Closed Account - What Now?

Zebra · 5 November 2009 at 9:34PM

I'm the carer for a friend with a terminal mental illness.

Over the last few years she has struggled with her finances but over the last six months or so things have been improving, with her bills getting paid regularly and only occasionally going overdrawn - until now!

Two of her hardest commitments are loans with Halifax and Natwest and about six months ago we wrote to them both enquirying as to whether the monthly payments could be reduced, as she couldn't afford the repayments - Halifax reacted positively, reducing the monthly payment to about £15 a month, but Nat West refused to budge and the payments remained at £140 a month.

This was a large chunk of her money - the only income she receives is DLA(Higher Rate) a small pension of about £65 a month and Child Benefit.

We therefore thought we would try again to ask Nat West to reduce the payments, but when she went to the NatWest yesterday to withdraw some money from her current account it was refused, and was told that the reason was that the account had been closed.

She rang the phone number she was given to try and sort things out, but they were adamant that the account remained closed and that she would be unable to either pay money into the account or withdraw anything from it.

Obviously she found this very distressing, and the stress it's causing is not doing her condition any good. But what can she do? All her benefits are paid directly into her account, and her utilities etc paid by direct debit. She has no other money to live on, and is worried about what will happen to her, although I have promised to help her out with buying food etc

How long will it take for her to open an account with another bank, and which bank do people recommend - she does occasionally go overdrawn? And would it be possible for her benefits to be paid in cash until a new account is opened?

DarkConvict · 5 November 2009 at 9:50PM

Sounds like the bank have offset the Loan against her current account. Offsetting guide. Unlike other debt collectors that have to goto court, banks can take money from any off your accounts without your permission to pay off any outstanding debts you have with the bank. Its been brought up on here a few times and in the media aswell, hopefully it will be reviewed and scrapped on day.

You should open a bank account with another bank that isn't part of the same banking institution. Here is a list of the different banks, List 1 List 2 List 3 List 4

As to opening a new bank account, the easiest are Barclays Cash Card, or the Co-Op Cashminder. Both of these are basic accounts with no credit facilities, available to undischarged bankrupts as well so easy to setup, and can be done on the day sometimes.

I am not aware of what is covered under "National Standards For Enforcement, May 2002" and may only apply to DCA debt collection. But as the bank have recovered money by some means it could be seen as debt collection. As she is a vunerable person and you are acting on her behalf it may be worth looking into it to see if it helps.

Lastly, Free professional advice from trained advisors is available from National debtline, CCCS, PayPlan and CAB

Zebra · 5 November 2009 at 10:03PM

Thanks Dark Convict - that seems to be exactly what they've done. I just can't believe that they've done it now - things have improved over the last couple of years, and she has been paying off her loan regularly.

Clearly it seems that she has lost whatever money was in her account, but what will happen to her future payments? I think her DLA is due next week, how can we stop it going into the Nat West black hole?

Thanks for the list of banks - I was thinking of Nationwide for her - as I've used them in the past, and although fees and costs are important so is customer service.

LBG_worker · 5 November 2009 at 10:03PM

This is typical of Natwest - Its not really a prime example of treating customers fairly is it? :rolleyes: I am assuming she was not given any notice or information about the reason for the closure? have a look at the link below and take action!

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/48/banking-closing-accounts.htm

DarkConvict · 5 November 2009 at 10:10PM

There is definely room for raising formal complaints, whether it gets anywhere is another matter.

What you need to do is inform anyone who pays money into the account to freeze payments as soon as possible, due to weekly billing cycles another week of funds maybe lost.

Get a new account up asap, and then give them the new bank details.

There are some laws i believe protecting certain incomes from the payments of outstanding debts and i would ring up the National Debtline above and see if they can advise further if her benefits would be covered. As it would mean that they should not have taken them. Banks simply have to much power and look out for themselves.

Others affected have had £600 off savings taken 2 days before it was due to go to the council for tax, and rent and other bills. These priority bills must be paid first so the bank is out of order as they have no idea what the funds are for.

Zebra · 5 November 2009 at 10:14PM

LBG_worker wrote: »

This is typical of Natwest - Its not really a prime example of treating customers fairly is it? :rolleyes:

You could say that - just remind me again - how much of a stake does the tax-payer have in them?

She wasn't given any notice or explanation, and that is what she is upset over - she is worried that she won't be able to open an account with anybody else.

Thanks for the link - I'm sure when the dust settles we will be making a complaint, but at the moment we just want to open a new account and get back on an even-footing.

Zebra · 5 November 2009 at 10:20PM

Thanks again Dark Convict - we will try to open one of the Co-op or Barclays accounts tomorrow, and hopefully it will be in time to receive her benefits etc.

LBG_worker · 5 November 2009 at 10:29PM

It is worth complaining eventually - I know now you just want to concentrate on getting things sorted but I have made a compliant with the financial obudsman before after my bank refused to give a satisfactory response to my complaint and they forced the bank involved to reward me £100 for my troubles.

Ames · 5 November 2009 at 11:40PM

If no-one else has said it, she needs to send a letter of first right of appropriation. Basicaly it says that the money is paid by the government for your essential bills and so it belongs to them really, and the bank can't just nab it. There's a template letter floating around but I'm rubbish at finding them, someone will be along with it soon no doubt.

Secondly, she needs to get in touch with DLA IMMEDIATELY and ask them to send a giro for next weeks money, explain the situation.

Thirdly, she should be on other benefits. She could apply for ESA, which is the new invalidity benefit, for people who can't work for reasons of disability. It's a long, stressful process though. So I think she'd be better off applying for Income Support as a single parent, I think she'll still get the disability premiums. If there's a DIAL near her, then she should get in touch with them about what other benefits she's entitled to.

She also needs to urgently open a new bank account.

Zebra · 6 November 2009 at 12:03AM

Thanks Ames
We'll open a new bank account and ring round to either stop payments, or transfer to the new account, or get giros sent.

That's helpful about the letter, we'll do that and the complaint to the ombudsman when we're settled.

Thanks for everybody's advice - things don't look so bad now - I'm sure we'll soon be sorted. :beer:

Zebra · 3 December 2009 at 10:04PM

As an update to my previous posts.

We went to Barclays to open a cashcard account, and took in identification to be verified, the cashier said it was all ok and the account would be opened shortly.

We waited for a couple of weeks, but then yesterday received a letter from barclays saying the account hadn't been opened because the cashier hadn't authorised it with the correct stamp showing the sort code of the branch.

We just don't know what to do now - the bills having been piling up, like gas, water and electricity. We tried ringing them all up to explain - eon have sent a prepayment card to use in future, but British Gas and the water company are threatening court action and disconnection.

All the stress and worry is exacerbating my friend's condition and I'm very worried about her health.

Closed Account - What Now?

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