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
Arts and Entertainment
Ben Stiller as Derek Zoolander in the leaked trailer for Zoolander 2
film
Sport
footballArsenal take the Community Shield thanks to a sensational strike from Alex Oxlade-Chamberlain
Arts and Entertainment
Gemma Chan as synth Anita in Humans
film
News
Keeping it friendly: Tom Cruise on ‘The Daily Show’ with Jon Stewart
people
Arts and Entertainment
Ensemble cast: Jamie McCartney with ‘The Great Wall of Vagina’
artBritish artist Jamie McCartney explains a work that is designed to put women's minds at rest
News
Republican Presidential Candidate Donald Trump
people
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: DBA Developer - SQL Server

    £30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Customer Service Administrator

    £13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

    Recruitment Genius: Dialler Administrator

    £22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

    Ashdown Group: Contracts Manager - City of London

    £35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

    Day In a Page

    Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

    US betrayal of old ally brings limited reward

    Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
    VIPs gather for opening of second Suez Canal - but doubts linger over security

    'A gift from Egypt to the rest of the world'

    VIPs gather for opening of second Suez Canal - but is it really needed?
    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
    The male menopause and intimations of mortality

    Aches, pains and an inkling of mortality

    So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
    Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

    'How can I possibly be on the list with these writers I have idolised?'

    Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
    Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

    Bettany Hughes interview

    The historian on how Socrates would have solved Greece's problems
    Art of the state: Pyongyang propaganda posters to be exhibited in China

    Art of the state

    Pyongyang propaganda posters to be exhibited in China
    Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

    Vegetarian food gets a makeover

    Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
    The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

    The haunting of Shirley Jackson

    Was the gothic author's life really as bleak as her fiction?
    Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

    Bill Granger's seaside-inspired recipes

    These dishes are so easy to make, our chef is almost embarrassed to call them recipes
    Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

    Tourists are limp, leaderless and distinctly UnAustralian

    A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
    Blairites be warned, this could be the moment Labour turns into Syriza

    Andrew Grice: Inside Westminster

    Blairites be warned, this could be the moment Labour turns into Syriza
    HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

    The mystery of Britain's worst naval disaster is finally solved - 271 years later

    Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
    Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

    'I saw people so injured you couldn't tell if they were dead or alive'

    Nagasaki survivors on why Japan must not abandon its post-war pacifism
    Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

    The voter Obama tried hardest to keep onside

    Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen