Get it right chaps/CHAPS

Bank of Scotland were recently faced with an action from one of its business account holders. The bank made a CHAPS transfer of funds from its client to a third party with a Barclays account. The funds were sent to the account number and to the bank with the sort code set out in the CHAPS instruction received by BoS from its client.

However the client later established that name of the beneficiary of this account was not the party to whom the client believed it was transferring the funds. It is alleged that it was given false information and BoS did seek to have the funds returned by Barclays. Barclays refused to do so without a court order and in any event, the funds swiftly left the account to which they had been sent.

The court rejected a request for summary judgement by the client against BoS that it somehow breached its obligations when sending the CHAPS. The court concluded from the evidence of how CHAPS works that a receiving bank that is able to match the account number and sort code to one of its accounts will be expected to credit that account with the money. It is not expected to match names to accounts.

For more information contact David Lewis