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MSE News: Number 10 to stop banks dipping into your account?

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  • MSE_Martin
    MSE_Martin Posts: 8,272 Money Saving Expert
    First Post First Anniversary Combo Breaker
    edited 25 September 2009 at 10:39AM
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    Some of the reaction to this is rather bizarre. This is a valid concern, that's being looked at, but many seem to have read a lot into it that isn't there.

    No one has suggested any rememdy, whether its simply stricter guidelines, stronger law or an entire systemic change. What has been suggesting is looking at a very important issue.

    The problem is if you are in dispute with your bank - it takes the money. If you are in dispute with any other company it needs to take action via an independent third party to do so.

    Why should the situation be different with banking institutions - we need efficient checks and balances in the system to ensure that there is a fairness in the structure.

    This makes the bank automatically a priority creditor; even when its taken money in error. Why should you current account bank have the money before your mortgage holder - gas & electricity company. Especially if its erroneously charging you.

    As for the argument of compensation; that's should be a last resort cure we need to focus on preventaion. We have seen literally millions of people with money unfairly or unlawfully taken from accounts for a range of issues. Meanwhile they sit in hardship while the banks keep the money. At the end of this path compensation cannot rescue the issues its caused - the stress - the difficulty - the knock on impact on your credit history.

    Yet no one necessarily is purporting a court based solution. At the moment there are simply no checks and balances on banks initial behaviour in this regard and that certainly seems wrong to me.

    Martin
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.
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  • blind-as-a-bat_2
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    The issue is further clouded for many reasons; one is the term 'dispute'

    morally the bank may be owed a sum of money, but because of there actions, or inaction, legally they may not have a right to collect because they have failed in some way to act correctly, responding to a complaint, a CCA request for example, yet they still take funds as they refuse to recognise there is any dispute, even when the law clearly states there is.

    Simply put, if a bank decides there is no dispute, which seems to be there first line of deffence, they please thereselves

    I use the CCA request's as an example, but it applies to many other scenarios, unfair/unlawful charges, miss-sold PPI etc etc…………
    Thats it, i am done, Blind-as-a-Bat has left the forum, for good this time, there is no way I can recover this account, as the password was random, and not recorded, and the email used no longer exits, nor can be recovered to recover the account, goodbye all …………. :(
  • Sol00
    Sol00 Posts: 1,230 Forumite
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    jambosans wrote: »
    Does a bank account really belong to the customer? I wouldn't have said so. The money deposited in a bank account is a facility provided by the bank under their terms and conditions.

    A debt in dispute with the bank is one thing, however I hardly see a debt being paid with credits made elsewhere within the same business an issue.

    If this practice was to change, e.g. a bank had to inform you before setting off, it would make the process a little pointless. Those not willing to pay arrears would simply remove the deposits from the bank.

    Another win win for the financially irresponsible.

    The bank account doesn't belong to the customer, but it is a necessity for most thesedays, and why should banks have the authority to take people's money without permission? They shouldn't.
  • natweststaffmember
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    I'm not entirely sure from your comments Martin, that you understand the Right of Set Off and the rules that surround that since the post seemed to indicate, Direct Debit Guarantee Scheme, reclaim of charges and financial harship etc, etc,. The government haven't announced anything. In fact, I suspect they have done the same as one of their departments did to me with regards to a separate issue. "We'll look into it and seek the views of all interested parties."
    I have not worked for NatWest Bank since February 2009

    This username is no longer active.
  • property.advert
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    I find myself sitting in both camps I'm afraid and I'm sure I'm not the only one.

    Firstly, you cannot have a customer who abuses credit facilities to the extent that you have to pursue him through the courts, whilst at the same time he maintains credit balances in the same bank (not organisation, which I feel should be protected). Surely some of the money in the account in credit is actually part of the money owed ? To suggest that the customer should be able to do this is madness.

    However, a credit balance on one account cannot be used to offset outstanding balances on credit accounts because the lender has decided to reduce the amount of credit available to the customer. To allow that is madness.

    Similarly, taking funds from one account to pay a disputed charge, bill or debt on another account is also wrong. The onus must be on the institution to prove to an independent third party that the charges are legitimate and fair. Even then, the customer should be given time and means to settle those charges or to appeal the original decision.

    What has to be accepted is that banking is a fundamental requirement of 21st century living. Unless the government wants to step in to this market then companies will use the banking system as a means of identification for their customers. You can see that presently with debit cards replacing passports as identification requirements for nearly all high street credit applications. I could not get a mobile phone contract when I returned to the UK because I did not have a UK based debit card. This is madness, utter madness.

    If something is not done, then people will have to hide all their credit balances away from their normal credit facilities. With the bank mergers of late, that is hard enough to do even now. Banks do have too much power and as we know, absolute power corrupts absolutely.
  • plumber2009
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    Why should the bank be able to take you'r money without your consent! to me its stealing. Regardless of your situation the bank needs to follow the same rules as any other company chasing bad debt.

    Take bank charges for instance, They charge you so you go overdrawn, then they charge you again and again and before you know it, the bank have taken all your wages. What right do they have.
  • MarkyMarkD
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    My real bone of contention was that the original article starts by saying
    While still in the early stages, the focus is expected to be on bank charges (see the Bank Charges guide), but could also stretch into setting off (see the Setting Off guide), where banks use people's savings to pay off their debts – without notifying customers in advance.
    To suggest that there is any sensible means of banks charging you for your account, other than simply notifying you in advance of the charges and then deducting them, is complete and utter madness.

    The idea that maybe they might send you an invoice and wait for you to pay it - or something similar - makes no sense at all to any rational being.

    The whole debate is based on the spurious argument that contractually agreed bank charges are "in dispute" and therefore not validly deductible by the bank. Once you've accepted that argument - which I don't - then you can argue anything logically follows from that. Build an argument on a dodgy premise, and the whole argument is false.

    In most "disputed" charging instances, the account isn't actually in credit when the charge is imposed. So the bank is not taking money from you. It is increasing its paper debt due from you. No different to BT or any other supplier imposing a charge on your invoice.

    The difference, I suppose, is that when you next pay money into the account, that money is used to meet the debit balance. But why shouldn't it? Nobody is MAKING you pay money into that account. It's your choice to do so.

    Martin's point about banks automatically becoming a priority creditor is the most interesting one. But, generally, it's not true. They are only a priority creditor if you choose to pay money into the account.

    The set-off point affects very, very, few people indeed. So it's not the part of the debate which really concerns me. Those people who have other assets are not commonly going to be the people who are suffering hardship as a result of set-off. Surely that is those without other assets, who don't make alternative arrangements for their income and consequently end up paying bank charges out of them?

    @plumber2009 - they don't "charge you so you go overdrawn ..."; YOU go overdrawn without permission so THEY charge you. If that charge then causes you to go overdrawn again, it's still the original overdrawing which is the root cause, not their charge.
  • jambosans
    jambosans Posts: 1,493 Forumite
    edited 26 September 2009 at 12:49AM
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    Sol00 wrote: »
    The bank account doesn't belong to the customer, but it is a necessity for most thesedays, and why should banks have the authority to take people's money without permission? They shouldn't.

    I agree fully with the sentiments that disputed debts, priority debts, etc should not be ignored by the banks and therefore tighter controls should be put in place.

    My comment was more aimed towards a genuine debt. In those circumstances I see no reason why a bank cannot offset the funds within their own business to pay off the debt. As I've previously commented, offsetting isn't the first thing a bank will do when arrears have begun. If the customer makes no attempt to arrange repayment or get in contact with the bank I do not see an issue with offsetting credit funds to pay a debit balance.
    Anything I post is my opinion, so from time to time I may be wrong. I try to provide answers based in fact, however I don't know everything, so (like all posters on MSE), take what I say with a pinch of salt.
  • never-in-doubt
    never-in-doubt Posts: 20,613 Forumite
    edited 26 September 2009 at 12:53AM
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    MarkyMarkD wrote: »
    @plumber2009 - they don't "charge you so you go overdrawn ..."; YOU go overdrawn without permission so THEY charge you. If that charge then causes you to go overdrawn again, it's still the original overdrawing which is the root cause, not their charge.

    No, actually you'll find the bank make the decision to make you overdrawn. Its the same if they refuse it.

    Ok, i'll put it to you in an 'honest joe' way for ease: I change from Virgin Media to BT. I instruct my bank to cancel the Virgin DD. I then set-up the BT DD. I only use this account for the one DD and so transfer enough in each month without looking at the account.

    I forget about things....... a year later I get a letter saying i'm £2580 o/d - why? Impossible, I did not have an overdraft. I question this. The bank, in their wisdom tell me that they paid a Virgin DD as well a BT one, I cancelled that DD so why? The bank 'thought' they were doing me a favour - they weren't.

    As a result the bank incorrectly made me go overdrawn, they then charged me for the privilege of their generosity and before you know it, i've got a default, they have nicked my savings and left me to fight something a year old.....

    makes sense right? Fair yea? The banks are right yea? Come on mate, smell the coffee :D:D

    edit; not having a dig, just saying you've missed the point slightly :D
    :o 2010 - year of the troll :o

    Niddy - Over & Out :wave:
  • never-in-doubt
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    jambosans wrote: »
    I agree fully with the sentiments that disputed debts, priority debts, etc should not be ignored by the banks and therefore tighter controls should be put in place.

    My comment was more aimed towards a genuine debt. In those circumstances I see no reason why a bank cannot offset the funds within their own business to pay of the debt. As I've previously commented, offsetting isn't the first thing a bank will do when arrears have begun. If the customer makes no attempt to arrange repayment or get in contact with the bank I do not see an issue with offsetting credit funds to pay a debit balance.

    Mate then why not reverse this and lets all take the laws into our own hands and forget the practice of shared creditors eh? Ok, so I have a kid with most the birds in Hammersmith and they are all chasing me for CSA - I don't pay, but as I claim benefit they offset my benefit and leave me nothing to live on so I pay the CSA..... see where things start to go wrong and become unlawful / downright illegal?

    Banks cannot and should not be allowed to dip into another account. They have to wait their turn like everyone else :beer:
    :o 2010 - year of the troll :o

    Niddy - Over & Out :wave:
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