How to lose £217,781.57

How to lose £217,781.57

Most professionals break into an Arctic-style cold sweat when filling in bank transfer forms.

'Check, double-check and triple-check' is the mantra. And then go back and check again 10 minutes later. After that, why not get a colleague to have a look too? After all, it's always useful to drag an unsuspecting co-worker into the 'blamestorm' that will inevitably rage if anything goes awry.

So why all this convoluted scrutiny over a job lot of random numbers? Aren't people getting too het up here?


As the case analysis below shows, get it wrong when sending a CHAPS transfer and it may well be the last time that you see the money in question.

Harsh but true.

Following Tidal Energy Ltd v Bank of Scotland plc, customers must carefully observe their bank's systems and take steps to protect themselves against making electronic payments to the wrong person.

In the Tidal case, a divided Court of Appeal held that the respondent (the bank) did not breach its contractual duties to the appellant (the customer) by effecting a CHAPS payment in circumstances where the payee’s sort code and account number, as supplied by the customer, did not correspond to the payee’s name.

The customer and the bank were taken to have contracted on the basis of existing banking practice whereby CHAPS payments are made using a payee’s sort code and account number alone.

For further information, check out the analysis from Patrick Bourke, from the Lexis®PSL Commercial team, below.

What was the background?

CHAPS, the Clearing House Automated Payments System, is the payments system operated by CHAPS Clearing Company Limited. The rules of the scheme govern dealings between banks rather than the relationship between banks and customers. The hallmark of CHAPS is the short time-scale for processing payments, 1.5 hours on a ‘straight-through’ basis (ie without manual checks).

Since at least 2007 a majority of UK clearing banks have processed electronic payments, including CHAPS payments, using the payee’s sort code (or bank identifier code) and account number. The payee’s name or account name is

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