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Income support and bank charges

caris
caris Posts: 730 Forumite
in Benefits & tax credits
Hi

Firstly sorry if this is not in the correct place.

Our youngest daughter is a single parent on IS, CTC and CB, also HB and CTB, for the last couple of months she has been getting bank charges of £94 a month from Lloyds bank, these charges are mounting because when they take their charges she is being left overdrawn and so being charged again and again, she is now getting herself into severe difficulties as she cannot meet her outgoing "normal" everday bills.

Is it right that banks are notsupposed to take charges out of your benefits?

Any help or advice would be really appreciated.

Many thanks
Caris
«1

Comments

  • krisskross
    krisskross Posts: 7,677 Forumite
    caris wrote: »
    Hi

    Firstly sorry if this is not in the correct place.

    Our youngest daughter is a single parent on IS, CTC and CB, also HB and CTB, for the last couple of months she has been getting bank charges of £94 a month from Lloyds bank, these charges are mounting because when they take their charges she is being left overdrawn and so being charged again and again, she is now getting herself into severe difficulties as she cannot meet her outgoing "normal" everday bills.

    Is it right that banks are notsupposed to take charges out of your benefits?

    Any help or advice would be really appreciated.

    Many thanks
    Caris

    Sorry to tell you that banks are entitled to take charges from benefit income in exactly the same way they take from income derived from any other source.

    I would suggest she opens a bank account elsewhere to have her money paid into and come to some arrangement to pay off the amount owed to Lloyds. Otherwise can no one lend her the money to enable her to start afresh with he LLoyds account?

    I believe the reclaiming of bank charges issue will drag on for months if not years so best sorted now.

    Perhaps she could book an appointment with the CAB as they will negotiate with the bank on her behalf.
  • pipkin71
    pipkin71 Posts: 21,821 Forumite
    caris wrote: »
    Hi

    Firstly sorry if this is not in the correct place.

    Our youngest daughter is a single parent on IS, CTC and CB, also HB and CTB, for the last couple of months she has been getting bank charges of £94 a month from Lloyds bank, these charges are mounting because when they take their charges she is being left overdrawn and so being charged again and again, she is now getting herself into severe difficulties as she cannot meet her outgoing "normal" everday bills.

    Is it right that banks are notsupposed to take charges out of your benefits?

    Any help or advice would be really appreciated.

    Many thanks
    Caris

    Hi Caris.

    I'm pretty sure you're right about this.

    Your daughter has to tell the bank that it is income support and that they cant touch it. She can also claim back what they have taken from her income support too, I believe.

    Let me do some checking but I do think you are right.

    Pipkin xxxx
    There is something delicious about writing the first words of a story. You never quite know where they'll take you - Beatrix Potter
  • pipkin71
    pipkin71 Posts: 21,821 Forumite
    Hi again Caris.

    Right, tell your daughter to go to the bank and tell them that, as she is only receiving income support, child benefit and/ or child tax credits in her account, then, under a]s187 Social Security Administration Act 1992 regarding income support and Child Benefit, and b]s45 of the Tax Credits Act 2002 regarding Child Tax Credit, they are not allowed to take any money out in charges as that is unlawful.

    She can then put in a claim for all other charges back as they have acted unlawfully in taking them, and they wont be able to take any further charges out of her account either. I'm not sure whether them charges are then cancelled out, or if they keep mounting but can't be taken IYSWIM.

    HTH

    Pipkin xxxx

    Edited to add: Google First Right of Appropriation

    I found this:

    http://www.adviceguide.org.uk/c_banks_and_building_societies.pdf

    A good site for you to join might be www.consumeractiongroup.co.uk
    There is something delicious about writing the first words of a story. You never quite know where they'll take you - Beatrix Potter
  • DaisyFlower
    DaisyFlower Posts: 2,677 Forumite
    Krisskross is right, banks can use any funds from an account for charges. The act states they cannot make any deductions directly from the benefit, ie before it reaches the account. Once its in the account they can deduct charges.

    If she speaks to the bank and makes an arrangement to pay the money back she'll get back on track. Then just exercise caution so as not to go overdrawn again.
  • pipkin71
    pipkin71 Posts: 21,821 Forumite
    DaisyFlower wrote: »
    Krisskross is right, banks can use any funds from an account for charges. The act states they cannot make any deductions directly from the benefit, ie before it reaches the account. Once its in the account they can deduct charges.

    If she speaks to the bank and makes an arrangement to pay the money back she'll get back on track. Then just exercise caution so as not to go overdrawn again.

    I've looked on the consumeractiongroup site, and what you are saying is not correct. The bank cannot take money from benefits. Have a look yourself at the info on the site.

    Pipkin xxxx
    There is something delicious about writing the first words of a story. You never quite know where they'll take you - Beatrix Potter
  • daveyboy998
    daveyboy998 Posts: 27 Forumite
    pipkin71 wrote: »
    I've looked on the consumeractiongroup site, and what you are saying is not correct. The bank cannot take money from benefits. Have a look yourself at the info on the site.

    Pipkin xxxx

    Correct - Certain state benefits like Income Support are paid by the Government for basic living costs. The banks cannot keep this money. However, the charges they impose for going overdrawn, etc, will stay on the account - but thats a whole different story :rolleyes:

    As suggested I would
    1. Open a new account with another bank and have all future money paid into there
    2. Research and arm myself with info as above and go to your bank...and expect a lot of resistance and denials that such a thing exists
    3. Go to the forum that deals with reclaiming bank charges

    Good luck!
  • real1314
    real1314 Posts: 4,432 Forumite
    pipkin71 wrote: »
    I've looked on the consumeractiongroup site, and what you are saying is not correct. The bank cannot take money from benefits. Have a look yourself at the info on the site.

    Pipkin xxxx

    Erm, the CAB thing you linked to says:
    1. Even if your account is overdrawn, you can choose how any further money you pay into the account is used (for example to pay your mortgage or rent). This is called [FONT=Arial,Arial]first right of appropriation[/FONT]. You'll need to write to them with new instructions each time you make a deposit.
    So, as she hasn't told the bank she wants to "appropriate" any of the funds, she's not got a course of redress, and she'd have to do it every week. Just you saying "yes" doesn't help the OP much unless you can find the particular part of the 1992 SSA that applies, after all, the bank aren't going to have a copy to hand, and even if they did, they wouldn't leaf through the numerous volumes to find somehting for the OP.

    Even if she does "appropriate", if she spends all of the money and leaves none for the charges owed, the bank will probably restrict use of the account.

    The best advice for the OPs daughter is to sort out her spending, then look at the charges once she's done that.
  • pipkin71
    pipkin71 Posts: 21,821 Forumite
    Apparently Right of Appropriation is something anyone can do - not just those on benefits, and this allows you to assign funds entering your account to specific events and needs.

    From what I've read, you need to give 7 days notice with regards how you will be assigning funds xx.xx rent / mortgage xx.xx groceries, ect. The bank may still take the charges from funds in the bank, but you can then complain to the financial ombudsman.

    Found these:

    http://forums.moneysavingexpert.com/showthread.html?t=461591

    http://www.sheffieldforum.co.uk/showthread.php?t=315142

    http://www.bankcharges.info/benefits_and_bank_arrestment_in_scotland.htm
    There is something delicious about writing the first words of a story. You never quite know where they'll take you - Beatrix Potter
  • pipkin71
    pipkin71 Posts: 21,821 Forumite
    daveyboy998 wrote: »
    Correct - Certain state benefits like Income Support are paid by the Government for basic living costs. The banks cannot keep this money. However, the charges they impose for going overdrawn, etc, will stay on the account - but thats a whole different story :rolleyes:This is the bit I wasn't sure of

    As suggested I would
    1. Open a new account with another bank and have all future money paid into there
    2. Research and arm myself with info as above and go to your bank...and expect a lot of resistance and denials that such a thing exists
    3. Go to the forum that deals with reclaiming bank charges

    Good luck!

    Good advice daveyboy.

    Pipkin xxxx
    There is something delicious about writing the first words of a story. You never quite know where they'll take you - Beatrix Potter
  • pipkin71
    pipkin71 Posts: 21,821 Forumite
    real1314 wrote: »
    Erm, the CAB thing you linked to says:
    1. Even if your account is overdrawn, you can choose how any further money you pay into the account is used (for example to pay your mortgage or rent). This is called [FONT=Arial,Arial]first right of appropriation[/FONT]. You'll need to write to them with new instructions each time you make a deposit.
    So, as she hasn't told the bank she wants to "appropriate" any of the funds, she's not got a course of redress, and she'd have to do it every week. Just you saying "yes" doesn't help the OP much unless you can find the particular part of the 1992 SSA that applies, after all, the bank aren't going to have a copy to hand, and even if they did, they wouldn't leaf through the numerous volumes to find somehting for the OP.

    Even if she does "appropriate", if she spends all of the money and leaves none for the charges owed, the bank will probably restrict use of the account.

    The best advice for the OPs daughter is to sort out her spending, then look at the charges once she's done that.

    Have a look at post #4, where I suggested s187 Social Security Administration Act 1992 regarding income support and Child Benefit
    There is something delicious about writing the first words of a story. You never quite know where they'll take you - Beatrix Potter
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