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Banks accused of inviting fraudsters to go after dead people's money


Lawyers have accused banks of inviting fraudsters to go after dead people’s money through a loophole created by changes relaxing probate rules during the pandemic. 

A number of banks including Lloyds and NatWest have raised the threshold for when a grant of probate – the legal permission for dealing with a deceased person’s assets – is needed before accessing a dead relative’s account.

Guidance suggests institutions should ask for legal permissions to ensure only the executors of the estate deal with a dead person’s money on any sums above £5,000. But each institution sets its own level and figures can vary wildly.  

Lloyds has doubled its probate threshold, to £100,000 from £50,000, as has NatWest, raising its threshold to £50,000 from £25,000. 

The aim of this change was to give grieving families more flexibility during the coronavirus lockdown, when many people did not want to go to public spaces such as the probate registry or bank branches. 

But legal trade body Solicitors for the Elderly has said the move is putting bereaved families at greater risk of fraud. 

Rosie Todd, of law firm Stevens & Bolton, said: “Banks are trying to help people during this difficult time, but in reality they are simply inviting in the fraudsters and leaving the system open to abuse.” 

She said con men could pose as family members or solicitors and have the funds released to them.

“It is much harder to do this when you have to go through the courts to obtain a legal permission, swear an oath and go through a thorough vetting procedure,” she said.

 She added there was also a risk of disputes over inheritance later down the line if one family member who was not the appointed executor received money from an account and kept it quiet. 

“This could also get you in trouble with the taxman if sums are not declared to HM Revenue & Customs,” she said. 

Institutions will typically not ask for a grant of probate for small amounts, which means poorer estates do not have to stump up court fees and families can cover immediate estate costs such as a funeral or clearing outstanding bills. 

But lawyers question why some institutions hold off asking for legal permissions until the sums in some cases exceed £100,000, adding that it poses a security risk. 

UK Finance, the banking trade body, has now written to Solicitors for the Elderly to better understand the fraud risk and how to balance this with convenience for customers. 

A spokesman said: “The banking and finance industry want to help executors and the bereaved wherever they can. Rules introduced in 2017 allow banks to release necessary payments to be made, including probate fees. This does not amount to a guarantee that funds will be released from a deceased’s bank account either without, or pending, a grant of probate – each case will always have to be considered on its merits.”

A NatWest spokesman said: “We take any fraudulent behaviour extremely seriously and have a number of processes and procedures in place to monitor fraud. We continuously monitor and review our probate limit and we reserve the right to ask for grant of probate for any amount as appropriate.”

A Lloyds spokesman said: “The temporary change we made to our probate threshold as a result of the pandemic has benefited customers looking to settle estates quickly during what has been a hugely emotional time for them. In order to protect our customers’ money, the decision to allow funds to be removed from an account is taken on a case by case basis, and only when the correct documentation can be shared.”

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