Ombudsman recommends charity receives compensation over bank delays

Restorative Justice for All spent months trying to recover money from HSBC

(Matt Cardy/Getty images)
(Matt Cardy/Getty images)

HSBC has been told to pay compensation to a justice charity after the financial ombudsman found the bank had missed opportunities to repay thousands of pounds.

The Financial Ombudsman Service has upheld a complaint by Restorative Justice for All, according to documents seen by Third Sector. The ombudsman recommended that HSBC pay £500 plus interest as compensation.

The dispute arose after the charity made a mistake when transferring money from its account last June, which led to £5,000 being sent inadvertently to an unknown beneficiary.

HSBC repaid the money to Restorative Justice for All five months later, but the ombudsman concluded that the bank had missed two opportunities to make the repayments sooner.

Restorative Justice for All called the police for help recovering the money last year, although HSBC has said that police involvement did not influence its work to return the money.

The ombudsman’s report said: “On 15 July 2021, HSBC reported that there were insufficient funds [in the unknown beneficiary’s account] to debit the account as planned.

“However, this isn’t consistent with the bank statements I’ve seen, where the balance was just over £5,000 for that day. HSBC have also acknowledged this.

“Therefore, I think there has been a mistake made here by HSBC, and an opportunity was missed to return the funds to Restorative Justice.

“The beneficiary then called the bank on 25 July 2021 and authorised HSBC to debit their account. This was possible as the balance on the account was above £5,000.”

However, the report says that “a member of staff didn’t action this at the time. This was another missed opportunity to return the funds.

“Restorative Justice ultimately received the £5,000 back in October 2021.”

HSBC had previously offered the charity compensation of £100 and then £350, before the ombudsman recommended a total of £500. Third Sector understands that HSBC accepts this judgement, although no payment has yet been made.

Theo Gavrielides, the founder and director of Restorative Justice for All, said: “The £5,000 related to a grant awarded to our community centre to set up a free community gym, as part of our local efforts to address antisocial behaviour by providing opportunities especially to young people who are at risk.

“We were unable to proceed with our vision as the funds were not being returned. This meant not only delaying our project but also spending a considerable amount of paid and voluntary time to recover the funds. It accused a lot of stress but also distracted us from doing the work.”

The financial ombudsman confirmed that it had undertaken this case but said it could not comment without permission of the people involved. HSBC also said it could not comment without that permission.

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