I received a call from my bank stating that in April my fiance withdrew $400 from his account and deposited it in mine. All of that is correct, but now the bank is saying that they debited the wrong account and that we owe them $400. We didn't catch the error at the time and now, six months later, they just took the money from my account. Can they do this? What can I do to resolve this issue?
There's no well-defined limit on a bank's ability to correct an internal error. Ordinarily, one would expect that the bank would have moved the money from your fiance's account where it should have come from in April, but probably those funds are no longer there.
On the other hand, because you have been penalized because of a bank's error, the only person the bank should look to is your fiance -- the party that wasn't charged back in April. You were entitled to the funds then, assuming they were in his account at that time. Unless your fiance is now a joint owner of your account, you have a strong argument in favor of obtaining a refund.
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There's no well-defined limit on a bank's ability to correct an internal error. Ordinarily, one would expect that the bank would have moved the money from your fiance's account where it should have come from in April, but probably those funds are no longer there. 