Bank not handling loan properly

scarey_man

Here's the story..
between 2002 and 2004 my Father had a Car Loan - £7200.
In 2004 he traded it in for another, and took a loan out which consolidated the original loan and the new one - £11500 (£5000 remaining from original + £6500 new)

The Bank said this new loan would pay the balance of the old one, which one would expect.
They were to put the funds for the new loan into his current account, then xfer £5000 to clear the original loan. The remaining £6500 my father would use to pay the Car company.

They didn't xfer any money to pay off the loan. They placed the £11500 into his current account, he used £6500 to pay for his new car.

My father is as financially savvy as a teacloth, and didn't know that the bank had not xferred the £5000 out to clear the old loan.
Over the course of the year, he spent the £5000.

The bank realised their mistake, and owned up to it, but he had to pay all the money back.

He got quite depressed and worried about it and cashed in his remaining savings etc to clear the full loan of £11500.

Does he have any case for compensation?
He now has no savings because of this.

grumbler

scarey_man wrote:

Here's the story..
My father is as financially savvy as a teacloth, and didn't know that the bank had not xferred the £5000 out to clear the old loan.
Over the course of the year, he spent the £5000....
Does he have any case for compensation?

Compensation for what?
Personally, I don't believe this fairy tale ... If your father was a millionaire he could have spent £5000 without without noticing this ... However, he was not.

And generally it is a bad idea to borrow £11.5K when having the same amount of savings ...

scarey_man

grumbler wrote:

Compensation for what?
..

we 'trust' the banks to look after our money in an appropriate manner.
If it was written down that they were to xfer £5000 to pay off the original loan and then didn't, they've not lived up to their part of the deal.

I'm not sure if he's entitled to anything or not, but want get opinions from a wider audience.

If a bank deposited £5000 into my account and I didn't notice and I proceeded to spend from my account, over the course of a year, £5000, would I then need to pay it back to the bank even though it was their mistake and I genuinely didn't know?

That's basically the position my father is in, and for someone financially illiterate he had no idea this was happenning.
Subsequently had to cash in savings.

C_Ronaldo

have you tried to speak to the bank about it

scarey_man

Yup, they said 'Yes, our fault'. But that's it!

grumbler

scarey_man wrote:

...If a bank deposited £5000 into my account and I didn't notice and I proceeded to spend from my account, over the course of a year, £5000, would I then need to pay it back to the bank even though it was their mistake and I genuinely didn't know?....

Undoubtly you must pay this amount back.

scarey_man

Been over the the COnsumer Action group forum, someone mentioned something about estoppel
quote "'we got £500+ out of Barclays by using legal precedent - they had not paid the mortgage for no reason, we then spent the money thinking it was available. I can't remember the case but the judge said if the bank made a mistake and the customer changed it's position as a result, the bank had to stand the loss. The bank said the customer should check their statements but the courts said there is no obligation to check any statements.'"

Wikipedia (http://en.wikipedia.org/wiki/Estoppel) has some interesting info,
quote "In the case of an existing debt, for example, an estoppel could arise where the creditor informs the debtor that the debt is forgiven, but there is no formal termination of the contract. If the creditor later tries to enforce the original contract terms, but the debtor has relied on the representation and has innocently spent the money on something else, the creditor may be estopped from relying on the usual contractual right to repayment because it would be unfair to allow the creditor to change his or her mind. Similarly, a landlord may tell a tenant that the rent is reduced or cancelled for a specific period of time, e.g. "You can pay half rent until the noise and dirt from the maintenance of the common parts is over." If the tenant changes behavior as a result of what is said, the landlord might be "estopped" from retrospectively claiming the full rent."

Bargain_Annie

My immediate reaction is that he must have realised that he had much more money available to him - even if he didn't check his Bank accounts regularly. I would know if I had an extra £500 - never mind £5000. Also - the Bank should have been sending statements on the loan accounts (both of them ) and will probably have records of these having been sent to your Dad's address. Undoubtedly, you could go down the legal route, but at what cost? :eek: He may even have made the situation worse by paying it all off - they now have the money and probably don't care any more. Sorry - but compensation is most unlikely - firstly he has the car - and has also spent the other £5000 as well!

scarey_man

thanks for the replies, I don't agree with some of them bu it's good to get a wider opinion.

scarey_man

Here's some further info which really angers me.
The bank, after failing to xfer money to pay of the original loan, continued to take payments + interest from my father on that original loan, as well as payments for the 2nd loan.

This then, after 1yr, caused his account to be overdrawn. They have given him nothing back, not even interest incurred on a loan they were to stop 1yr prior.

In 2005, my father had a minor stroke which was put down to stress. I didn't understand why he could have been stressed, but now I know. He subsequently lost his HGV license and now has no savings, little income.

So goddamn angry !!!!

regularsaver1

He would have seen on his bank statements that £11500 went in but the £5000 wasn't taken out on the same day