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Benefits and Bank Charges
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# 1
dcochrane
Old 20-11-2007, 4:25 PM
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Cool Benefits and Bank Charges

Can anyone tell me if banks can legally deduct bank charges of £30+ from government benefits which is the only source of an individual's income. Friend told me they can't as the goverment have said this is the lowest amount people can live on. Can anyone tell me what the position is?

Thanks,

David
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# 2
dmg24
Old 20-11-2007, 4:35 PM
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Yes they can, unless you have previously requested that they do not. Further information here.
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# 3
dust75
Old 20-11-2007, 6:19 PM
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NO they cant the SOCIAL SECURITY ADMINASTRATION ACT OF 1992 states that no one can take any money from anybody on benefits as thats what the goverment states that a person needs to live on
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# 4
Anthillmob
Old 20-11-2007, 6:21 PM
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theres a thread on here somewhere about bank charges and benefits. anyone know where it is?
There's someone in my head, but it's not me
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# 5
mum2one
Old 20-11-2007, 6:31 PM
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it maY be worth contaacting the financial obsbumen, as there is a HARDSHIP ANGLE that can be used, and they can write to the bank as well.
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# 6
real1314
Old 20-11-2007, 8:24 PM
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It's a grey area, much like bank charges themselves, however my reading of it is that when you receive a payment of certain benefits (to my mind it's likely to be only Income Support and JSA(ib)), you should be able to receive the full amount of this money.
This does not mean that banks cannot apply charges, it just means they give you the full amount and your overdraft increases by the amount of the bank charge.
There is no way that social security legislation could preclude a bank from applying charges.

I believe however that DWP have recently published an internal faq that supports the banks taking the money.

It's perhaps an area that needs to be sorted, however I cannot see anyone wanting to see an outcome that stops charges, even welfare orgs might see this as not encouraging financial responsibility?
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# 7
mum2one
Old 20-11-2007, 8:33 PM
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When | spole to the financial obsbumen as I had 3 letters from Halxxxx saying that they were taking 2 sets of £30.00 charges with 1 days notice, as Im on benefits, I was tols that banks have the right to take the money and there is not a time break that they have to give you eg 14 days from letter, you have to argue the hardship angle, wich is a grey area.
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# 8
Larumbelle
Old 20-11-2007, 8:38 PM
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I'm DWP, I'm not aware of any FAQ that says that, but then, one of these days that pile of virtual paperwork will topple over and flatten me

Not ideal, but I would suggest opening a 'bog standard' basic account with no overdraft/debit/cheque facilities at a different bank or building society, and getting your benefit paid directly into it. It won't make the overdraft disappear, but will at least ensure that your benefit benefits YOU and not the bloody banks.
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# 9
mouseymousey99
Old 20-11-2007, 9:50 PM
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I had a d/debit at an early date the other day - and thought OH NO..but I found out as long as you pay in the cash to cover it on the same day its ok, they waver the charge. I admit it was only a £7 d/debit but it would have cost £38 in charges so from now on £10 goes into my emergency tin.....
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# 10
peter999
Old 20-11-2007, 9:51 PM
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Bank taking your Benefit? Quote this -
http://forums.moneysavingexpert.com/....html?t=269424

peter999
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# 11
dag
Old 20-11-2007, 10:49 PM
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As mentioned in the other thread, if I was on means-tested benefits, then I would have reservations about drawing the bank's attention to it. The way I look at it is that if you need money in a hurry, but you can't get it from the mainstream lenders, then you enter into the scary world of pawnbrokers and payday loans, which really can be much more expensive in the long run.

I don't like losing my benefits if I can help it, but I've almost always been more worried about losing my mainstream lender credit lines. My credit dependency runs way way deeper than my benefit dependency.
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# 12
gratton20
Old 21-11-2007, 5:40 PM
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Hi everyone,

I usually post on other boards but also had a problem as all our benefits go into wifes step (basic) account at Natwest and they bounced a DD which would have put her £1 overdrawn ... and charged, same day £38 for doing it. Paid in the dosh same day but still wouldnt refund .. now found out about this SS act and decided, to try it and see if it works the trick as we really cant afford to loose £38 Not sure if all our benefits covered as we are on CB, DLA, IS, Carers allowance, Tax Credit but here is a letter I just posted to our branch ... I will post agin and update people on if it works.

==================================================

22 November 2007
The Manager
Nat West Bank Plc
Anytown AB1 2DD

Dear Sir /Madam

Account Number: %%%%%%%% Mrs B Nuisance

On 3rd October 2007 you charged me an unpaid item fee of £38 in respect of an unpaid direct debit for the sum of £24.39 which had it been paid would have left my account in an overdrawn state. This would have made the account less overdrawn that it was when you applied a charge! I paid in money to cover the debit balance on the SAME DAY as the direct debit was refused and requested, in branch, that the charge be cancelled and I was refused.

I have now taken professional advice on this matter and would direct you to the provisions of “Social Security Administration Act 1992" - the relevant subsection included below.
Social Security Administration Act 1992
Miscellaneous
Certain benefit to be inalienable **

187- Subject to the provisions of this Act, every assignment of, or charge on-
(a) benefit as defined in section 122 of the Contributions and Benefits Act;
(b) any income-related benefit; or
(c) child benefit,
and every agreement to assign or charge such benefit shall be void; and, on the bankruptcy of the beneficiary, such benefit shall not pass to any trustee or other person acting on behalf of his creditors.

** inalienable = not to be forfeited.

I am advised that the effect of this legislation is to make it unlawful, regardless of any terms and conditions imposed by the bank upon an account, for you to take charges from any money deposited which is solely consisting of Social security benefits - which as you are aware my account is.

I therefore formally request that you refund into my account within 28 days the sum of £38 and advise me to that effect.
I look forward to your response in due course.
Yours faithfully

===============================================
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# 13
krisskross
Old 21-11-2007, 10:34 PM
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I think you may well find that that particular Social security Act is about having benefits taken as security. It used to be that child benefit or other payment books were taken as security from borrowers by lenders.

Any money going into a bank account from whatever source is just income and can be taken by the banks if charges are levied. Otherwise what would there be to stop people on benefits (a goodly proportion of the nation) running up debts to the banks, then saying the banks are not allowed to charge for the unauthorised overdrafts created.

You can certainly ask them not to take benefit income but I am certain there is no law that prevents them doing this. Perhaps you would be better not having direct debits ,withdrawing your money and paying everything with cash. No chance of small errors costing you dearly then.
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# 14
gratton20
Old 03-12-2007, 3:14 PM
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Default I won!!!

Hi

I promised to update the forum on the progress of my letter to Nat West and here goes ..

I WON!!

Nat West head office just phoned up and said they apologised for taking the fee and that they agree they should not have taken it as I am on benefits only and the money will be paid back into the account in full today.

Great result, although I realised it is not in writing so maybe others would have trouble getting the same result as it probably is a legal grey area and no doubt Nat West were not 100% sure but felt it not worth the trouble in case I took it to court .. anyway, well done Nat West!!!

Hope this may help other people too.
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# 15
kurjam
Old 03-12-2007, 3:34 PM
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do you know the address for head office for natwest ??
the same happened to me with natwest and my local branch say they do not have to refund charges, so i want to write to head office ..
thank you
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# 16
gratton20
Old 03-12-2007, 3:51 PM
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Hi,

I wrote to the branch manager at my branch. It seems they then pass it on to head office. Did you pay in money to cover the o/d bal same day as it was due as I understand this plays a part in them deciding to refund the charge even if they dont think they have to by law ... and I am fairly sure, as others have said, that the law in SS act is about keeping money as security and doesnt really apply here ... (My letter being a bit of a "bullsh*t baffles brains" .. try it and see effort!) it may well be that if you pay in to cover the debit same day they have a policy of refunding if you write and ask. I would suggest you be very polite and use the template letter like I did, - if you didnt cover the o/d balance same day i suspect you may have more problems tho... good luck!
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# 17
bestpud
Old 03-12-2007, 5:48 PM
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In my experience, banks will often refund a one-off charge where the amount has been small and the customer has made an attempt to cover it.

This is nothing to do with being on benefits - it's just about kicking up a fuss because the computers don't distinguish between genuine or one off errors and people taking the ****.

I can't see why they should not be able to levy a charge purely because someone is claiming benefits.

Don't get me wrong, I am no fan of banks and they need to reduce their charges full stop.

However, one minute we blame them for getting people into debt and the next we are saying they should not discourage poor financial management.
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# 18
gratton20
Old 03-12-2007, 7:07 PM
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Bestpud - I agree poor money management should not be encouraged, but on the small income we had it can be very easy to now and again miscalulate. people on a good income almost always have an overdraft facility even if they dont want/need it, and can afford to be lax and I bet often would be in same prob as we were if they couldnt go overdrawn, bet they dont notice it when it happens by a couple of pounds .. but thats hardly poor money management .. if you got lots its easy to manage

I think the probable reason it was refunded has nothing to do with benefits .. more as you said because we paid in straight away and only ever done it once and it IS a gesture of goodwill ... in any event I got a result so i am happy LOL
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# 19
bestpud
Old 03-12-2007, 7:22 PM
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I do understand how it is hard to live on a low income as I do - I've also lived on benefits.

At the monent, we are struggling to get our overdrafts down and pay stupid amounts of interest every month so I don't condone the banks charging at all.

I guess I was questioning how far banks should be held responsible for people going overdrawn and I feel it would be a mistake to remove charges for people on benefits. Having lived pretty much hand to mouth I think it could be the start of a slippery slope.
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# 20
LadyMorticia
Old 07-12-2007, 3:59 AM
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What are these bank charges meant to be for?

Please excuse my ignorance but I've never had this happen to me before.

xx
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