Bank Charges not applicable if you're on benefits!

Pandafan

Hi - I've just sent this letter to my bank:


"My only regular income consists of income-related benefits. (Working and Child Tax Credits, Disability Living Allowance for my son, and Child Benefit.) Therefore, the effect of cancelling an overdraft effectively equates to the appropriation of benefit money, as does applying bank charges for failed payments. You will be aware that this is illegal under the Social Security Administration Act 1992, Section 187, which states:

Certain benefit to be inalienable

(1)Subject to the provisions of this Act, every assignment of or charge on—
(a)benefit as defined in section 122 of the Contributions and Benefits Act;
(b)any income-related benefit; or
(c)child benefit, and every agreement to assign or charge such benefit shall be void; and, on the bankruptcy of a beneficiary, such benefit shall not pass to any trustee or other person acting on behalf of his creditors.

I intend to calculate the total of such charges (including returned payment fees) applied to my account since I started receiving benefits three years ago, and I will provide them in a subsequent letter."

Apparently the banks keep really quiet about this, and don't even inform their frontline call centre staff. I'll keep you posted!

bengal-stripe

Not that old chestnut again!

The Government’s response

The purpose of the Social Security Administration Act 1992 Section 187 and section 45 of the Tax Credits Act 2002 is to prevent people’s benefit money being at risk by it being assigned over to a third party in settlement of a debt. It is not intended to prohibit the application of bank charges. Bank charges are in the nature of an expense, and are incurred by the holder of the account; tax credits and benefits are payable in order to help customers meet their expenses, and as such it is legitimate for banks to deduct charges from the balance of an account held in that bank, whether the money paid into the account comes from tax credits, benefits or other sources, such as earnings.

http://www.consumerwiki.co.uk/index.php/Benefits_and_the_Social_Security_Administration_Act

mulronie

Pandafan wrote: »

Certain benefit to be inalienable

(1)Subject to the provisions of this Act, every assignment of or charge on—
(a)benefit as defined in section 122 of the Contributions and Benefits Act;
(b)any income-related benefit; or
(c)child benefit, and every agreement to assign or charge such benefit shall be void; and, on the bankruptcy of a beneficiary, such benefit shall not pass to any trustee or other person acting on behalf of his creditors.

Unfortunately that's the only accurate part of your post.

Bank charges do not comprise an agreement to 'assign or charge [a] benefit', and nor does withdrawing an uncommitted credit facility. The legislation is there to stop people "forward selling" their benefit entitlement, directing it to the accounts of loan sharks, and other nefarious activities. Neither the text nor spirit releases you from your obligations to pay interest/fees as appropriate.

thatsean

Budgeting properly will also result in no charges, and save you the cost of a stamp in future.

opinions4u

Pandafan wrote: »

Hi - I've just sent this letter to my bank:


"My only regular income consists of income-related benefits. (Working and Child Tax Credits, Disability Living Allowance for my son, and Child Benefit.) Therefore, the effect of cancelling an overdraft effectively equates to the appropriation of benefit money, as does applying bank charges for failed payments. You will be aware that this is illegal under the Social Security Administration Act 1992, Section 187, which states:

Certain benefit to be inalienable

(1)Subject to the provisions of this Act, every assignment of or charge on—
(a)benefit as defined in section 122 of the Contributions and Benefits Act;
(b)any income-related benefit; or
(c)child benefit, and every agreement to assign or charge such benefit shall be void; and, on the bankruptcy of a beneficiary, such benefit shall not pass to any trustee or other person acting on behalf of his creditors.

I intend to calculate the total of such charges (including returned payment fees) applied to my account since I started receiving benefits three years ago, and I will provide them in a subsequent letter."

Apparently the banks keep really quiet about this, and don't even inform their frontline call centre staff. I'll keep you posted!

Dear Pandafan.

Your assumptions are wrong.

Here's a complaints leaflet. It mentions the FOS but they will tell you that your assumptions are wrong too.

See you in court!

(If the judge makes a costs order against you, it will not feel good).

Yours sincerely,

Your bank.

pinkdalek

Being on benefits should not mean you are exempt at all.

I mean does it mean if you get caught speeding then you don't pay the charges involved because you are on benefits? If it was 100% true then surely anyone on benefits could abuse the financial system and run up stupid amounts of debt.

Of course you could speak to your bank on a civil basis, being open and honest with your current situation, afterall they do have to act sympathetically for customers in financial difficulty. Or you could be a complete "smart alec" and quote laws which you only have a scratch knowledge of and have it bounce back in your face.

Good luck with your crusade. But you are responsible for your own actions, why are you being charged by your bank?

deutsch

this post is funny.

Agricolae

I have a question about the above. As the government's response has pointed out, bank charges are expenses rather than anything else. As such they are not covered by the Acts referenced.

Let's say a customer of a bank is only paid benefits and they have £250 worth of benefits in a bank account. They also have a loan with the same bank which they have defaulted on and the bank decides to write off the debt and close the customer relationship.

Can the bank have right of set off in this case with the £250 in the bank account? They would be assigning benefit money to cover a debt on a different account, which sounds like it would be against the two Acts.

JuicyJesus

Agricolae wrote: »

Can the bank have right of set off in this case with the £250 in the bank account? They would be assigning benefit money to cover a debt on a different account, which sounds like it would be against the two Acts.

The first issue is that "assignment" in this context is ordering the benefits to be paid to someone else. Someone else in the thread used the example of a loan shark being "assigned" benefit money so that they get it instead of the claimant. As it is, the funds paid into a bank account are not "assigned" to anyone other than the customer in this example - it is their account.

From that point on, the money is just money. Another thread used an analogy of water going into water - if you empty a bucket into a large water tank, while you can identify what water is in the bucket and what is in the tank *before* you mix them, you can't pour the bucket into the tank and then later pick out the individual water molecules that used to be in the bucket. As such even if the money going into the account was benefits money, as soon as it goes into the customer's account it's just available funds, the source of it is irrelevant. The money has been paid to an account in the customer's name, therefore it has been assigned to them. End of. Whether it then goes to pay off loans, overdrafts or anything else is irrelevant.

Of course in your scenario the one thing stopping them is that banks are obliged to not set off and not leave anything for priority expenses.

jonesMUFCforever

OP's next post will be HELP!! I can't get a bank account all the ones I have tried have declined me - how will I be able to get my benefits?? HELP!!!
(Present bank will close his account for sure)

JuicyJesus

One thing I forgot to mention - while the bank can't actively set-off against funds for priority expenses, that doesn't mean that if you have an unauthorised overdraft, then repay it with benefit money, the bank has to let you draw back down upon it. A lot of people are under this misconception and it simply isn't true.