Setting Off: Have your say on how customers should be treated

Former_MSE_Wendy

[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif] What this is all about[/title]
The Financial Services Authority has launched a consultation on whether to add specific rules to its Banking Conduct of Business sourcebook (BCOBS) about the banks’ right to Set Off.

At the moment, banks have the right to transfer cash from your bank or savings account to pay off other debts held with them, such as credit cards or loans. It can do this without permission or even notifying you first!

The FSA has made several suggestions in its Quarterly consultation (Section 7, pages 44 – 53), including that Banks should:

• tell customers that the right of set off exists before they agree to sign up for an account
• contact customers when they are beginning or continuing to experience financial difficulty to remind them the right of set off exists
• tell customers straight away after any money has been taken from their account
• ensure consumer have enough left to meet essential living expenses and priority debts (to be decided on a case by case basis)
• not take money from a joint account to pay for a debt in one account holders name

[title=http://images2.moneysavingexpert.com/images/dp/wtd_underline.gif] How to have your say[/title]
You can respond - before 6 September 2010 - in the following ways:

Online: Complete questions 21 to 30 in Chapter 7 on the online response form

Post: Send your views to Kirsten Jones, Financial Services Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS

E-mail: The [EMAIL="cp10_15@fsa.gov.uk"]consultation response team[/EMAIL]

If you do not want your views to be made public once the consultation has closed please state this on your response.

If you write or email these are the questions asked by the FSA:

Q21 Do you agree with our proposal that information about set-off should be provided in the account terms and conditions?
Q22 Do you see a need for further information, beyond that set out in our proposal, to be provided about set-off when a customer opens an account?
Q23 Do you agree with our proposal for firms informing customers of the right of set-off when they are beginning or continuing to experience difficulty in meeting their payment obligations?
Q24 Do you agree with our proposal that customers should be promptly notified about the use of set-off on their account?
Q25 Do you agree with our proposals for exercising the right of set-off fairly?
Q26 Do you have any suggestions of other ways of exercising the right of set-off fairly?
Q27 Do you agree with our proposal that firms should not use set-off in the types of scenarios listed above?
Q28 Do you agree with our proposal to apply the guidance in the information requirements to credit unions, but exempt them from our post-sale guidance on set-off?
Q29 Do you agree that our proposed guidance should take effect immediately?
Q30 Do you have any comments on our proposed amendment to BCOBS?

And of course please let us know what you think below

dancingfairy

To be honest I can't see the proposals working. How on earth are the banks going to know what someone's expenses are? they say they will do it on a case by case basis but that will drag it all out. Are they going to take the money first and wait for someone to say it's not reasonable or are they going to ask first what's reasonable with the person concerned? Also they are going to tell people when they've taken the money - I can't see that helping much to be honest. It's still going to cause panic and people will have to make other arrangements when the money's been taken anyway.
All the system does as far as I can see is cause panic - most people on debt -free wannabe are trying to get themselves straight and having to open a new bank account to prevent setting-off is just another hurdle to jump through.
Why not scrap the scheme altogether?
df

PeterDuckett

I'm a little bit Pro Bank on this one!

Yes the right does exist and it is mentioned in the small print along with allot of other things,

should the bank be force to bring this to your attention other than the terms and conditions in general?

perhaps the banks need to apply some common decency send a letter saying you missed your last two payments and you have available funds so next month you will pay three months and all charges from this account.

Job done your informed that you broke the bank policy and they have a right to recoup the loss.

Lets face it if you find borrow money then default (Bankrupt, IVA ect) it affect all the bank customer even the ones in good standing as the bank has now got to fill that gap from its own pocket.

nymph_2

I'm sorry but I'll never agree that a bank should be able to take your money in Off Setting.

EVERY other company has to use the legal system to get their money where it is owed, by way of summons/small claims etc, wether it be rental, water rates, TV Licences, council tax! Come to that, even the court when it is owed money by way of a fine imposed, must still consider the means of the person in order to pay!

I understand the argument regarding the fact that people should be careful with their finances, however not everyone who is in money trouble is there because they were careless, misfortune does happen and sometimes NOTHING can be done about it.

So what right does the banking sector ALONE have to arbitrarily impose further financial difficulties with potentially drastic implications? The word unfair doesn't even come close!

irismary

I strongly believe that the banks should not be able to offset. Most of the time they are not taking funds from a savings account but from a current account just after wages or benefits have been paid in. This doesn't just cause panic but pushes people into priority arrears,i.e. rent or mortgage , council tax, utilities. It hits the most vulnerable and without warning. They usually find out when they go to the hole in the wall to get their hard earned money or child benefit and there's nothing there. people then resort to doorstep lenders at massive interest rates in order to keep a roof over their heads or to buy food, because by the time the set off happens they are already in financial difficulties.
Moreover, often, the next thing that people do, is open a Basic bank account and leave the "offending" bank. The bank could avoid this and retain the customer if they were more reasonable in the way they treat their debtors.