HSBC were sent a payment by one of my clients to an old account

Mr_Ogre

Hi,
The client didn't realise that they'd credited the wrong account and as I no longer bank with HSBC, I had no way to find out until it was too late.
The client (a small charity) paid me £500 for some advice and their bank told them that it was too long after the original payment to recall it.
Apparently, this must be done in 3 days after the original transfer.

Now, it was the charity's mistake, but HSBC are now holding on to this money as the account was for my business which had closed and I owe them quite a bit of unsecured debt. I will be bankrupted soon, but my question is this;

Can HSBC hold on to someone else's money like this?

On another point, I was informed as this was the fourth time that I'd tried to speak to someone higher up the chain, they were refusing to speak to me again!
I was perfectly polite to them, no raised voice, merely restrained confusion!

I would like to write to someone high up at Canada Square, but it would seem that the senior officials like to keep their identities quiet.

If anyone can help, I'd be really grateful.
Thanks,
Mr Ogre

cleo1299

Mr_Ogre wrote: »

Hi,
Now, it was the charity's mistake, but HSBC are now holding on to this money as the account was for my business which had closed and I owe them quite a bit of unsecured debt. I will be bankrupted soon, but my question is this;

Can HSBC hold on to someone else's money like this?

I don't see why not. Presumably they have allocated the £500 towards your outstanding debt?

To get the £500 you would have to take HSBC to court and if you did that you would probably lose, and have costs to pay as well.

And even if you did win a court case against HSBC, all they would have to do is turn around and sue you for the money you owe them, which they would probably win with costs and you would end up still without the £500 and owing HSBC more than ever.

cleo1299

It's called "right of set-off", apparently. There's some info about it on the website of the Financial Ombudsman Service at http://www.financial-ombudsman.org.uk/publications/ombudsman-news/40/40_setoff.htm.

It does say that "The account from which the firm transfers funds must be held by the customer who owes the firm money."

Since the account that the money was paid into had been closed, you might be able to argue that therefore it was not an account held by you and therefore the right of set-off should not apply. Might be worth trying. Long shot though.

Mr_Ogre

As I suspected, probably the charity will just have to write it off. It was me trying to recover their money, but I guess it was their error and so they are the only ones who can argue it.
Thanks for the advice though!

cleo1299

Mr_Ogre wrote: »

As I suspected, probably the charity will just have to write it off. It was me trying to recover their money, but I guess it was their error and so they are the only ones who can argue it.

No, the charity doesn't have to write it off.

The charity paid the £500 they owed you. HSBC has claimed the money under these "set-off" rules, and has presumably used it to reduce your debt by £500. So you've had the money -- you just didn't get it in cash, but in payment toward your debt. That's not the charity's problem.