Probate problems lead to £7,000 repayment from Nationwide


A penalty fee was wrongly levied on a Nationwide accountholder when his mother died, wiping out some £5,000 of her savings.

After the death of his father, Mr X took control of his mother's financial affairs. However, his mother’s life’s savings were deposited with Nationwide, whose rules did not give him the authority to manage the account.

The building society suggested that the account be changed to a joint account in the name of Mr X and his mother. Knowing that early termination penalties do not apply on death, they put a substantial amount of money into a fixed-interest time deposit.

In due course Mr X’s mother died and he became her executor. However, he was shocked to find that Nationwide had charged a 365-day interest penalty, wiping out more than £5,000 of interest and leaving just £143.

The probate unit said that, as the account was now in Mr X’s sole name, his mother's death was disregarded. Had the account been in her sole name, however, things would have been different.

"Probate relates to applying for the right to deal with a deceased person's affairs," said our Head of Wills and Probate at Simpson Millar LLP. "Otherwise known as administering the estate, it can be a legal minefield. In Mr X’s case, where he was understandably unsure of where he stood as executor and in dealing with a large financial institution whose rules could be opaque, Nationwide should not have charged the penalty on his mother’s savings."

Nationwide has since repaid Mr X £7,195, which was the money it wrongly deducted plus interest. As an apology, the building society added another £250 in compensation.

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