Upheld: account administration error; incorrect removal of account holder complaint against Yorkshire Building Society

Decision detail

Summary

Mrs H complained that Yorkshire Building Society removed her daughter from a joint account in error in 2024. The removal was discovered during tax return preparation and resulted in the interest on the account being taxed at a higher rate, costing Mrs H an additional £1,462.53 in income tax. Yorkshire Building Society accepted the error and offered compensation of £1,462.53 for tax losses plus £325 for distress and inconvenience. The ombudsman upheld the complaint, finding the firm's offer fair and reasonable, and required Yorkshire Building Society to pay the full amount of £1,787.53.

The Ombudsman's reasoning

The ombudsman found that Yorkshire Building Society's removal of the daughter from the account was clearly an error that the firm had accepted. The only lasting impact was the additional tax paid due to inability to split interest. The ombudsman was satisfied that the £1,462.53 offered fairly compensated the actual tax loss incurred, and that this compensation would not itself be taxable as it represented compensation for financial loss rather than income. The £325 for distress and inconvenience was considered fair given the impact on Mrs H and her daughter.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website