high street bank could confirm that it followed this part of the code”.

The Daily Telegraph goes on to state that the recipients of electronic payments are identified by account numbers only. The names are not checked in the process, so even if they do not match, the transaction can proceed. “This is now a major issue when you can use something as basic as a mobile phone number to transfer money,” said Mike Pemberton, of solicitors Stephensons. “If you get one digit wrong there’s no other backup check, like a person’s name – once it’s gone it’s gone.” If you misdirect an online payment, your bank should contact the other bank within two working days of your having informed them of the error, but they have no legal obligation to help.

Mr Sampson obviously expected that the bank’s software would check that the account number belonged to the account name he had stored in his online payee list, but apparently UK banking software doesn’t do this. Why on earth not? Surely it’s not unreasonable for banks with all the money they spend on computer systems to perform this safety check? It’s not good enough to point to the problems that can arise when a name is entered in different ways such as Sheila Jones, Mrs S Jones, Sheila M Jones, SM Jones, Mrs S M Jones, Mrs Sheila Mary Jones etc.

These are all elementary examples for intelligent name matching software.  More challenging are typos, nicknames and other inconsistencies such as those caused by poor handwriting, which would all occur regularly should banks check the name belonging to the account number. But software such as matchIT Hub is easily available to cope with these challenges too, as well as the even more challenging job of matching joint names and business names.

There are also issues in the USA with banking software matching names – I remember when I first wanted to transfer money from my Chase account to my Citibank account, I could only do so if the two accounts had exactly the same name – these were joint accounts and the names had to match exactly letter for letter, so I had to either change the name on one of the accounts or open a new one! Having been an enthusiastic user of the system in the USA for sending money to someone electronically using just their email address, I’m now starting to worry about the wisdom of this…

We banking customers should perhaps question our banks more closely about the checks that they employ when we make online payments!

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