'National Savings wrongly gave me £4,000. Do I give it back?'

When the retired artist Peter Williams was contacted by National Savings & Investments, saying it had some money for him, he assumed it was a scam. He was sure he never had an account with the government savings bank and, after ringing them, thought that was the last he would hear of it.

But, he says, NS&I persisted, contacting him again and again. Williams was so sure he was not due any money, he asked the bank to record the call and keep a transcript of his objections. His grandfather once bought him a single premium bond in 1956 but he knew he did not have a savings account.

“My wife and I searched for evidence of a long-forgotten account but found nothing. NS&I were insistent that the account was mine and I was equally insistent that it was not my account … the transcript clearly showed that I had steadfastly maintained that the account was not mine,” he says.

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When NS&I said he could access the money by putting in his pin and password, Williams admits he yelled at them, saying: “I don’t have a pin number or password. I have been trying to tell you that over the past few weeks.”

Reluctantly, he sent NS&I a letter with his signature to access the money – and only then found out he was in line for about £4,000.

But of course the story does not end there. Six months later NS&I called again. This time it was a little more humble and apologetic. Yes, it told Williams, you were right all along. It was not your money. Can we have it back please?

What would you do? Could you legally keep the money? Mr Williams’ predicament bears some resemblance to the extraordinary story of Peter Teich, who Guardian Money revealed in December lost a £193,000 inheritance after pressing a wrong digit on his sort code and account number, and sent it to another individual. Only after paying large court fees did Teich get the money back.

In that instance, the law was clear: finders keepers does not apply and if money lands in your account, you have no right to retain it. But what if a bank or institution almost forces money upon you? Isn’t that rather different?

Whatever the legal merits, the immediate problem for Williams was that by the time NS&I asked for the money back, he had already spent it.

The artist had used the cash to buy some new trifold doors for the conservatory in his home in Market Drayton, Shropshire.

“Several of our friends suggested that we were entitled to keep hold of the windfall. Others suggested we should return the doors to NS&I!” Williams says.

In the end, Williams decided just to pay the money back, although in monthly instalments. “I don’t regard myself as a particularly moral person but I just didn’t feel comfortable keeping the money. So I set up a standing order to pay it back monthly.” The “debt” is now cleared.

Yet, legally speaking, Williams probably did not have to repay the money. While his case could be described as “unjust enrichment”, the fact that he had bought the trifold doors only because NS&I sent him the money means he had changed his personal position and would be unfairly penalised by having to return the cash.

Williams would be protected by a court ruling in 1991 involving, of all places, the Playboy Club in London – and it is such an important part of the law regarding unjust enrichment that it has its own Wikipedia page.

Richard Colbey, a barrister, explains. “Mr Williams probably need not pay the money back in these circumstances. Although he had received money he was not entitled to, he was wholly innocent in doing so and had changed his position as a result. Buying the trifold doors was something he would not have done had he not been assured he was entitled to that money. The position would have been different had he simply left the money in a savings account where it easily could have been returned.

Several friends suggested we were entitled to keep the windfall. Others suggested we should return the doors to NS&I!

Peter Williams

“The principle arises from a 1991 case where a crooked solicitor gambled £220,000 of his firm’s money at the Playboy Club. His overall losses were £151,000. The House of Lords, as the supreme court then was, held that the Playboy Club had to return the £151,000 but not the full £220,000. The club had suffered no detriment in respect of that much but had changed its position in respect of the £69,000, which had been paid to the solicitor as winnings.

“Mr Williams, having changed his position, is entitled to the protection that case bestows on those who would be unfairly penalised as a consequence of someone else giving them money to which they are not entitled.”

One of the unusual aspects of this case is that NS&I contacted Williams out of the blue. Williams does not know how it obtained his contact details but he accepts that his relatively common surname is the likely reason for the mix-up. He holds no grudge against NS&I, whom he says treated him politely through the entire episode, and did not contact Guardian Money for the purposes of getting the money back.

In total, NS&I sits on more than £3bn of unclaimed assets, according to its 2018-19 accounts, although only £20m of that is from unclaimed premium bonds. The majority is money held in savings certificates and accounts that have lain dormant for years.

Guardian Money sent the full details of the case to NS&I, which admitted that it had made “a clerical error”, that the money belonged to another Mr Williams and that it is duty-bound to recover money wrongly sent.

In a statement, NS&I said: “We can confirm that this was a clerical error in the case of Mr Williams. However, it does not relate to a dormant account. We have an obligation to recover an incorrect payment to a customer. In the case of Mr Williams, we did not make an unsolicited call to Mr Williams. He made a phone call to NS&I after receiving an account statement that he did not recognise as his account.”

• If you believe you may have money lying dormant at NS&I, you can check at mylostaccount.org.uk