Questions of cash: 'We lost 4,000 after an ATM took our card'

Q: My mum had her debit card swallowed by an ATM. The next day, she went back to the bank to retrieve the card and was told to go to her own bank, Abbey. Abbey told her it did not have the card. Its cashier then cashed a cheque of my mother's and told her that a series of transactions had withdrawn 4,000 in 24 hours.

My mum was horrified and told it to investigate the matter immediately and stop the card. She reported the matter to the police and spoke to Abbey, which promised to send her forms to report the incident for it to investigate. The forms did not arrive. My mother repeatedly phoned Abbey, which accused her of giving her PIN to someone. This was untrue. Nor was anyone behind my mum at the ATM, who could have witnessed her PIN entry.

The police refuse to take any action as Abbey has not reported the matter. Abbey refuses to refund the money. It is an awful lot of money to lose. We also want to know how her 600 withdrawal limit was breached. SS, Benfleet.

A: You tell us that initially after we contacted Abbey the bank told your mother that it had heard from us, but that it was not prepared to alter its decision refusing to refund her money causing her considerable distress. The refusal was confirmed again by Abbey in a letter. By then you had spoken with the police, which agreed with you and us that this appeared to be a sophisticated fraud. Eventually Abbey has taken what seems to us to be the reasonable approach and reimbursed your mother the full 4,000.

A spokesman for Abbey says that its fraud investigation required access to the records of the ATM used by your mother and that the third-party oper-ator of the ATM refused to provide that information. The spokesman says: "While we could not find evidence to suggest there was fraud, we could not rule this out, either, and as such we have taken the decision to reimburse the customer the full amount on the basis that we have a long-standing relationship with [her]. We feel that despite not being able to detect any fraudulent activity, the situation warranted special consideration."

If Abbey had taken this reasonable approach from the outset and displayed sensitivity and customer loyalty, your mother would no doubt still be a loyal customer. Instead, understandably, she has decided to move banks.

Q: You suggested there is disquiet about the state of health of the West Bromwich Building Society (Questions of Cash, 11 April). I have just made a substantial deposit with it. How serious are the concerns? Is my money safe? GH, by email.

A: A few days after we expressed concern about the state of the West Bromwich, its credit rating was downgraded by Moody's. While nine building societies were downgraded, West Bromwich was (with the Chelsea) the society put on to the lowest investment grade, Baa3 one notch above "junk" status. This means Moody's believes its prospects "may be... unreliable" and "have speculative characteristics". This is not good news and reflects West Bromwich's over-exposure to doubtful property loans.

However, even if the society hits further problems, its depositors remain protected under the Financial Services Compensation Scheme up to a maximum of 50,000, and the Government has stepped in to prevent individuals losing any money where an institution in the UK has failed in this banking crisis.

West Bromwich denies it is in serious difficulties. It said: "Like several other building societies, the West Bromwich Building Society is extremely disappointed to have been notified by Moody's that its credit rating has been downgraded... Moody's analysis appears to be based on an overly pessimistic house-price scenario relating to the premise that house prices will fall by 60 per cent. Together with virtually all other commentators, the West Brom disagrees...

"The West Brom wishes to stress that it remains a safe and secure home for members' savings, as evidenced by strong capitalisation and a high and increasing proportion of retail funding. In fact, over the last year, we have attracted 90,000 new members and have grown our retail savings deposits base by 1bn."

Q: I have made a complaint to Northern Rock about its refusal to allow us to change our mortgage product. We have followed its internal complaint procedure and then referred it to the Financial Ombudsman Service, which acknowledged it but told us that due to the volume of complaints, our case could take up to six months to resolve. We first logged our complaint with Northern Rock in November 2008. This means it could take 10 months to resolve. SJ, by email.

A: The Financial Ombudsman Service (FOS) accepts that it is taking longer to resolve some cases. It says that the banking crisis and recession have led to a big increase in the number of complaints it is receiving 40 per cent more now than a year ago. The difficult economic climate is also causing customers to become more willing to complain and to refer cases involving smaller sums of money. Financial services providers and customers have become less willing to settle cases. These factors are making it more difficult for the FOS to resolve disputes.

What is more, says the FOS, an increasing number of financial services providers are simply rejecting customers' claims for redress without properly investigating them. This means that the FOS has to ask more questions itself, as there is often insufficient information initially available for it to take a view on a case. It adds that about a third of cases are resolved in less than three months and 80 per cent within nine months.

The chief ombudsman, Walter Merricks, made clear in the latest issue of Ombudsman News his frustration with many firms over their failure to operate effective customer complaints services. The losers are consumers such as yourself.

Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: questionsofcash@independent.co.uk