Thursday, March 29, 2007

Lawsuit Filed Against BMO & TD Bank for Funds Transfer Delays

The Globe and Mail, Tara Perkins, 29 March 2007

A class-action claim has been filed against the Toronto-Dominion Bank on behalf of customers who say they did not receive prompt access to their money after depositing cheques or receiving wire transfers.

The claim comes less than two weeks after a similar suit was launched against the Bank of Montreal by the same law firm, Juroviesky and Ricci LLP. Suits against other banks are possible, lawyer Henry Juroviesky said yesterday.

He filed the suit against TD in the Ontario Superior Court of Justice. It seeks $100-million in economic damages, plus an extra $20-million in punitive damages, on behalf of anyone who made a deposit by cheque or wire transfer into a TD account between March 27, 2001, and March 27, 2007, and did not receive access to the funds in a reasonable period of time.

"Barring extraordinary circumstances such as terrorist attacks, extremely inclement weather, or the like, cheques will clear by 11:00 a.m. or even earlier, on the first business day following the day a cheque is deposited by the customer," the statement of claim said. Generally, the cheque will be settled within 12 to 18 hours of clearing, it said. That means most cheques drawn on Canadian institutions are settled within two business days of deposit.

Cheques drawn on U.S. financial institutions are generally settled by the fifth business day after being deposited, it said.

The lead plaintiff in the suit, Toronto-based Re*collections Inc., alleges that it deposited a $10,000 (U.S.) cheque from a Citibank account into its account at TD on Feb. 28 and the funds were held until March 22. The plaintiff alleges the cheque cleared 20 days earlier, on March 2.

Implementing a standard 10, 15, or 30-day hold period on deposits without investigating the true settlement date is a "knowing and intentional breach" of common law duty, the suit alleges.

It is looking for damages based on the amount of interest the depositors would have earned by investing their funds during the time the bank held their money.

None of the allegations has been proven. Neither the suit against BMO nor the one against TD has been certified as a class action.

TD spokeswoman Kelly Hechler said the bank believes the suit against it "is without merit and (we) plan to vigorously defend against it." She would not comment on specifics, as the matter is before the courts. BMO declined to comment.

In an unrelated interview last week, Liberal Finance Critic John McCallum suggested the House of Commons finance committee will be looking into issues involving the length of time that banks hold on to money. Mr. McCallum was not commenting on these lawsuits.

"Generally speaking, when money goes into banks it goes in at lightning speed, when it comes out of banks it goes more at a snail's pace," he said in the interview last Wednesday. "So, in other words, the banks get to hold all this money for longer periods, and they get the interest, not the customer."

He said the committee would be examining "how we can recommend some changes that will see more interest in the pockets of Canadians, and less interest in the pockets of banks."

Questions at a preliminary hearing at the committee the following day focused on the timing of bill payments, or the discrepancy between when consumers pay their bills and when companies receive the money.
Canadian Press, 19 March 2007

Bank of Montreal is facing a class action lawsuit filed on behalf of bank customers who didn't receive immediate access to their funds after cheques and wire transfers cleared.

The suit, filed on Monday by Juroviesky and Ricci LLP in the Ontario Superior Court, alleges that the bank "wrongfully withheld certain of its clients' funds on deposit."

The action covers clients that made at least one bank account deposit between March 19, 2001 and March 19, 2007 and couldn't access the funds immediately after the deposit.

Bank of Montreal spokesman Ralph Marranca declined to speak about the case.

"We have a long-standing practice of not commenting on matters before the courts," he said in a phone interview.

Juroviesky and Ricci said the move comes after "a thorough investigation" into the matter.