Misdirected CHAPS Payments

A CHAPS payment is an electronic bank-to-bank same day value payment made in UK sterling. The system has been in operation since 1984. According to CHAPS Co, the average daily volume is 130,000 payments with a value of around £275 billion.

Many businesses rely on the CHAPS system as a means of paying suppliers and being paid by their customers. It is said by CHAPS Co to be a fast, secure and efficient means of payment with the funds being transferred irrevocably the same day. But is it?

There have been instances where a customer instructs their bank to make a payment to an intended recipient by CHAPS only for the payment to be mistakenly paid to a fraudster’s account instead. This is usually as a result of a fraudster imposing as the person the customer intends to pay and giving the customer the imposter’s bank account details instead of the correct bank details where the payment is to be made.

This is precisely what happened in the recent case of Tidal Energy Limited v Bank of Scotland PLC [2014] EWCA Civ 1107. This case concerned the wrong bank details and account number being entered on a CHAPS form, but the correct name of the supplier. As a result, a payment was made to a fraudster’s account, which was immediately withdrawn. The supplier’s account was not credited. Read our blog on the case here.

The Times report of the Court of Appeal decision can be viewed here.


What we can do for you

Our financial litigation team have experience in bringing claims to recover misdirected CHAPS payments, having represented Tidal Energy Limited in its appeal to The Supreme Court of England and Wales. If you or your business has been a victim of similar events, Capital Law can carry out a quick and no nonsense assessment of the merits of the claim.

The leading lawyers in the team are:

Philip JonesStephen MeadeAlexia Thomas.