Bank ordered to repay child €66,000 after father withdrew funds

Ombudsman took view there was no valid authority for father once girl turned seven

A bank has been ordered to repay a child €66,000 that it allowed her father to take from an account she should have controlled.

Details of the case are contained within the latest set of legally binding decisions by the Financial Services and Pensions Ombudsman. The decisions were issued during the second half of 2020.

In one case, the parents of a child called “Daisy” opened a junior bank account on her behalf when she was three months old. The account was used to deposit monthly child benefit payments.

Her father was authorised to make withdrawals until she reached seven years of age, at which point Daisy was to become the signatory. However, he continued to make withdrawals until virtually all money was removed from the account.

The account “appeared to have been operated by Daisy’s father as if it were his own”, the ombudsman noted. After Daisy’s seventh birthday, a large number of debits, totalling approximately €66,000 had been taken from the account.

Daisy was unaware of the existence of the account and stated that no consent was ever given to her father to withdraw funds after she turned seven and that she did not benefit from the withdrawn funds. She requested the bank refund the money.

The ombudsman took the view there was no valid signing authority for the father on the account once Daisy turned seven. Accordingly, he upheld the complaint and directed the bank to reimburse the account.

Addiction problem

In a separate case, an Irish investment company was ordered to pay a compulsive gambler compensation of €17,000 after it failed to heed his warnings that he had an addiction problem.

Having opened a trading account in March 2017, “Jim” experienced significant financial losses and began seeking help for a gambling addiction.

He advised the investment company that same month that he was a compulsive gambler, was mentally unwell and was very vulnerable, requesting that a lifetime ban be placed on his account.

Despite this, the investment company encouraged him to start trading on his account again, after which he suffered further losses and withdrew his funds.

When he contacted the company for help and advice in relation to the losses, it suggested he deposit £10,000 and offered him further investment options. He lost more money over the following few days before withdrawing the remaining funds.

The ombudsman said the investment company had “failed abysmally” to meets its obligations as a regulated entity.

The ombudsman’s report also featured a number of complaints regarding tracker mortgages.

He said it was “disappointing” that one particular bank continues to argue that certain customers have no entitlement to a tracker rate of interest.

“This bank persists in this line of argument, even in circumstances where it has already conceded the customers’ entitlement to a tracker rate, as part of the Tracker Mortgage Examination directed by the Central Bank,” he said.

“This is not helpful in terms of seeking to resolve these complaints. In addition to the additional inconvenience caused to the bank’s customers, this approach needlessly increases the resources required by the bank itself, and by this office.”