A FEW days after I made out a $400 DBS cheque to OCBC Bank, I discovered in my online statement that $4,000 had been paid instead.

DBS said, while the words were correct, the figures indicated $4,000. By right, the cheque should have been rejected, but this did not happen.

DBS did not offer to provide a copy of the cheque as evidence.

When I asked for one, I was told the charge would be $20. When I insisted the charge be waived, the response was a need to 'check with the manager'.

I have yet to receive a reply. OCBC will transfer the excess amount to DBS.

While this reflects poor operational controls and lack of service standards at both banks, I am more concerned that such a serious error is regarded with a cavalier attitude by the banks concerned.

In my case, payment was between personal accounts in both banks.

However, it is in the public interest to know how the matter would have been dealt with if money had been paid wrongly to a third party.

• How reliable are controls by banks when it comes to cheque clearance? How frequent are such errors? 
• If a bank pays more than the amount stated on the cheque, what are its liabilities and obligations? Is this regulated by the Monetary Authority of Singapore?
• Can the account holder demand that the bank make good the money immediately, or does he have to wait while the bank 'investigates'? 
• Can the account holder seek compensation if an unauthorised transfer leads to related damages, monetary and otherwise? 
• Can a third party who receives the money refuse to return it?

Charles Lim

This letter  was first published in The Straits Times on 18 July 2008.