Account of the case
The customer has made a claim to FINE about two payments, one made in 2020 and one in 2023. The bank has made a refund to the customer for the 2020 payment during the FINE process. Only the 2023 payment is still a dispute at FINE.
The customer has made a payment order on 13 January 2023 to First Caribbean International Bank in Turks and Caicos Islands. The payment order has included the following instructions made and accepted digitally in the customer’s web bank:
”beneficiary account: [account number X]
beneficiary: FIRST CARIBBEAN INTERNATIONAL BANK
payment message: [company X] --[account number X]
[company Y]— [account number Y]
beneficiary bank: FIRSTCARIBBEAN INTERNATIONAL BANK (FCIBTCGP)”
The payment was made in euros. It was sent via two intermediary banks which were Banco Santander in Spain and Canadian Imperial Bank of Commerce in Canada.
According to the customer’s bank statement, a cross border transfer of 3.250 euros was made on 13 January 2023 and the bank’s service fee of 35 euros was charged. The amount of 3.175 euros was returned on 16 February 2023. The bank charged a service fee of 6 euros and returned it to the customer on the same day.
Customer’s complaint
The customer claims that the bank has not effected the payment in 2023 according to the given payment instructions. The customer didn’t tell the bank to send payment to Canada.
The customer demands a return of 75 euros for the exchange rate differential, 35 euros for the service fee, and 6 euros for the returned payment fee.
The customer agrees that he has made several outgoing currency payments in the bank. Years ago, the staff at the International Payments desk were competent. Over the past few years, they have not been.
Bank’s reply
The bank finds the customer’s claim regarding the payment order made on 13 January 2023 unfounded. The customer has provided incorrect information on the basis of which the payment order was executed. The bank's liability is limited to the fact that the payment order was sent within the time period mentioned in point 8.2 the General Terms and Conditions for Outgoing and Incoming Currency Payments and made available to the intermediary bank of its choice.
When the customer gives a payment order through the bank’s online bank, a link to the terms and conditions applicable for the outgoing foreign payments is presented in the online bank. Furthermore, the customer has made several outgoing currency payments for over ten years in the bank. Many of the payment orders were made in the branch office by providing the information in a form for the outgoing currency payments. In the form the customer explicitly has confirmed to have made himself familiar with the General Terms and Conditions for Outgoing and Incoming Currency Payments and accepted them by signing the form.
The instructions were made and accepted digitally in the customer’s web bank. The payment was effected according to the given payment instructions. Because the payment was made in euros, it is not possible to send it directly without the intermediary banks. The recipient's bank has stated in international banking registers that they can accept EUR payments through Canadian Imperial Bank of Commerce, thus Canadian Imperial Bank of Commerce was added as an intermediary bank for the payment. However, the bank cannot send EUR payments directly to a Canadian bank, so the bank’s intermediary bank, Banco Santander, from Spain, was added to the payment as the first intermediary bank.
There might be multiple intermediary banks involved in execution of an international payment. The payer’s bank cannot control the payment information after the payment information has been transferred to the intermediary bank, nor the related fees regarding actions of intermediary banks. The service fee for the payment accepted by the customer in his web bank only covers payment cover and information transferred to the first intermediary bank.
The claim regarding the fees is 116 euros in total. The bank has charged its normal fee of 35 euros for the outgoing foreign transaction (other than SEPA) according to the Price list for everyday banking services with the acceptance of the customer. This consists of 10 euros for an account transfer abroad other than as a SEPA payment, and 25 euros for charges for full-amount payments. For the latter payment it is stated on the price list that if the payer also pays the recipient’s bank fees (to the full amount to the recipient), the payment is subject to an additional charge.
This fee covers transfer to the first intermediary bank. Banco Santander returned the payment to the bank with information: “Beneficiary bank states: account not hel/close”. When there are several intermediary banks in payment, it is not always clear who has deducted charges. In this payment, Banco Santander informed only ”less charges”, so most likely both Banco Santander and Canadian Imperial Bank of Commerce have deducted their own charges. 75 euros was deducted from the payment once it was returned by Banco Santander.
The bank has refunded the service fee EUR 6 that was deducted from the returned payment based on the return.
Further clarifications acquired
According to SWIFT MR103 sent to Banco Santander, beneficiary information is the same as given by the customer in web bank.
Company X has stated to the customer on 31 January 2020:
“Our bankers have confirmed this afternoon that your wire was returned because there was insufficient information to credit the funds; only the invoice number was supplied.”
The bank has provided a screenshot of Cross-border transfer from the bank’s web bank. In the sidebar there is a box that is titled Terms and conditions. In the box is stated the following (underlined text is a link):
“The payment is transferred to the beneficiary in the euro payments area according to the general terms and conditions for euro payments for transfers or outgoing and incoming foreign payments, and on the basis only of the account number stated by the payer.
In the form for an order for Outgoing foreign payment the payer confirms with their signature the following:
“I confirm that the details above are correct and authorize the bank to debit my bank account with the service fees in accordance with above order. I have in my possession the General Terms and Conditions for Outgoing and Incoming Currency Payments or General Terms and Conditions for Euro-denominated Payments transmitted within the Single Euro Payments Area, and have made myself familiar with them and accept them.”
In addition, FINE has been provided with the customer’s bank statement, the bank’s price list for everyday banking services, the General terms and conditions for Outgoing and Incoming Currency Payments, and receipt of the payment made on 13 January 2023.
Resolution recommendation
Formulation of question
In order to resolve the dispute between the parties, the Banking Complaints Board must assess whether the bank has effected the payment according to the information given by the customer and the terms and conditions of the payment.
The applicable norms of law and terms
According to the bank’s General terms and conditions for Outgoing and Incoming Currency Payments section 3 (Issuance of details for a payment order):
“The payer issues a payment order by giving the bank the necessary details for the execution of the payment. The payer consents to the execution of the payment order by signing a payment order form or by confirming the payment order using a personal or business identification code issued by the bank, or in another manner agreed upon with the bank. […]
The payer is responsible for the authenticity of the details of a payment order. The payer’s bank is not responsible for correcting or completing a payment order, unless otherwise agreed.[…]”
According to section 12.2 (Other payments):
“A bank which is involved in the execution of a payment order is not responsible for the operations of the other parties involved in the execution of the payment order, or for their solvency.
A payment service user is not entitled to reimbursement of funds or service charges or interest if the payment has not been executed or if it has been executed incorrectly due to the payment service user. Neither is a payment service user entitled to reimbursement due to a delay in payment, if the delay of the payment is due to the payment service user.
A payment service user shall notify its bank of a non-execution of, faulty execution of or an unjustified payment transaction without undue delay from having noticed it.
Outgoing payments
The payer’s bank is responsible for the dispatch of the payment order within the time stated in section 8.2 and for making the payment order available to the intermediary bank the bank has chosen, or when a cheque has been issued as stated in the payment order received by the payer’s bank.
The payer’s bank is not responsible for the execution of a payment when the details of the payment and the cover for it have been transferred to the intermediary bank, or when a cheque has been issued.”
According to section 15 (Liability for damages and limitations of liability):
“The service user’s bank is liable to reimburse the user only with the direct damage arising from an action taken by the user’s bank in breach of either law or these terms and conditions when transferring a payment. Such direct damages are necessary investigation charges incurred to the user for the investigation of the error. A payment service user is not entitled to receive compensation from his/her bank for indirect damages unless the user notifies his/her bank within a reasonable time after he/she detected or should have detected the error. […] The payer’s bank, the intermediary bank or the payee’s bank is not liable for possible indirect damages incurred to the payer, payee or third party from an error in the transfer of payments.”
Evaluation of the case
It is undisputed that the customer made the payment order and accepted it digitally in the customer’s web bank. According to customer’s instructions, the payment was to be paid to company X’s account in First Caribbean International Bank. Also, according to the customer’s instructions, the payment’s message named two different companies and their account numbers (of which one was company X’s account number).
The payment was transferred via two intermediary banks: Banco Santander and Canadian Imperial Bank of Commerce. The payment was returned to the bank after a month. 75 euros was deducted from the payment when it was returned to the bank. It is unclear which bank or banks deducted their own charges. It is also somewhat unclear why the payment was returned.
According to the General terms and conditions for Outgoing and Incoming Currency Payments, the bank is responsible for the dispatch of the payment order within the time stated in section 8.2 and for making the payment order available to the intermediary bank the bank has chosen. Furthermore, according to the terms and conditions, a bank which is involved in the execution of a payment order is not responsible for the operations of the other parties involved in the execution of the payment order.
The customer hasn’t explicitly agreed to the aforementioned terms and conditions when he made the payment in the web bank. The customer has made several outgoing currency payments with the bank for over ten years. According to the bank, the customer has used on several occasions the form for an order for Outgoing foreign payment in which the customer has confirmed that he has in his possession the terms and conditions. The customer has not declined this. Furthermore, a link to terms and conditions has been present on the screen when the customer made the payment. The Banking Complaints Board finds that the customer has accepted the General terms and conditions for Outgoing and Incoming Currency Payments when he made the payment.
The Banking Complaints Board finds that the bank has effected the payment according to the instructions given by the customer in the web bank. The SWIFT message sent to the first intermediary bank, Banco Santander, has the same information that the customer had given.
The Banking Complaints Board finds that the bank has acted in accordance with the terms and conditions agreed with the customer, and the bank is not liable for the returning of the payments and charges deducted by the other banks.
Final outcome
The Banking Complaints Board does not recommend compensation to the customer.
The Banking Complaints Board’s decision was unanimous.
BANKING COMPLAINTS BOARD
Chairman Sillanpää
Secretary Heino
Members
Atrila
Makkonen
Piilo
Punakivi