Astonishing letter from Lloyds TSB

Skintybinty

Just had a letter from Lloyds TSB adding a new term to the contract for my credit card.

It says that if they owe me any money (I assume this refers to refunded/reclaimed fees etc) they reserve the right to offset it against any arrears I may owe.

Now, I'm not a lawyer, but I would have thought if they owe me money, that's money they never should have taken in the first place (or they wouldn't be refunding it), thus MY money, not theirs, and not up to them how I spend it.

Particularly if I'm in a debt management plan where any excess funds are supposed to be split equally between creditors. And when I also have an arrears on my mortgage and a suspended possesion order - which surely must constitute priority debt.

Can anyone comment on the legality of this new term, cos I don't think 'we're owed money' is necesarily sufficient for them to apportion funds that don't belong them to them, by admission of the fact they were being 'returned' in the first place.

DevCoder

It's not a new term at all

They have the right to set off any monies against the debt you owe them

http://www.moneysavingexpert.com/banking/setting-off

Your mortgage is not a priority debt, council tax is as is benefits.

You can check COBS but I think you'll find Lloyds have done nothing wrong.

Skintybinty

The article actually seems to say the opposite:-

"In a rather complex paragraph, it explains that money should only be used to pay "non-priority debts" once provision has been made for priority debts (see the full set-off section.)"

So again, if your credit card company gave you a refund, then immediately took it back to pay off arrears, whilst you had priority debt such as a mortgage arrears that would not appear to be consistent with the set-off clause.

Skintybinty

Mortgage is listed as a priority debt on the DirectGov website.

The_Swerve

Not sure what the problem is here...banks have always had the right to offset, whether it be in the written terms and conds of the credit card or not.

And surely it makes sense...you owe them £1000, then they owe you £500 for PPI reclaim...doesnt it just make sense that overall, you owe them £500????

However, I can see your point regarding debt management. The done thing is for payments to be made on a pro-rata basis, but not too sure much could be done about that particular oddity.

mybob

Hi skinty binty, im in the same position as urself, i jurst rang up regarding my letter, only to be told to disregard tha letter as every one has recieved them and its a error. hope all works out , keep smiling u will get wats due .