Livid. The bank and the teenager's overdraft

Alpine_Star

opinions4u wrote: »

I gave a straight answer to a straight question. No spin. No bull. I stated it as it (probably) is.

If you look at the final paragraph of my post you will even see me questioning the size of the overdraft allowed compared to income.

The OP hasn't done us the honour of clarifying whether it's a student account or not. That may explain the loan to income ratio.

But ultimately it changes nothing. The customer borrowed the money and should repay it as and when the agreement demands.

And?

My point is that you clearly implied that no human was responsible for deciding the level of credit.

In my view, given that this involves an inexperienced 18 year old and a responsible, mature financial institution, the bank is more guilty of irresponsible lending than the 18 year old is of irresponsible borrowing.

huw01

I'm afraid the OP has to realise that her daughter is now an adult and will have to clear up her own mess. It will be an expensive but valuable lesson for her - she wont do it again.

I used to work for a local authority in council tax some years ago now and it was amazing how many parents would be calling up "on behalf of my daughter/son". We couldn't talk to them about it becaase of the data protection act - and the mother/father used to go bezerk about it.

I know that my dad wouod have given me a kick up the backside if I had run into debt and would have told me to sort it out myself. Amazing how many parents cannot let go. I know in this case she is only 18 - but old enough to make her own mistakes now.

If you want to help you daughter out. Teach her a hard lesson. Get her to clean the house, do some gardening etc for the national minimum wage. That way you can feel you're helping her pay it back, have the house spruced up and teach her how damn hard it is to earn cash

glider3560

huw01 wrote: »

I used to work for a local authority in council tax some years ago now and it was amazing how many parents would be calling up "on behalf of my daughter/son". We couldn't talk to them about it becaase of the data protection act - and the mother/father used to go bezerk about it.

When I worked in a call centre, we used to get quite a few calls from parents wanting to discuss their son/daughter's car insurance policy. These weren't just 17 year olds - one was for a 23 year old where the parent wasn't even named on the policy. I couldn't speak to the parent about the policy as they weren't named - they got really rude, started swearing at me and wanted to speak to a manager. I did the usual conflict management response "Mr x, please stop swearing or I will end the call", "F***ing insurance companies" so I hung up.

Back to the topic, I was given a £1500 overdraft at 18 before going to university. I was also given £250 on another account which I only used abroad. Even though I was only 18, I used my common sense and didn't use it as I knew I couldn't afford it pay it back. Common sense is something that people seem to lack these days.

chexum

Alpine_Star wrote: »

In my view, given that this involves an inexperienced 18 year old and a responsible, mature financial institution, the bank is more guilty of irresponsible lending than the 18 year old is of irresponsible borrowing.

Are we trying to argue whose responsibility is the financial education, the lack of it, and the lack of requiring it?

Of course, it's the bank that gave her the overdraft, forced her to spend it, and made her to hide this from her family.

If she moves to Uzbekistan to marry a shepherd, it's the bank's fault as well - I'd be worrying about that too. After all it's not that adults should be allowed to do anything to ruin their own life (or their parents...)

Shall I refrain calling anyone adult, who doesn't understand that spending on credit means you spend more of your future money?

If you think about it, graduate overdraft is a fine way for banks to assess someone's ability to handle credit, and an incredible opportunity for students to build a relationship with the bank, and a credit file which is very hard (or expensive) to kickstart later on.

Some might fail this lesson.

bengal-stripe

Alpine_Star wrote: »

In my view, given that this involves an inexperienced 18 year old and a responsible, mature financial institution, the bank is more guilty of irresponsible lending than the 18 year old is of irresponsible borrowing.

And who is guilty of irresponsible spending???

CIS

I used to work for a local authority in council tax some years ago now and it was amazing how many parents would be calling up "on behalf of my daughter/son". We couldn't talk to them about it becaase of the data protection act - and the mother/father used to go bezerk about it.

I see that happen all the time - its quite common for students to turn up at the monthly court with their parents to sort it out for them.

It's often quite good leverage - angry parent on the phone (with their childs permission of course) shouting at me, I explain situation to parent (namely the child has not bothered to deal with the situation), parent apologises and goes to kill child.

jimjames

While I agree it does seem a strange lending decision to lend 10x a low monthly income ultimately the bank thought it was good commercially and many people are lent £20,000+ on the basis of earning under £2000 per month. It does highlight yet again the lack of financial education in this country (and possibly elsewhere).

Unfortunately if adults are unable to understand the consequences of borrowing it is rather hard for them to be able to educate their children on it.

@OP - did your daughter have a bank account before 18 and did you explain to her about borrowing? My 11 year old has just got his first account and I think it will be a very good learning experience for him to start to manage his money.

Alpine_Star

bengal-stripe wrote: »

And who is guilty of irresponsible spending???

The teenager - clearly.

But given that banks are run by mature adults who have a regulatory duty to lend responsibly I believe the balance of responsibility lays with them.

I take it you're over 18? Would you be stupid enough to lend £2000 to a teenager on £300 a month?

opinions4u

Alpine_Star wrote: »

The teenager - clearly.

But given that banks are run by mature adults who have a regulatory duty to lend responsibly I believe the balance of responsibility lays with them.

It's all a bit pointless though, isn't it? You can debate who should have done what for as long as you want. It isn't going to make the debt go away. In the eyes of the law the debt exists.

The bank has allowed the customer to borrow the money.

The customer has a contract that says it will be repaid at some point in time.

The customer's parent is upset and has posted on the messageboard to canvas views (although has then failed to respond to any of those views).

It's not clear, on the face of it, whether the loan was prudent or not. To me it's a poor decision (automated or otherwise) if the customer is not an under-graduate. It's still a real debt though.

To you, it seems, banks are an evil for making money out of people's stupidity. To me, people should work out how to pay their bank as little as possible and make as much money as they can out of that relationship. It isn't that hard. One way of not paying your bank anything is to never borrow from them.

A bank takes a risk when it lends money and gets its hands burned if it makes a bad decision. It doesn't in any way make the customer any less responsible for their own decision to borrow.

Alpine_Star

opinions4u wrote: »

It's all a bit pointless though, isn't it?

It's entirely the point in my view. If the bank hadn't lent irresponsibly in the first place the irresponsible spending couldn't have occurred - and nothing will change my view on that I'm afraid.