Alberta Maintenance Enforcement (MEP) has agreed with the Ombudsman that creditors should not suffer financially in the event MEP makes an administrative error.

A bank imposed daily interest and penalty fees on a mother after she paid off debts using a $50,000 payment from MEP. At the time, MEP believed it had collected long standing arrears owed to the woman by the debtor and MEP deposited the money into her account.

It turned out MEP advanced the money prematurely. Within days, MEP learned the payment from the debtor fell through. As a result, MEP had the funds removed from the creditor without notifying the woman. This created a $40,000 overdraft for her. After the Ombudsman investigated, MEP conducted its own analysis and it agreed it lacked the legislative power to make such recalls in the event it makes an administrative error.

Before writing to the Ombudsman, the creditor had contacted MEP to complain. It was acknowledged MEP recalled the funds when the payment from the woman’s former spouse did not go through. MEP staff informed the woman that they would try to recover the funds from her former spouse as soon as possible, but they would not return the payment or reimburse her for the interest or fees she was charged. MEP did not explain how the payment was rejected after the money was already in her account.

In discussions with our office, the mother explained that she underwent a significant amount of stress at the time the payment was recalled, but was able to manage the situation by extending an existing line of credit. She expressed her concern that another person in the same situation may not be able to financially recover.

During the investigation, MEP explained they have the authority to recall funds from a recipient’s account, but could not identify the legislation which allowed them to do so. Upon further review, MEP determined they cannot recall a payment unless it was made in error, such as being sent to the wrong person. This means MEP should not have recalled the payment from the mother’s account.

As a result of the Ombudsman’s investigation, MEP reimbursed the mother for the interest and penalty fees she was charged when MEP recalled the payment from her account. In addition, MEP made changes to their internal policies to ensure staff understand the limitations for recalling payments in the future.

Although the Ombudsman could not reverse the initial impact MEP’s recall of funds had on the mother, the investigation may prevent such a situation from occurring again in the future.

This case also confirmed the constructive approach MEP takes when receiving recommendations from the Ombudsman. MEP acknowledges when it makes an error and it takes action to resolve the complaint.