How can I retrieve cash from a wrong account?

Q In July I made an online internet payment of £1,795 from my Lloyds TSB current account to my Cahoot personal loan, to close the loan account. A month later I discovered the payment had never made it - it seems the amount I paid went to the correct sort code, but the account number had the last two digits transposed.

I got the account reference number from Cahoot and passed it on to Lloyds, after which the payment was made, so either Cahoot gave me the wrong account number to begin with or whoever wrote down the number at Lloyds made a mistake.

It turns out the account number that was errorously entered is a valid account. And when Cahoot contacted this customer, he/she said: "Too bad, I've already spent it and can't pay it back." The only advice I am getting now is to take legal action, which could be costly and lengthy - is there nothing else I can do?

LW

I'm afraid not - you must go to the police about this. You say either Cahoot gave you the wrong number or the Lloyds TSB staff member wrote the number down incorrectly, but it's just as possible that you took down the number incorrectly and passed this on to Lloyds TSB, so trying to hold either bank responsible would be pretty much impossible.

Then it basically comes down to your word against the Cahoot customer's, who might argue that this is cash you owed him/her, so why should he/she pay it back? I'm not suggesting that this is what happened, just that with issues like these you would need to prove your case. This shouldn't be too difficult: ask Cahoot and Lloyds to send you letters detailing the transaction you tried to arrange. The letters should include times and dates of your phone calls, the amount involved, the purpose of the transaction, the intended recipient account number, and the date and time of the transaction. This should prove that the transfer made was erroneous - and that the Cahoot customer who received your £1,795 is liable to repay the sum or be prosecuted for theft.

Send a letter to this customer, via Cahoot, explaining that you are taking the problem to the police unless the sum is repaid within seven days, send copies of your letter to both Lloyds TSB and Cahoot, and keep a copy yourself. Send all letters recorded delivery, too. This might be enough to adjust the appalling attitude of the Cahoot customer. If there is no response, I'm afraid you will have no other option but to go to the police, bringing all documentation relating to the incident: your original loan agreement, your last statement indicating the redemption figure, and the letters from Cahoot and Lloyds.