Joint account customers warned over risk of being pursued for debts

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Many banking customers signing up to a joint account with a partner could be at risk of being pursued for serious debts they did not realise they were liable for, research warns. 

Banks are being urged to spell out joint account terms more clearly as a survey found widespread confusion among consumers as to how these accounts work.

Three-quarters (74.1%) of people do not realise that either person is liable to pay the debt on a joint account and that the bank may pursue either for the full amount.

SavvyWoman.co.uk, which released the findings with M&S Bank, says it receives emails from those who have been left "high and dry" after their ex has run up debts on a joint account.

The survey of more than 2,000 people also found seven in 10 (70.1%) do not know or wrongly think they need the approval of both parties to set up arranged overdrafts.

Nearly half (47%) incorrectly think the approval of both joint account holders is needed to withdraw cash, or do not know whether this is the case or not.

A similar proportion (46%) do not realise their credit report can be linked to someone else's if they have a joint current account together.

Sarah Pennells, founder of SavvyWoman.co.uk, said: "Thousands of couples open joint accounts each year and I've been concerned for some time that many of them don't know what they're signing up to. If a relationship breaks down, one partner can be left with debts of hundreds or even thousands of pounds.

"We're now going to campaign to get all banks to do their bit to make joint accounts clearer so couples know exactly what they're agreeing to.

"I'm looking forward to the day when I don't get emails from women who have been left high and dry because their ex has run up debts on a joint account and they've been left to pick up the bill."

M&S Bank provides couples with a one page summary of key account information.

Sue Fox, chief executive of M&S Bank, said: "As a result of the research, conducted with SavvyWoman, we also want to ensure couples better understand the financial link they're making with their partner from the outset, such as linked credit reports."

A spokesman for trade body UK Finance, which represents banks and other bodies, said: "Joint accounts offer a useful service, but as with any product, it is important customers fully understand the terms and conditions before they sign up.

"UK Finance has published a helpful guide to joint accounts, and advise any customers who are unsure about their account to speak to their bank."

Here are Ms Pennells's tips for couples thinking of opening a joint account:

:: Make sure you read the terms and conditions before you take out a joint account.

:: Do not agree to an overdraft facility if you do not need one and, if you do, limit the amount you borrow to what you need and are able to pay back.

:: Agree with your partner exactly what the account will be used for before you open it.

:: Check the account regularly so you know what it is being used for.

:: Contact your bank immediately if you and your partner split up, especially if it is acrimonious. Ask the bank to change the way the account operates so you both have to agree to any withdrawals or new payees.