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.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
educationTo mark International Women's Day, Sarah Brown on how charities have brought proper joined-up thinking to the delivery of education
- 1 The future of sex: The first female condoms were derided, mistrusted and shunned - but will their modern counterparts catch on?
- 2 South African rhino finally put down after roaming Kruger park for days with horn hacked off and bullet in brain
- 3 Study suggests that 'gaydars' are real - at least for women
- 4 Man stabbed with Legend of Zelda Master Sword in serious condition
- 5 First clip of Outkast's Andre 3000 in Jimi Hendrix biopic All Is By My Side emerges
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
iJobs Money & Business
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...
£30000 - £40000 per annum + benefits: Pro-Recruitment Group: Personal Tax, FTS...
Day In a Page
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew