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
Saturday 17 August 2013
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.
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.
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.
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.
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.
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.
- 1 JK Rowling horrified by Harry Potter actor Matthew Lewis's raunchy photoshoot
- 2 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 3 The ten most unequal developed countries in the world
- 4 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 5 New Zealand 'the best country to work as a prostitute', says sex worker advocacy group
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Labour leadership: Battle lines are drawn as members battle over party's ideology at first hustings of the contest
The day that Britain resigned as a global power
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof