Post dated cheque coming out early?

[norvernrob]

Posting this in the general thread as it could apply to any bank.

 

Last month I sent a post-dated cheque for a loan payment (to Citifinancial). the cheque was dated 28th april. I checked my account on the 26th and the cheque had come out, making me overdrawn. The following day I had a payment for £30 come out of the account. If the cheque hadn't come out early there would have been sufficient funds to pay the £30, however dear old HSBC want to charge me £25 'overdraft review' fees for both the cheque taking me over limit AND the following £30 payment. I immediately sent an email to HSBC customer services stating that it was a post dated cheque, they had let it come out early and I expected them to remove all charges related to the incident.

 

Had a nice reply (note: sarcasm) via email from the customers favourite, Mr Bowden.

 

""""""""""""""""""""""""Thank you for your e-message dated 27 April 2006.

 

Please accept my sincere apologies for the delay in this response.

 

After reviewing your records, I can confirm that the Cheque (number:******) for amount GBP***.** was honoured on 26 April 2006.

 

Please be advised that we discourage customers from issuing post dated cheques as it can cause difficulties in managing the account if the cheques are presented for payment before the date on the cheque.

 

This is because the payee may not check the date of the cheque and pay it into their account without it being noticed by the receiving bank. Please note that we will not be able to prevent the payee from presenting post dated cheques into the account before the cheque date.

 

In this instance, I can confirm that the overdraft review fees of GBP50.00 have been applied to your bank account during charging period 11 April 2006 to 1 May 2006. These were due to the following :

 

26 April 2006 - GBP**** overdrawn

27 April 2006 - GBP**** overdrawn

 

The charges have been applied correctly. Please note that we will only charge an overdraft review fee of GBP25.00 every time you go overdrawn or further overdrawn without our agreement or exceed or further exceed an agreed overdraft limit. We also promise that we will not charge overdraft review fees for:

 

- Any borrowing not agreed with us in advance, if this is the first time this has happened in the last six months.

 

- Small overdrafts not agreed with us in advance (not more than GBP10.00) or for overdrafts above an agreed limit if the excess borrowing is small (not more than GBP10.00).

 

- Borrowing without an agreed overdraft limit if the borrowing is GBP50.00 or less and was for no more than 14 days in any one charging month.

 

In order to avoid a similar situation occurring in future I would recommend careful monitoring of your account to ensure your balance remains within your agreed overdraft facility.

 

If you wish to discuss this matter further, may I suggest that you contact us on 08457 404 404. """"""""""""""""""""""""""""

 

 

Obviously Citifinancial shouldn't have paid the cheque in early, but surely someone at the receiving bank should have noticed this? I am at the LBA stage with HSBC anyway, so I still have time to add the £50 to my claim.

 

Who is responsible for paying me my charges back? Citifinancial for paying it in early, the receiving bank for taking a cheque with an advance date on, or HSBC for honouring it? (edit: would it me dishonourable of me to claim it back from Citifinancial for paying it in before the agreed date, then adding it on to my claim against HSBC as well? :O))

 

Thanks in advance!

[alanfromderby]

I would say that it would be HSBC since you have a contract with them that would seem to me to imply that they will make payments when they are properly authorised - surely this cheque was not properly authorised since it was not in date.

[Bookworm]

From the BBA website:

 

http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=263&a=5603&view=print

 

"Sometimes customers 'post-date' a cheque. This is a date in the future and essentially means that the customer intends that the bank will not pay the cheque earlier than the date inserted on the cheque. If a post-dated cheque is paid in before the date on the cheque the bank may pay it or return it marked ?post-dated'. Most banks do not encourage post-dating cheques. You should be careful to ensure that a post-dated cheque is not presented to a bank before the date on the cheque. Some banks state in their terms and conditions that they will pay a post dated cheque on first presentation if the cheque is otherwise in order."

[alanfromderby]

Yes, but then the BBA think that bank charges are perfectly in order!!

[Bookworm]

Very true. But I think the point about T&Cs in this case is relevant.

[Bookworm]

Ok, then, this might help:

 

http://news.bbc.co.uk/1/hi/programmes/moneybox/3537727.stm

[Robertxc]

I would say that whichever bank debited your account has to give it back.

 

The thing to bear in mind is that once a cheque has been scanned by the bank teller by running it through the wee machine which reads the numbers on the bottom, the teller then inputs the amount of the cheque. I don't think she also inputs the dat. thereafter, the whole thing is totally automated. The reason banks don't like post dated cheques is that they are simply not set up to deal with them. Instead they rely on the payee not presenting it before the intended date.

 

Interesting phraseology:

 

I can confirm that the overdraft review fees of GBP50.00 have been applied

 

I've never seen charges described like this before. Seems that they are trying to imply every time an account is about to go overdrawn a real person has a look and decides whether or not to allow it. Maybe they even hold a meeting or two. Not.

 

I'm definitely detecting trend in the communications coming out the banks of trying to imply a much clearer link between charges and actual effort on their part. All implied of course, nothing explicit which could be challenged.

[norvernrob]

Thanks for that info, obviously the bank aren't going to remove the pending charges then. I'll add the charges to my claim when it gets to the moneyclaim stage.

 

I'll also speak to Citifinancial tomorrow, as we agreed over the phone that I would date it the 28th, as that was that date I got paid. See if I can get a £50 reduction in this months payment.

[norvernrob]

I would say that whichever bank debited your account has to give it back.

 

The thing to bear in mind is that once a cheque has been scanned by the bank teller by running it through the wee machine which reads the numbers on the bottom, the teller then inputs the amount of the cheque. I don't think she also inputs the dat. thereafter, the whole thing is totally automated. The reason banks don't like post dated cheques is that they are simply not set up to deal with them. Instead they rely on the payee not presenting it before the intended date.

 

Interesting phraseology:

 

 

 

I've never seen charges described like this before. Seems that they are trying to imply every time an account is about to go overdrawn a real person has a look and decides whether or not to allow it. Maybe they even hold a meeting or two. Not.

 

I'm definitely detecting trend in the communications coming out the banks of trying to imply a much clearer link between charges and actual effort on their part. All implied of course, nothing explicit which could be challenged.

 

I have never had any charges related to like this before either. Everything comes out of my account, and always has done no matter how much it takes me over my limit. They are usually referred to as 'over limit' charges though.

 

I'm still adding them onto my claim, unless of course they can prove in a court that it cost the £50 to make those 2 payments, and I have a funny feeling they won't.

[lookinforinfo]

It looks as if the rules relating to post dated cheque has changed over time.

Banks may not like people using pd cheques for a variety of reasons, but that is not

sufficient to ignore the customers instructions and pay the cheque.

 

I was surprised to see that some Banks now inform their customers not to post

date cheque and they will pay the cheque on presentation if everything else is in order regardless that the cheque is post dated. From the letter to you, I gather

that while your bank frown on the practice, it seems that it is not laid down in your T&C's. Therefore, whatever the smokescreen put up by your bank, they failed to

notice the date at the time of payment. It is a pity that you did not let us know

straight away, since the advice would surely have been to inform the Bank that you wished to stop the cheque-which would have been within your rights since the

cheque was not yet "in date."

 

It may also may be that Citifinancial 's bank missed the date on the cheque,

though not necessarily. If it was CF's policy not to accept pd cheques, and you

may have to ask them about that, then they may have instructed their bank to

accept the cheque anyway. Their is no liability on their bank in any event as they are the accepting bank, not the paying one.

 

CF may have been at fault in presenting the cheque early- especially if you pointed out to them what you had done, but the responsibility lies with your bank for paying it. They ignored your instruction not to pay the cheque until the due date.

 

I have been looking through the Bills of Exchange Act 1882 and the cheques Act 1992

trying to find reference to pd cheques without result. However I did come across

an interesting website [Citizens Advice]relating to banks in Jersey. I appreciate that they may be

subject to different laws than we are but I do agree with there conclusions. And

as far as I know, regardless of banks T&C's, I doubt the legality of them forbidding

the use of pd cheques. And I certainly do not agree they have the right to pay

a cheque early and not have to accept the consequences. Rant over. THe url is below

 

http://www.cab.org.je/131010.htm

 

Post-dated cheques

Nobody is obliged to take a post-dated cheque as, by law, a post-dated cheque does not count as settlement of a debt, however, the writing of post-dated cheques is not specifically prohibited under banking terms.

 

If a bank puts through a post-dated cheque before it's date and thus makes it's customer overdrawn, the charges will normally be refunded, depending on the bank's policy. Lloyds/TSB have a policy of not refunding charges incurred by a customer issuing a post dated cheque which it has processed too early. It is the bank's responsibility to check the date on a cheque. Credit Card companies will usually accept post-dated cheques, but a note should accompany the cheque pointing out the date for cashing. Some banks charge a fee for the use of a post-dated cheque to pay credit card bills. .

 

Advisers should note that by law banks should always refund charges incurred by the bank failing to carry out the customer's intructions. A claim by a bank that postdated cheques are not permitted, and/or that the bank has no responsibility for the consequences of cheques being cleared early should be challenged.

[trundlecat]

Rules & Regulations aside, I once sent a cheque for a birthday present dated on the day of birthday & it was cashed early. I didn't mind & they'd told me they'd done it but they had altered the date on the cheque. I used to think that any changes on a cheque had to be initialled but it would seem it doesn't make a difference.

 

If I'm sending a post dated cheque these days I always write "THIS CHEQUE IS POST DATED **/**/**"" across the top in big letters.

[diddled]

Ive also had post dated cheques debited to my account early (HSBC). I queried these at the time because they resulted in a penalty charge being applied to my account. As HSBC told me that their systems do not recognise post dated cheques this must be further proof that everything is automated

[lookinforinfo]

Ive also had post dated cheques debited to my account early (HSBC). I queried these at the time because they resulted in a penalty charge being applied to my account. As HSBC told me that their systems do not recognise post dated cheques this must be further proof that everything is automated

 

It may be true that their systems do not recognise post dated cheques. However, in this country the responsibility for paying a cheque lies with the branch where the cheque was drawn. Before paying the cheque, it should be manually scanned to see that the cheque has been filled in properly. IE that the date is in order; there is a payee; that the words and figures tally and it has been correctly signed. Also have any alterations to the cheque been signed by the drawer. And is there a "stop" on the cheque. All these factors have to be in order before the question of whether there are sufficient funds in the account comes into the equation.

 

If their systems do not recognise postdated cheques [and I accept that a computer

would not recognise that fact as the date of each cheque paid in is not inputted],

then how is it that banks DO recognise when cheques are out of date [ie after 6 months] and a prime example of that is in the first week of January when the year

changes. The only way it can be done is manually. Your bank did not lie, but were

extremely economical with the truth. Basically they missed the fact that the date

was wrong and it should have been returned unpaid. And in those circumstances I

understand that banks do not normally charge the customer.

Armed with that info. you could try again, pointing out their failure to spot their mistake and their questionable attempt to deny their liability. [Copy to OFT?]

[Robertxc]

Are you sure banks can automatically tell if a cheque is more than 6 months old? I don't see how they could, for the same reason they're not set up to detect post dated cheques.

 

Could it be that they're just more observant in January because they know that there are often mistakes with the date?

[lookinforinfo]

That was precisely my point Robertxc-that banks cannot tell automatically that a cheque is out of date. Which is why I said "The only way it can be done is manually". In other words someone has to look at every cheque due for payment

to confirm that it is in order. And a cheque that is not in date at the time of payment, should not be paid.

 

Robert I am hoping that you have misread my previous post [something I have done myself on many occasions] rather than my post being confusing. IF it is my fault

and Diddled especially is still unclear as to how the bank misled him, I will rephrase

that post.

[norvernrob]

I sent a reply to HSBC stating that someone had made an error in not checking that all the details on the cheque were correct, and that I refused to pay charges incurred due to their incompetence.

 

Here is the reply.

 

***********************

 

Dear Mr ********

 

Please accept my apology for the delay in responding to your e-message dated 8 May 2006.

 

As previously advised, we discourage customers from issuing post dated cheques, as it can cause difficulties in managing your account, if cheques are presented for payment before this date.

 

This is due to the payee, who may not check the date of the cheque and pay it into their account, without it being noticed by the receiving bank .

 

Due to the volume of cheques processed by the bank on a daily basis, you must assume that your cheques will be paid, on the date they are presented to your bank account.

 

I would recommend that you contact the payee and arrange an alternative method of payment. I regret to inform you that as the charges have been calculated correctly, no refund is due on this occasion.

 

I trust this clarifies matters.

 

Yours sincerely

 

 

Mr M Bowden

Manager Customer Credit Services

 

*************************

 

So basically they are saying that as they process so many cheques they can't be arsed to look at them properly.

 

These charges are due to come out of my account on the 01/06, but my moneyclaim will be lodged on the 18/05. As they have made it clear they won't refund can I add these charges to my moneyclaim or will I have to start pursuing them again next month? (which I have no qualms about doing)

 

I can't be bothered to keep banging my head against a wall with this d*ckhead!

[mahala]

On the topic of cheques being out of date, or having the wrong year written on them ...

 

A few years ago I tried to pay in a cheque from my Mum into my bank. The counter assistant picked up that the date was wrong, because it had the wrong year. She told me that they expect it in January, when the year has just changed and let them through with the wrong year on, but as this was [April or May or something], they would expect people to know what year it was by then, and get it right, so refused to process it.

 

What i couldn't believe was a) that my Mum had got the year wrong that far into the year and b) in January the bank (Abbey in this case) will happily accept cheques with last year's date on them!

[lookinforinfo]

Go on give it one more try -just for the hell of it.

Something along these lines....... The responsibility for carrying out my instructions

does not rest with the payee nor the receiving bank as you know. It lies with your

branch. You have already admitted paying the cheque ahead of its due date and

pressure of work is no excuse. And the Citizens Advice Bureau has stated "Banks

should BY LAW always refund charges incurred by the bank failing to carry out the customer's intructions. A claim by a bank that it has no responsibility for the consequences of cheques being cleared early should be challenged." I look

forward to confirmation that these charges willl not be applied. Failure to do so will result in my immediate application to the Courts for restitution.

 

Then you won't have to worry where to add the charges to. [if you look at a previous post of mine on the first page, you will see the last lines are from the

Citizens Advice website.]

[rbrears]

If I recall correctly ( the memory is a bit fuzzy on this) I am fairly sure that since the Cheques Act 1992 (which amended the Bills of Exchange Act 1882) a bank cannot be held negligent if it pays a post-dated cheque on first presentation.

[lookinforinfo]

I think your memory must be fuzzy. The 1992 act was concerned with cheques

that had "account payee only" written on them. After that it was reinforced that

it was the responsibility of the receiving bank to ensure that cheques so marked

had to be paid into that specified account and no other. Prior to that act it had

been a grey area for banks.

 

And in 2004 no less an august? body than the British Bankers Association had this to say

 

Understanding Cheques

 

"Sometimes customers 'post-date' a cheque. This is a date in the future and essentially means that the customer intends that the bank will not pay the cheque earlier than the date inserted on the cheque. If a post-dated cheque is paid in before the date on the cheque the bank may pay it or return it marked ?post-dated'. Most banks do not encourage post-dating cheques. You should be careful to ensure that a post-dated cheque is not presented to a bank before the date on the cheque. Some banks state in their terms and conditions that they will pay a post dated cheque on first presentation if the cheque is otherwise in order."

 

As this lot truly are apologists for all the Banks, you can be 100% certain that there

is no legislation covering banks for paying post dated cheques early as these guys

would have said it. If they had an ounce of decency in them, they would point out

that if a bank does pay it early they are ignoring their customers instructions.

Any bank doing it despite their t&c's is acting unlawfully and would not have a leg to stand on in Court.

In fact, if they say you are not allowed to post date a cheque, and one is presented for payment, under their own t&c's, they should return it as it

contravenes their regs. Goddam banks want it both ways.

[BankFodder]

I think that the payment of post dated cheques before they due date is a breach of an implied term that the bank will carry out its customers reasonable instructions.

 

If you get to the stage of having to make a claim, I would be tempted to make the point by including this in the claim. In other words I would claim generally for the charges and in any event I would single out the charges that were incurred as a result of the payment of the post dated cheque and I would make an allegation in the alternative that payment of the cheque was in breach of contract alternatively again negligence. It won't hurt your claim. But it will make them pay attention.

 

If you decided to do this, you would have first to allege that there was an implied term as I have suggested above and then go on to allege that the implied term was breached. On the alternative allegation of negligence you would have to allege that the bank had failed in its duty of care towards you by failing to notice that the cheque was postdated and by proceeding to pay it and the by proceeding to pay it they had incurred charges on your behalf.

[norvernrob]

Go on give it one more try -just for the hell of it.

Something along these lines....... The responsibility for carrying out my instructions

does not rest with the payee nor the receiving bank as you know. It lies with your

branch. You have already admitted paying the cheque ahead of its due date and

pressure of work is no excuse. And the Citizens Advice Bureau has stated "Banks

should BY LAW always refund charges incurred by the bank failing to carry out the customer's intructions. A claim by a bank that it has no responsibility for the consequences of cheques being cleared early should be challenged." I look

forward to confirmation that these charges willl not be applied. Failure to do so will result in my immediate application to the Courts for restitution.

 

Then you won't have to worry where to add the charges to. [if you look at a previous post of mine on the first page, you will see the last lines are from the

Citizens Advice website.]

 

Thanks LFI, basically sent them the above message. See what they say now. And thanks BF, I will see what Mr Bowden replies with this time before I consider what to do next!

[norvernrob]

Just received this message in reply to the above.

 

""""""""""""""""""""""""""

 

Dear Mr ********

 

Thank you for your e-message dated 12 May 2006.

 

Whilst I do appreciate your comments regarding this matter, please be aware that our scale of charges can benefit all personal customers but each time an account has an overdraft which hasn't been agreed in advance or operates outside of the above criteria, we incur costs in reviewing and agreeing any additional borrowing.

 

Under these circumstances we believe that applying Overdraft Review Fees is both fair and appropriate and we won't refund charges that have been applied correctly. We won't, however, charge more than five fees in any one charging month, and charges applied to an account will never exceed either the maximum overdrawn balance or the amount of any borrowing which is over an agreed limit. This is part of our wider commitment to fair banking.

 

May I recommend that you monitor your account regularly to ensure sufficient cleared funds are available on your account when items are presented for payments and your account is maintained in credit at all times. By meeting this obligation, you will ensure no further charges are applied to your account.

 

If you wish to discuss this matter further, may I suggest that you contact us on 08457 404 404.

 

I trust this clarifies matters.

 

Yours sincerely

 

 

Mr M Bowden

Manager Customer Credit Services

 

"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

 

Sounds like yet another standard Email COMPLETELY ignoring every single point I raised in the message.

 

Lets see what they say when they get my moneyclaim in a couple of days time.

[lookinforinfo]

What a liberty!

Telling you to monitor your account. If they had done their job properly, there would have been no problem.

I notice they did not dispute any of the points you put to them. That's because they can't. And the letter was so worded that while they said they won't refund charges that have been applied correctly, they didn't actually claim that the charges had been applied correctly.

 

From your point of view it's probably not worth the hassle to phone them when you have a claim just about to hit them. But it would be great if you could get them to

back down and for you to get your money back now rather than later.

 

When they paid the cheque it was not "in order" and so should not have been paid-end of story-their mistake-nobody else's. Why should you have to pay? Writing postdated cheques is not against the Law: not refunding charges wrongly taken,

is against the Law.

[norvernrob]

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