Foreign Cheque Returned

Oscar the Hound

I recently paid a foreign cheque into my bank account. The account was credited the same day at that dates rate of exchange. Somewhere in the clearing process it was returned to the bank and the cheque was returned to me with a slip saying that the bank was debiting my account for the amount of the cheque.

Fair enough.

However...when I looked at my statement i realised that the amount that they debited from my account was significantly higher that the amount that was credited when I lodged the cheque.

Two things to note:

The difference cannot be explained as a charge, as there was a separate entry for the charge for the returned cheque.

The difference cannot be explained as simply reflecting the difference in foreign exchange rates on two separate days - I checked the rates and there was less than 1 cent in the difference in the rates. There is an almost 9 cent difference in the rate that they have applied.

I believe that they have applied a "sell rate" to the currency when they returned the cheque to me. I wouldn't have thought that that sort of transaction applied to this situation.

To me this seems like fraud. But I would appreciate anyone's comments about the legality/ethics of it if this is the case.

Much obliged.

Solair

The first thing to do is go into your local branch and ask to speak to the manager. Make an appointment if necessary and explain the situation.

If he/she cannot provide a satisfactory resolution, then you should contact the Financial Regulator : http://www.financialregulator.ie/ and take it from there.

They should not have lodged uncleared funds into your account i.e. they should have put the cheque through clearing and then lodged the funds to your account when it cleared. Putting money into your account then withdrawing more money than they put in is just ridiculous!

It's not up to the customer to know the intimate machinations of the banks' international clearing system for cheques.

Did the bank tell you that you would be liable for any of these charges / conversion rate differences in the event of the cheque bouncing?

unclebill98

Banks will lodge F/x chqs into customers account when they are "Undoubted Customer" and they do not feel at risk of loosing the money. As per procedure/process it will always show as cleared funds unless its sent on collection.

It did go through a clearing cycle. I agree with Solair, go to your bank and explain your fears.

superrdave

Used to work in a bank. Foreign cheques cleared into accounts straight away unless there appeared to be something dodgy about them. However, any time we had returns, we debited exactly the amount credited (cos we, as the bank, still haven't received anything for the cheque, so its not like we have lost anything). We also didn't charge for inward bounced cheques (though the outward rate is frightening). Sounds like you has been diddled. The banks behaviour is unconscionable because they have lost nothing on the foreign exchange aspect of this.

Basically, imagine when you lodge a foreign cheque, the bank essentially buys it off you for a predetermined price and then cashes it, keeping the foreign cash for itself or else selling the foreign cash for euros. Now, if they fail to cash the cheque because there is insufficient funds or a technical error with the cheque, it's not your fault and the bank lose nothing by just rescinding the contract made with you and taking the exact amount of money back. Taking more, however, is taking the piss. Talk to them, and if it is unsatisfactory, ask to speak to the manager. If that doesn't work, tell them you'll be phoning 1) their customer relations unit in dublin 2) the financial regulator and 3) joe duffy. Should do the trick.

unclebill98

superrdave wrote: »

However, any time we had returns, we debited exactly the amount credited (cos we, as the bank, still haven't received anything for the cheque, so its not like we have lost anything)

Wrong, banks F/X dept use forward rates, booking rates to transact in all F/x. They would be including the amount bought in at branch level. So even if the op got the chq back the bank would have been including the amount of the chq in the overall f/x system. So its far to use the rate on the day to debit the customer back. This can work both ways also.