Savvy Money: You can be held to account if a joint bank deal backfires

If your partner takes more than their share of the cash there is little you can do about it

How would you feel if you opened your bank statement and found someone else had applied for an overdraft without your permission and spent thousands of pounds without your knowledge? Not only that, but you were responsible for the entire debt? You'd probably be pretty unhappy about it. But I'm not talking about identity fraud; I'm talking about what can happen if you have a joint bank account.

When problems arise…

In fact, that's precisely what did happen to Jo R, from London, who has a joint bank account with her husband. They're in the process of getting divorced and he'd asked Jo to keep the joint account open while they finalised the finances. What Jo didn't realise was that her husband had applied for a £10,000 overdraft facility (yikes!) and, after their marriage broke down, had taken £2,700 out of the account.

Branch issues

You might expect the bank to spring into action in a situation like this, but when Jo got in touch she found the opposite. Staff at her local Halifax branch told her there was nothing the bank could do. A month later, when he'd spent almost £1,000 more, Jo went back to her bank. Again she was told there was nothing it could do.

Late response

In desperation, and after talking to counter staff, Jo withdrew £5,000 so her husband couldn't run up a bigger overdraft. It wasn't until two months later, after Jo complained to the bank, that it froze the joint account.

Halifax bank has offered Jo £150 in compensation and waived all overdraft charges, although it's since written to her asking her to repay the full amount (it's told me it's also written to Jo's husband for payment, although it's not told Jo this). It's admitted that branch staff could and should have done more, but describes what happened as an isolated incident, saying all staff are fully trained to ensure they "follow our procedures correctly and sensitively".

Joint account confusion

Banks don't keep figures on how many people have joint accounts, but over 21 million people in the UK are married and millions live with their partner so I'm sure the number runs to millions. The problem is that many people don't understand exactly how they work (research for my site showed 60 per cent of adults didn't) and the banks don't always help.

Joint accounts are a bit of an odd concept in law, in that you are "jointly and severally" liable for any debts. What that means is if one of you runs up a colossal debt and can't or won't pay, the other is responsible for the full whack. And sadly, Jo's experience isn't a one-off.

Clear information

The rules on joint accounts aren't always made clear when you sign up. Most high street banks include information about who pays off any debts in the terms and conditions which, in some cases, can be over 40 pages long.

One or two (Co-operative bank and HSBC), ask couples sign a separate agreement if they open a joint account and Nationwide staff mention it in their script if you apply via a branch or phone.

Changes needed

So, what needs to change? In my opinion, three things: firstly, banks need to make the rules around joint accounts much clearer when you sign up. That means giving couples a clearly written and short document that they have to sign.

Secondly, banks need to help customers who have a joint account if their relationship with the other account holder(s) breaks down. Either by offering to change the way the account works so both have to agree to future transactions or even by freezing it. Sure, customers have a responsibility. But banks should do their bit as well.

Lastly, banks should make sure both joint account holders agree to any increase in overdraft limits or mortgage extension. If they're equally liable to pay the whole debt, they should be kept informed about exactly what they're liable for.

Verdict

Joint accounts can be convenient but they can be bad for your wealth if things go wrong. They only work if the other account holder can be trusted and, sadly, you can't assume the bank will know what it's supposed to do if there's a problem.

savvywoman.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Content Writer - Global Financial Services

    £25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Web Developer - PHP

    £35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

    £15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Loan Underwriter

    £18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

    Day In a Page

    The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

    The Silk Roads that trace civilisation

    Long before the West rose to power, Asian pathways were connecting peoples and places
    House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

    The honours that shame Britain

    Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
    When it comes to street harassment, we need to talk about race

    'When it comes to street harassment, we need to talk about race'

    Why are black men living the stereotypes and why are we letting them get away with it?
    International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

    International Tap Festival comes to the UK

    Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
    War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

    Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

    Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
    Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

    'A subversive brothel keeper and Communist'

    Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
    Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

    BBC heads to the Californian coast

    The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
    Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

    Victorian fraudster who shook the Bank of England

    Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
    Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

    Car hacking scandal

    Security designed to stop thieves hot-wiring almost every modern motor has been cracked
    10 best placemats

    Take your seat: 10 best placemats

    Protect your table and dine in style with a bold new accessory
    Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

    Cook not the only one to be caught in The Oval mindwarp

    Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
    Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

    Can Benitez get the best out of Bale?

    Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
    Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

    Beijing witnesses new stage in the Jess and Kat rivalry

    The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
    Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

    Jeremy Corbyn interview: A shrewd operator desperate for power

    His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
    Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

    Isis executes Palmyra antiquities chief

    Robert Fisk on the defender of the ancient city's past who was killed for protecting its future