How to reclaim misdirected payments
It’s everybody’s worst nightmare – transferring a large sum of money to the wrong account. But what happens if you end up doing just that? Is there a way to get the money back? And if so, how do you go about it?
It’s everybody’s worst nightmare – transferring a large sum of money to the wrong account. But what happens if you end up doing just that? Is there a way to get the money back? And if so, how do you go about it?
What is a misdirected payment?
A misdirected payment happens when you make a payment to the wrong bank account by mistake. It’s usually because you’ve got one or more of the numbers in the account number or sort code wrong. Of course, with so many of us using online and mobile banking, there’s a lot more chance of this happening – and if you’re not careful, ‘fat finger syndrome’ could end up costing you a lot of money.
What happens if you make a bank transfer to the wrong person?
If the account you’ve accidently made the payment to doesn’t exist, the money should bounce back to your account. But if it does go to someone else’s account, it’s not always so straightforward and you’ll need to act quickly.
What should I do if I send money to the wrong account number?
While there’s no guarantee you’ll get the money back, most banks have signed up to the misdirected payments code of best practice, so they should do what they can to get your money back for you.
- Call your bank immediately
If your bank has signed up to the misdirected payments code, they should take action within two working days. They’ll investigate and, if they find a payment has been made to the wrong account by mistake, they’ll liaise with the account holder’s bank to get your money back. The good news is that, in most cases, your bank should be able to recover the money and it should be with you within 20 working days.
If, for some reason, the bank can’t get the money back – say, the person the money was sent to disputes its return or has spent it – they should tell you within 20 working days. They’ll also advise you on what action you can take – taking the person to court, for example. - Keep a note of when and how the mistake happened
Also, keep any contact you’ve had with your bank. - If the money isn’t returned, complain to your bank
Your bank will have a complaints procedure you can follow. If you can’t find it on their website, give them a call and ask them about it. After you make a complaint, the bank has eight weeks to respond. - As a last resort, you can contact the Financial Ombudsman
If you’re not happy with your bank’s response and you still can’t retrieve the money, the Financial Ombudsman may be able to help.
What’s being done to stop misdirected payments from happening?
Up until recently, banks haven’t checked the recipient’s name when you make a payment online – they’ve only checked the account number and sort code.
But things have changed. From 30 June 2020, around 90% of bank transfers are covered by Confirmation of Payee. When you make a payment online, your bank now has to check that the account holder’s name matches the account number.
This is great news for customers. The idea is to stop fraudsters, who in the past have tricked people into paying money into bogus accounts, but it can also help stop you paying money into the wrong account by mistake
What happens if money is deposited into my account by mistake?
If you’re on the other end of a wrong bank transfer and money is paid into your account by mistake, what should you do?
- Contact your bank
Call your bank and explain what’s happened. - Give the money back
If you spend it, you’ll be committing a crime and could be reported to the police.
And put yourself in the shoes of whoever made the accidental payment – they’re probably worried sick about it. If you return the money to your bank, they can pass it back to the person who made the payment. Problem solved…
How to avoid misdirected payments
Here’s how to make sure you never accidentally transfer money to the wrong account:
- Ask the person you’re paying to give you their full name. Even if only their initials are on their bank account, you’ll still need to know their full name for Confirmation of Payee to work.
- Double check – even triple check – the sort code and account number of the account you’re paying into.
- If your bank uses Confirmation of Payee and you’re told the name and account details don’t match, be very careful. Check directly with the person you’re paying that the details are correct.
- If you’re paying a bill, be sure to check the amount and payment reference.
- If you’re feeling nervous about making a large transfer, you can first send through a token amount – say £1 – and check it goes through.
- Stay on top of your finances. Among other things, that means deleting old payees from your list.
- If you’re transferring money to a relative or friend that you’ve not paid in a while, check you still have the right account details.
