A recent case has clarified the position where a CHAPS transfer is made to an account with the correct account number and sort code but the incorrect name on the account. In Tidal Energy Ltd v Bank of Scotland plc ([2013] EWHC 2780 (QB)), the court looked at the CHAPS rules and the terms of the CHAPS transfer form which had been completed by the bank's customer.
The customer had brought a claim against the bank because it had instructed the bank to make a payment to one of its suppliers, giving the bank a sort code and account number to which the payment was made. The name of the account holder was not that of its supplier and the customer had been a victim of a fraud. The court ruled that there was no requirement in the CHAPS rules for the account holder's name to be included and in practice CHAPS transfers were processed without reference to it. It was only the destination account number and sort code that mattered.
There was no evidence that the bank had been responsible for any error in transmission of the payment. The payment had ended up with the wrong payee because the bank's customer had given the wrong sort code and account number, so the customer's claim failed.
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