Banks may be "failing consumers" when it comes to joint finances

The Momentum UK Team 08 July 2013

Banks may be failing some customers who need to safeguard their finances when their relationship breaks down according to women’s finance website SavvyWoman.

Despite around 40% of marriages ending in divorce - with a breakdown rate much higher for unmarried couples - it appears that banks are failing to establish and carry out procedures to help consumers going through a divorce or separation.

When a couple opens a joint account, they are both equally liable for any debt on that account - regardless of who ran it up. SavvyWoman found that this is not always clearly explained, or is buried in the account’s terms and conditions where it can be hard for consumers to find.

Figures from the Financial Ombudsman Service (FOS) demonstrated an increase in the number of enquiries and complaints relating to relationship breakdown and joint accounts in 2012. The FOS also found an inconsistency in approach from banks when it came to providing information for joint account customers and when disputes materialise.

Problems can arise with joint accounts when the couple decides to split, especially if the breakup isn’t on good terms. When couples tell their bank they're in dispute and they have a joint account, banks should take reasonable steps to ensure that both partners have to agree to any transactions, or freeze the account, as soon as possible.

Unfortunately this does not always happen according to the report, which means that one partner can withdraw money from the account without the other person’s knowledge. Sarah Pennells founder of SavvyWoman founder said:

"Of course, couples who take out a joint account have a responsibility, but so do banks, and I’d like to see all banks and building societies help couples manage their joint accounts when their relationship breaks down, by making sure both partners have to agree any extra spending or offering to freeze the account.  

"They should also give couples consistently clear and concise information about their responsibilities for any debts on joint accounts before they sign to open the account.  At the moment, some banks just cover this in their terms and conditions – which can run to many pages** – while others ask couples to sign a separate letter spelling out who’s responsible for any debt on a joint loan.”