Case Study: Joint Accounts

The following is a case study provided by the Ombudsman for Banking Services and Investments (OBSI)

Ms. D and her common-law spouse of 33 years had a $120,000 investment to which they had both contributed over the years. Both elderly, in 2003, they decided to cash out their investment and received a jointly payable cheque. The couple visited their bank and met with their banking representative. Ms. D’s spouse identified the account which the cheque was to be deposited, which the banking representative wrote on the back of the cheque. A teller completed the transaction.

Neither Ms. D nor her spouse had endorsed the cheque, and they both assumed it had been deposited into their joint account. Ms. D’s spouse passed away several years later, at which time it was discovered that the cheque had in fact been deposited into a joint account of the spouse and his daughter (no relation to the client). The daughter, executor of the estate, refused Ms. D access to the funds and eventually moved the money to another bank.

Ms. D complained to her bank that they made an error and that the money was rightfully hers: She never intended to have it deposited anywhere other than the joint account she had with her late common-law husband. She requested that the $120,000 be refunded to her. The bank declined the client’s claim, saying that even if she was entitled to a 50% share of the funds, Ms. D should have raised the issue sooner. The bank also said that the lack of endorsement was not sufficient to hold the bank responsible if Ms. D otherwise benefitted from these funds – which the bank felt she did through her spouse. Ms. D brought her complaint to us.

Complaint upheld in part

We determined that the bank was legally and professionally responsible for ensuring that the cheque was properly endorsed. Our investigation showed that the rules governing such transactions say that a cheque made payable to more than one payee must be endorsed by all parties before being deposited into an account which excludes more than one of the payees. The bank should not have deposited the cheque into an account other than the one held jointly by the client and her spouse in the absence of her endorsement. The bank agreed to compensate Ms. D $60,000, which represented her 50% share of the $120,000, plus accrued interest.

OBSI is the national independent dispute resolution service for consumers and small businesses with a complaint they can’t resolve with their banking services or investment firm. As a free alternative to the legal system, we work informally and confidentially to find fair outcomes to disputes about banking and investment products and services.

OBSI looks into complaints about most banking and investment matters including: debit and credit cards; mortgages; stocks, mutual funds, income trusts, bonds and GICs; loans and credit; fraud; investment advice; unauthorized trading; fees and rates; transaction errors; misrepresentation; and accounts sent to collections. Where a complaint has merit, OBSI may recommend compensation up to a maximum of $350,000.