Couple’s cash crisis prompts calls for phasing out of bank drafts

THE Consumer Association of Ireland has called for the phasing out of bank drafts because of concerns over their security.

Association chief executive Dermot Jewell asked that businesses stop encouraging the use of bank drafts for payment purposes and warned consumers not to purchase them except in specific circumstances.

The calls come as a Dublin couple moving to Britain for their retirement face financial hardship after a draft representing the proceeds from the sale of their house went missing in the post.

The postal company, Parcelforce, a subsidiary of Royal Mail, has refused to take responsibility for the loss.

It offered just £250 (€360) in compensation because it says the contents of the envelope were not disclosed prior to posting.

AIB Bank, which issued the draft, has theoretically stopped it but says it cannot guarantee it could not be cashed by someone and therefore it cannot refund the money over €380,000 to the couple until the draft expires in six year's time.

In the meantime, AIB has paid for the bungalow Annette and Laurence Power planned to move to in Ipswich and they can reside there but the bank is retaining the deeds until 2009.

It is also waiting six years to release the balance of the proceeds from the sale of the Dublin house over 100,000 which the Powers had intended to live on to supplement their pensions.

Mr Jewell said he sympathised with the couple who were left in a "dreadful and distressing" situation but he said the bank was acting in accordance with the law and it was the legislation that needed to change.

"The thing about bank drafts is that under banking law, they are deemed to be and must be accepted as the equivalent of cash but that makes a draft a very dangerous document to have floating around ," he said.

Mr Jewell warned consumers against buying drafts unless they knew they personally could place the document directly into the hands of the intended recipient.