HBOS failure at Ombudsman

nlamont

My son had mental health problems and, in a few months, got over his authorised overdraft at HBOS by a few hundred pounds. He'd been made redundant, which contributed to his problems and he refused to claim benefits, which made it worse. He refused to answer calls from the bank. The charges piled up, both interest charges and charges for each transaction over his authorised overdraft limit. I tried repeatedly to ask HBOS to give him a respite, but their procedures (and I accept this) would only allow them to discuss the case with me if he'd authorised each particular call. It would often take me two or three weeks of cajoling to get him to do that. In the end, when the HBOS charging system changed to the new £1 / £5 a day one, our only option was to pay £1300 to pay off his overdraft and close the account. It was going to cost £35 a month just to keep the account open! We'd previously paid £700 to bring it within his authorised limit. HBOS offered £105 as a goodwill gesture which we turned down - we went to the Ombudsman to see if we could get more of the charges repaid.
The adjudicator turned us down on the grounds that (1) a ruling couldn't be based on the idea of fairness, citing the OFT case and (2) the charges weren't an error on the part of the bank and its offere of £105 meant it had acted in a 'positive and sympathetic manner'. What's worse, the bank now claim £70 of that £110 was fees it waived when we closed the account (which they didn't tell us at the time) so now their offer is just £35. I discussed it on the phone with the adjucator who was sympathetic but would only reconsider if we had new information to present. Looks like the end of the story unless anyone can suggest an angle to approach it from?

DON79

I can't really help with the charges side of things, however the story that you had to be authorised at each call to discuss the account is incorrect. HBOS have got the facility to make a record on your son's account that he gave permission for you to discuss and deal with the account. This could also have been done by letter from your son authorising to you discuss and act on his behalf regarding the account. Permission at every call is totally unnecessary.

edit - also did you never try going into a local branch with your son to try and resolve the issue? or were you not advised that you could do so and have called from there?

Sorry I can't be of more help than that.

nlamont

Thanks Don.

I did get my son to sign a letter to authorise me and next time I called I was told the authorisation only lasted for a short period (I think it was a week, but can't remember) then has to be renewed by phone. Only getting power of attorney would allow 'permanent' authorisation.

Early in the problem I did get him to go to his branch with me, where the manager was sympathetic and helpful, and managed two things - to have his overdraft reinstated when it was due to expire and to have one particular transaction charge revoked. But as things got worse I couldn't get him to go back to the branch.

One thing I forgot to mention which will be of interest to MSE readers is that the FSO adjudicator said, rather wearily, 'there's a common misconception out there that we're here to get charges refunded. All we can do is ask the bank to consider a goodwill payment.'

dunstonh

The adjudicator turned us down on the grounds that (1) a ruling couldn't be based on the idea of fairness, citing the OFT case and (2) the charges weren't an error on the part of the bank and its offere of £105 meant it had acted in a 'positive and sympathetic manner'.

That was always the response you were going to get since the court case ruling. The FOS rules on the basis of FSA rules and the law. It does include a bit of fairness in there as well at times which the courts wouldnt do but in this case, they go by the rules.

Looks like the end of the story unless anyone can suggest an angle to approach it from?

You mention your son has mental health problems. How severe are they? Often the financial firms cannot hide behind the rules when the person is mentally incapable of understanding what they are doing. Were the FOS aware of the level of mental health problems your son has?

One thing I forgot to mention which will be of interest to MSE readers is that the FSO adjudicator said, rather wearily, 'there's a common misconception out there that we're here to get charges refunded. All we can do is ask the bank to consider a goodwill payment.'

The FOS is there to deal with complaints where the firm and the consumer are deadlocked with a different opinion. The FOS makes sure rules have been followed. IF they have, they will rule with the firm, if they havent they will rule with the consumer.

nlamont

Thanks - without wanting to go into too much detail, my son's problem was a combination of Asperger syndrome and depression brought on by his redundancy. The AS pretty much ruled out his responding to phone calls or initiating phone calls, and created a very fixed attitude of 'there's nothing they can do - if they send bailiffs I've nothing for them to take', and the depression rendered him unable or unwilling to face up to the situation; the more it got out of control the more daunting it was to him. I explained all this to several bank call centre people and to the FSO lady, but I might just spell it out again. I think in the Bank's eyes there's nothing else they could have done as the charges apply to everyone regardless.

Happily, he's now recovered from the depression, is working again and has a new account with a different bank. It's just us that have taken the financial hit!

davidgmmafan

Don't beat yourself or him up too much about not answering the phone I doubt it would've done any good, you'd probably just have had a similar conversation to the one you are having now a bit earlier.

I really think this hardship is a load of rubbish. £105=positive and sympathetic??? I'd say that depends on the amount of the charges and I'm guessing they were a lot.

Apart from the fact that the customer did not contact the bank this EXACTLY why I object to Halifax new charges. If this customer didn't have people who could help would he ever clear a balance increasing at a rate of £30 (at least) per month? If not the customer goes bankrupt or similar and everybody loses. The system is not working.

Based on my limited (and highly cynical) knowledge of hardship I'd try and push the vulnerability issue more, but the great problem is even if you have success with this you can see from the FOS response it doesn't oblige the banks to do a great deal. This issue has become a complete joke now they know the regulators are toothless dogs.

the_insider

You have been mis-informed about the authority. If your son sent a letter of authority to the bank they would honour it for up to a year if there was fairly regular contact. But they are right in saying that your son would need to give authority each time you wanted to call if they did not have it in writing. Unfortunately, Don, regardless of whether they have the facility to note the account or not they will not accept ongoing authority taken over the phone.
And nlamont, unfortunately once FOS have made a decision there is not much further that the bank can do. Unless you challenge the FOS decision. I have a feeling that the reason that your complaint was unsuccessful was due to the fact that your son is able to work. This would lead people to believe that he is in a position to manage his own finances and therefore the bank have not acted incorrectly in giving him the account (regardless of the charging structure david!). The only way you could really argue this angle would be if he was offered the account and immediately went overdrawn as he was not aware of how the account works. It's definitely worth going back to FOS again though and seeing if they will reconsider.