Really strange error & now mum owes thousands- help

[Helpmymum]

I'll try and keep this as simple as possible, I'm just seeing if anyone has any advice or insight into how this might play out before we start contacting people tomorrow.

My elderly, widowed & (totally alone for the past year 😪) mother got a letter late Friday afternoon which was spent special delivery from a pension company. In short, it said that she took a bond out 20 years ago which was cashed in 15 years ago and her account was closed, she was no longer a customer. They then said that they are really sorry but they have just discovered during an audit that they had mistakenly used her bank account details with another bond for another customer and she has been receiving a monthly payment for the last 20 years in error. This amounts to an awful lot of money, tens of thousands of pounds. And it needs to be repaid. We have checked and she has been receiving the payment in her account.

She was widowed a long time ago and when my father died, my sister and I where both toddlers and so she employed a financial advisor to deal with the finances, obviosuly to eliviate the stress. She is not wealthy by any means, she owns a modest house (which was paid for by my dad's life insurance policy), has a small amount of savings (which is with the financial advisor invested in whatever he thinks) and collects her pension.

I can understand why she wouldn't question this money going in as she just left everything to the financial advisor, he obviously opened the bond and cashed it out and payments of this nature were expected/ perfectly normal.

After receiving the letter, my sister immediately called the financial advisor who said he had never dealt with anything like this before and was working from home, he would need to go into the office on Monday morning to have a look at the records. My sister then called the company in question, it's a large, well known company so she didn't take the number from the letter just incase it was a scam and found the number from Google. She called and a person in the company could not find any record of this or the letter having been sent out, however she did say she wasn't part of the relevant department and the person who's signature was on the letter did infact work there. It was so late on Friday afternoon, there was no one there who could help or knew anymore.

My poor mum has been in an absolute state all weekend, she's thinking she is going to have to sell her house to pay this back. I think technically she does owe the money as we can see she has recieved it. Does anyone have any idea of what might happen?

First thing tomorrow is a call to citizens advice and legal advice, obviosuly talk to the financial advisor and the company in question too.

I think I'm just asking if anyone knows what we might be in for here?

Thanks

Have you spoken to her financial adviser? I don't understand why they wouldn't have noticed this if they were taking care of things for her. Surely the mistake is between the company and the financial adviser?

Citizens advice OP.
Definitely don't try to figure this out or respond without expert advice first, and CAB is free.

@Helpmymum

Update- although not much more detail. We have established today that it isn't a scam. We are waiting for an email response from the company to some questions (fact finding) that we asked over the phone. The contact person on the letter was not available to talk so we left a message. Financial advisor is still looking into digging out old records but it seems they are not liable for a number of different reasons including that my mum never mentioned to them she was receiving this money (she can't explain why, she is very confused and doesn't know herself). My sister has had a conversation with a solicitor friend today who has advised this is relatively common and not to open a complaint as it will drag on and we won't achieve anything from it. Best course of action would be to reply to the email (when recieved) stating that we have taken legal advice and as it was their error and mum recieved the money in good faith, has spent it and considering her vunerable position she would not be repaying any of it. And that we consider the matter closed. This apparently might be enough to warn them off but if not, next step would be to employ a solicitor to write a letter too. She thinks we shouldn't have to pay any of this back and they are just trying it on. They will probably know that and will back down eventually.

Any thoughts on that approach would be appreciated?

That sounds perfectly sensible and good advice from the solicitor friend

Hopefully all the scam obessive posts will now stop.

Keep full records of all conversations and emails. The FA is probably right that there isn't anything that they can do about something they had no knowledge of so I'd be nice to them and hope they can find all the old files.

The company is duty bound to try and get the money back but that doesn't mean they will flog a dead horse unreasonably. I think I may have said yesterday that it will get sorted eventually although it may take time and persistence, I see no reason to change that view

Good luck

@Staffy1

Have you spoken to her financial adviser? I don't understand why they wouldn't have noticed this if they were taking care of things for her. Surely the mistake is between the company and the financial adviser?

Financial advisors don't receive copies of all their clients bank statements, how could they know if no one told them?

It may come down to what your mum can reasonably be expected to have known. If the company wrote to her saying bond was cashed, no further liability from this company, then the money started being paid to her a month later, then she should have queried it either with the company directly or through her financial advisor. Unfortunately, just saying she never looks at bank statements/letters won’t be much of a defence. You need to know what the company says about what correspondence was sent to your mum - while it is their error, if she should reasonably have known that she wasn’t entitled to the money then they have a stronger case to reclaim it although I agree that they should be willing to enter into a repayment plan.

@FlyingBurrito, this makes it sound like they would have known:
I can understand why she wouldn't question this money going in as she just left everything to the financial advisor, he obviously opened the bond and cashed it out and payments of this nature were expected/ perfectly normal

By the way, you may not need to pay for legal advice. It’s not clear if this is a pension product - you mention a pension company but then talk about a bond - but if it is a pension product The Pensions Advisory Service will provide free assistance.

I had similar with a pension transfer when I left a company. Apparently the transfer was outside the time allowed and I should repay the amount, some blah blah that my ex companies contributions had been recalled. All seemed ridiculous, I'm not sure that is even legal, I think they rely on you doing the right thing. I sent a recorded letter that I would not be paying the amount back as it was their error and I never heard from them again. I have no idea if it was a scam, looked fine, didn't phone them.

Personally I would try this and ask them to stop the payments but that she won't be returning them as it would bankrupt her, it was their mistake. Worth a try.

[quote Staffy1]@FlyingBurrito, this makes it sound like they would have known:
I can understand why she wouldn't question this money going in as she just left everything to the financial advisor, he obviously opened the bond and cashed it out and payments of this nature were expected/ perfectly normal[/quote]
Obviously we dont know the details but if the bond was cashed in there would be no monthly payments

I think the OP means that her mum wouldn't have thought it unusual. As far as the Fa is concerned the matter was closed it wouldn't occur to him that the band company would mix up the account bumbers

My situation was with legal & general if that helps.

Thanks everyone. Yes just to clear a few things up- my sister contacted CAB this morning, they said IFA would be best to advise but could pass it on to a specialist in the area and we can expect contact in around 3 working days- so I think we will hold off sending any response till receiving a reply to that. In terms of what the financial advisor is and isn't in control of with my mums money- it seems that they take her savings and invest on her behalf (with her consent of course) so are not privy to her bank account. I questioned today whether they did an annual or even periodic review of mums finances and whether she would of been questioned on her income. I.e did she ever tell them she was receiving this money and they said they did do reviews but if a client told them they were receiving money from a source then they wouldn't question it and would reasonably believe it was a source of income generated outside of their remit. The financial advisor isn't an accountant, just an advisor on what to do with the money entrusted with them I am led to believe. Mum also said that she thinks she recieves correspondence from them sometimes asking if she is okay financially and she replies saying yes and that's it. I am not sure if this is true/ ins and outs of it. And I still don't know if my mum has or hasn't told the financial advisor she was receiving this payment but either way he can not be held responsible for essentially her incompetence. It's a mess for sure, and obviosuly she has been negligent to not notice or question this anomaly.

Has she got legal cover on her home insurance? I’d be giving them a ring no way will she have to pay the whole amount back.

Hi, I’m a solicitor (albeit it not in this field) and I would be if this is genuine i think that most of the claim would be time barred as being out of time (normally 6 years from date of claim (i.e. the date she received money erroneously) or if later, 3 years from date on which they should have had knowledge that they had a claim. Of course that doesn’t stop them trying it on! If it is genuine, she should get legal advice before paying any of it back x

I would agree that you should wait until you have as much information from the pension company as possible, and see what the CAB pensions specialist says before you do anything at all.

Also worth mentioning that the Pensions Advisory Service will give you free advice and help you with the steps you need to take to sort this out.

www.pensionsadvisoryservice.org.uk/pension-problems/making-a-complaint/common-concerns/mistakes-and-overpayments

[quote DomingoinLittleOakley]I would agree that you should wait until you have as much information from the pension company as possible, and see what the CAB pensions specialist says before you do anything at all.

Also worth mentioning that the Pensions Advisory Service will give you free advice and help you with the steps you need to take to sort this out.

www.pensionsadvisoryservice.org.uk/pension-problems/making-a-complaint/common-concerns/mistakes-and-overpayments[/quote]
This doesn't appear to be anything to do with a pension, I don't think any of that will be relevant
The mum has simply received monethat wasnt for her, no need to add unnecessary complications

Sorry missed a few other questions-

This was a bond taken out with a pension company so not a pension product if that makes sense. I havn't got to the bottom of whether she did recieve a monthly income from it legitimately when it was active but the financial advisor is looking into it and I am awaiting a response.

Re home insurance- that's another issue I've tried to resolve today, I would usually help her sort this out but with covid this year she did it herself. She did actually go online and do it through money supermarket in January- I found the policy they had sent unopened today 🤦‍♀️ and have taken a look at it, the address and a couple of other details were wrong on it so I called to change them, legal expenses wasn't on it so I changed the policy to include it- this of course might be too late if we end up needing proper legal advice.

Okay, I am not a lawyer.

I just wanted to make a couple of observations that might be useful going forward.

My understanding with financial advisers or accountants is that ultimately, liability is always with the client, especially for full disclosure of what money you have.

On that basis, it might not be the task of the adviser to notice money coming in that shouldn't be. They can only work with the information given.

If you are saying the FA closed the bond without your mother's instruction, and didn't notice money coming in, that is odd. But do they have full responsibility? If your mum signed what they gave them, then I'm pretty sure the onus is on her to check what she signed.

Re solicitors, my experience is limited to buying and selling my flat, and dealing with my father's estate. Once again, the onus is on the client to understand what's being explained.

If the FA or solicitor gives wrong advice, that's different.

It's impossible for us to say what went wrong here but if you and your family can get the paperwork and look at it first, I think that would be best and if you need to involve a solicitor, I'd do it after you have checked the paperwork thoroughly yourself and taken advice from CAB.

Going forward do you have Power of Attorney for your Mum. Older people are often too proud to ask for help and when I cleared out my Fathers home before he moved into a care home there were plenty of letters unopened, cheques for an accident he had in his car going back 20 years....etc

No the FA wouldn't of closed the bond without mums knowledge or consent but her most coherent explanation as to why she has no knowledge or understanding of any of this has been that she just signed any paperwork he sent without really reading it properly. Obviosuly this isn't his fault and he wouldn't of been aware of her mental state. It's horrifying that she would do this and it obvisouly looks like she has been very stupid and brought this on herself. The reality of the situation is that my dad died very suddenly when she was a young woman (both mid 30's) and she had two very young children. She was in a deep state of depression after his death for a long time and has never really gotton over it and as we now know depression can be so dapilitating on all areas of your life. She couldn't deal with the situation as a whole and so focused on what was the most important thing (bringing up the children). She managed to keep her head above water on this (she is a fantastic mum) but keeping on top of other stuff i.e finances, she just wasn't capable of.

OP how old is your mum now? Does she have to file a tax return?

@AcornAutumn 70, I have never known her to or mention filing a tax return so my presumption is not but now you have said that I'm panicking that perhaps she is suppose to of and hasn't. Do you know how I could check this?

How on earth did they figure out it was your mothers bank details on the other persons records? If we had the incorrect bank details on someone’s record at work we’d never know who they actually belonged to! Very odd. I’d ask for copies of all her records with this company personally and see what notes etc have been put on file. 15 years is a long time not to pick up that sort of error and if she’s no longer an active customer they shouldn’t really still have active records for her, so it’s odd they do!

@Roominmyhouse that is a very good question and something I hadn't thought of so thankyou, I will be asking this going forward with the correspondence with the company.

@Roominmyhouse

How on earth did they figure out it was your mothers bank details on the other persons records? If we had the incorrect bank details on someone’s record at work we’d never know who they actually belonged to! Very odd. I’d ask for copies of all her records with this company personally and see what notes etc have been put on file. 15 years is a long time not to pick up that sort of error and if she’s no longer an active customer they shouldn’t really still have active records for her, so it’s odd they do!

That is a really good question!

Because if her original bond had been cashed in they should not have kept her details. And usually if you pay money into a wrong account you have to communicate via the bank as the bank cannot give out the holders details.

I can see that an audit would pick up that more money was going out than should, but not that any legitimate sum was being paid to the wrong account.

Unless they picked it up in a spot check.

Hmmm.