How two banks misplaced £12,000 - and spent five months looking for it

How two banks misplaced £12,000 - and spent five months looking for it

Angela Banham has been waiting five months to find out where the £12,000 she transferred from Abbey to Halifax has gone.

In January she requested what she assumed would be a straightforward transfer of a cash Isa, the tax-free savings account, to Halifax which was offering a better rate of interest, 6.2 per cent at the time, on its two-year fixed-rate Isa account.

'The various bits of paperwork were completed quickly by me, and I believe I was told it would take about three weeks to open the new account at Halifax,' she says.

She received a letter from Abbey on 11 February confirming that the amount - £12,551.62 - had been transferred. She expected it to appear instantly in her new Halifax account, but days later it was still not there. Five months of worrying, stressful and fruitless phone calls followed, as Banham repeatedly called both banks.

In the middle of May, Halifax told her that the problem was with its fraud-prevention department, but as recently as last week she received a letter from the bank asking if she had yet received a copy of the cheque from Abbey - and suggesting that, if not, she should perhaps chase Abbey.

She eventually decided enough was enough and contacted The Observer and the Financial Ombudsman.

'Instead of compensating me and sorting out their own house, [Halifax] are making me wait while they try to obtain a copy of the £12,000 cheque from Abbey so they can pursue their internal.....continued below

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inquiries,' she says. 'What is amazing me - and all my friends - is that a cheque was sent in the first place. I was dumbfounded when Abbey told me they always use a paper cheque when closing an account. Is this usual? Are all banks still sending paper cheques by snail mail?'

Amazingly, the answer is yes. Last week The Observer kicked off its 'Why are we waiting' campaign to speed up the processing of Isa funds between banks after we were deluged with mail by panicked readers who have not been able to access their money for weeks.

Under HM Revenue & Customs guidelines the switching process is meant to take 30 days, but thousands of people who moved money during the 'transfer season' are finding that it takes much longer that for funds that have disappeared from their previous account to turn up with their new bank.

Vincent Cable, the Liberal Democrats' Treasury spokesman, is so concerned about the problem that he has written to the financial watchdog and the heads of Britain's banks to ask them what is being done. 'They [the banks] are pocketing money by being inefficient and avoiding paying interest,' he told The Observer last week.

The problem stems partly from the outdated transfer process: banks still write each other cheques rather than moving money electronically. Banks, building societies and the Isa trade body have been meeting over the past few weeks to come up with a way of resolving the problem, but they describe the introduction of electronic transfers as a long-term aim.

We would like to see this aim made a priority - and plenty of our readers agree. Over the past week our mail bag has been bulging with tales of people who have had problems transferring their cash and who support our campaign.