Barely more than a generation ago, few banks and building societies had much in the way of computerised systems. So in many instances, people kept track of their accounts by means of a passbook. This was updated by the firm when transactions were made over the counter. As computerisation started to take hold, generally from the early 1970s onwards, many banks replaced these passbooks with account statements.
When all this happened, banks didn't tend to ask for the old books back. In fact, many people wanted to keep them - sometimes as a separate record of the account, sometimes for sentimental reasons. But after a time, these passbooks often found their way to the back of an old drawer or cupboard, not to see the light of day again for many years.
A sense of surprise and pleasure often accompanies the re-discovery of such books, when they appear to show a long-forgotten "nest-egg". That joy can quickly evaporate when the bank says it cannot find the account and that it must have been closed many years ago. But because of the passage of time, banks often cannot produce any records to show exactly what happened to the money. That is when people think about contacting us.
So, are banks really depriving people of these long-forgotten "nest-eggs" - or were the accounts genuinely closed- And why can't firms prove what happened - even if it's 30 or more years ago-
It is important to remember that things are usually different for passbook-based accounts with building societies - or with banks that have recently converted from being building societies. This is because building societies went on offering passbook-based accounts for much longer.
Sometimes the wording inside the passbook will say the book should be produced when a withdrawal is made - often it will say that it must be produced. But despite this, the existence of the passbook is not conclusive evidence that the account still exists. This is because banks did not refuse people access to their money if, for example, their passbook had been mislaid. Withdrawals were often allowed without the passbook if the bank was satisfied about the customer's identity and the authenticity of the transaction.
When we look into this type of complaint we need, first, to examine the bank's earliest available register of active accounts, and its register of dormant accounts.
An active account is one that is still being used and its details are recorded under the account number. But accounts are seldom recorded centrally at a bank's head office; usually there are separate records for each branch.
A dormant account is one that is not being used, and where the firm has lost touch with the customer. After an account becomes dormant, it is transferred to a separate register of dormant accounts (there may be individual ones for each branch). It is recorded under the name of the account holder and, after a time, the account number may be re-used for someone else's active account.
A dormant account remains indefinitely in the register of dormant accounts - until the customer gets in touch with the bank to claim the money. The bank cannot claim the money for itself after a lapse of time.
The law does not require businesses to keep records indefinitely, and it is unlikely that the bank will have retained any other paperwork from the relevant period. So we are unlikely to find any concrete evidence concerning the closure of the account. And the law does not require banks to pay up just because it cannot produce evidence showing how and when the account was closed.
We have to decide what is most likely to have happened, in the light of the available evidence. And we often conclude that the most likely explanation is that the account was closed many years ago - in circumstances that the customer has long since forgotten.
Here are some recent case studies.
Mr and Mrs L sent us a passbook that showed they had opened a savings account in 1964. The account was used regularly until October 1968, and the final balance in the book was £248 0s 3d. The couple had asked the firm for the money - plus interest. The firm refused, saying it believed the account had been closed many years earlier.
There was no reason for the firm to have lost touch with Mr and Mrs L - they had lived at the same address since 1963. But after we started our investigation, a second passbook came to light. That started in December 1968, and had a balance of £254 2s 11d. It carried on until the end of 1969. Alongside the final balance of £10 17s 6d were the words "balance to statement".
The most likely explanation seemed to be that the first book was mislaid some time between October and December 1968. The second book replaced it, and carried on until the account was computerised in early 1970. The account had more than likely been closed some time after that - and Mr and Mrs L had forgotten that the two books, and the statements, all related to the same account.
In early 2000, Mrs V was sorting out some old boxes in the garden shed when she came across a passbook. It was for a deposit account which she and her late husband had opened in 1965. The last entry in the book showed a balance of £132 13s 2d. Mrs V asked the firm for the money, plus interest, but it refused.
Mrs V said it was possible that the firm had lost contact with them, because they had moved house a few times. But the firm in question does have a central record of dormant accounts - although that revealed nothing. At our request, it also searched its records at a number of branches close to where Mr and Mrs V had lived - but again, nothing.
Quite often, after computerisation these old passbooks were marked up with their new computerised account numbers. But that had not happened with Mr and Mrs V's book. Taking everything into account, we felt the most likely explanation was that the account had been closed - without the passbook, and probably before computerisation - and that Mrs V's memory had faded with the passage of time.
We did, however, tell the firm that we thought its investigation of this complaint had been pretty poor. It had taken far too long to do things, and only made the further branch searches when we asked it to. We recommended that it should pay Mrs V £150 for the inconvenience we reckoned she had suffered as a result. It agreed to do so.
Mr N had a passbook which showed that, in 1930, his grandfather had opened an account on his behalf. The actual firm had long since disappeared - swallowed up during later mergers - but the "successor" firm is today one of the largest in the country.
The passbook suggested that the account had been used until November 1948. The last balance in the book was £329 6s 10d. Mr N asked today's firm to pay him the decimal equivalent of that balance, plus interest since 1948. It refused but did offer £350 as a gesture of goodwill. Mr N was not happy with that and referred the case to us. We examined all the papers and worked out, first of all, that in 1946 the account had been transferred from Mr N's grandfather's name to his mother's name. None of the entries in the book after that had been filled in like the earlier ones - and the entry dated 3 September 1946 was pretty clearly a transfer to a current account. Mr N then came up with some old records for that current account - which made it clear that the additional entries in the passbook were a private record which mirrored the current account transactions. Everything stopped in 1948. So, we were satisfied that the passbook account itself had been closed back in 1946. We then thought about what might have happened to the current account. It did not appear in the firm's dormant account records - and because Mr N's own papers did not go beyond 1948, we took the view that that account, too, had been closed many years ago.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.