Bank Errors and Refunds

i )   Interest Charge Validation and Bank Error

In the case of one large retail company the bank’s four quarterly overdraft interest calculations presented were at odds with our observation of relevant overdrawn balances and relatively keen interest rates. Using the patented Overdraft Interest Calculator (OIC) we were able to reconstruct all overdraft value balances by reference to transactions throughout the year and confirmed a discrepancy of some €1m between our reconstruction and the bank charge. Further analysis and testing identified the source of the problem, in the banks value dating arrangements

An interest refund of €1m was paid.


ii) Operation of the Bank set-off charge

One customer operated two current accounts which were netted daily to zero.

One current account, it was noted operated at an average credit of €4m and the other was managed to zeroise this with an overdrawn balance of €4m. The client was satisfied that any surpluses were thereby being cleared. What the client did not understand was the overdraft charge of €40k, when  the net position  had never  been overdrawn.  That €40k charge was explained by the Bank’s 1% charge for ‘’setting off’’ the €4m credit against the €4m overdraft. In its arrangements with the bank no reference had been made to this charge, which was computer-generated.

An interest refund was agreed for two years.


iii ) Refund of  Interest penalties

The bank computer does not report its analysis of its interest charge which can invisibly include, penalty excesses, set off and non-compliance charges. Reconciliation of the charge can often be   challenging.  One law firm client which had arranged with its bank to operate its overdraft carefully   within a €500k limit was surprised at the level of interest finally charged. During its general review, Finalysis was able to identify an apparent €30k overcharge. Further analysis showed that this overcharge included €20k of an interest penalty then arising from the invisible backdating of cheques then drawn by the client, with the other €10k relating to the basic interest charge on the invisibly higher overdraft.

The law firm client obtained a full refund.