Funds withdrawn by divorced individual's partner

Due to his impending divorce, a client went to a local bank branch to remove the credit room available on a joint personal line of credit by reducing the limit to an amount just above the outstanding balance. The client was advised that it may take up to five business days for the paperwork to go through but that the changes had been made.

One week later the branch called the client and stated that over $4,000 had been withdrawn from the personal line of credit by a co-signer one day after the client's visit to the branch. The client asserted that the bank acted negligently and demanded to be reimbursed for the amount withdrawn.

The bank denied the request. It acknowledged that funds had been withdrawn after the request to lower the limit of the personal line of credit but did not believe it had acted negligently. The customer service representative had informed the client that it would take up to five business days for the limit reduction to become effective. In addition, he gave the client a copy of the Customer Service Request Commitment form, which also stated the limit reduction would take five business days. The bank informed the client that, had he told the customer service representative the reason for lowering the limit and expressed concern over the five-day delay, the line of credit could have been frozen immediately.

The client then appealed to OBSI. Our investigation confirmed that, under the personal line of credit agreement used by the bank, if more than one person has signed the agreement the obligations of those people are joint and several. Each person is therefore fully responsible for the account balance and the bank does not owe compensation for any withdrawals. We also noted that the Customer Service Request Commitment form, which clearly stated the changes would take up to five business days, was signed by the client. Had the client expressed reasons for the change, the bank could have taken different action.

There is no financial loss when the balance of a joint personal line of credit is increased by one of the authorized account holders. We concluded that there was no evidence that the bank acted inappropriately in this situation. As a result, we did not recommend compensation for the client.

(2009)