Advice for friend re Benefit/Charges/Overdraft

crazyworld_2

Hi all, i'm currently attempting to reclaim my own bank charges back, and am helping a friend to go through all their own statements (much more organised than me, they have all theirs dating back 6 years and more!) to add up all the charges. at the moment

Anyway, so far we've worked out that they should be due around £1000 back in charges alone, but then i've also noticed on their statements that although they've received about £3000 in housing benefit payments from the council, almost £2000 of that has been gobbled up by their overdraft, and in effect, they've only actually been able to make use of just under £1000 and in the past has been in arrears (which i've just found out about), so not only have they had to cover the shortfall in the amount of rent due, but they've also had to arrange to pay back the arrears, and cover the amount lost in housing benefit payments!

Can anyone advise whether my friend could claim back the amount gobbled up by the overdraft, as surely, this amount was the amount due to them, not due to the bank to pay back an overdraft?

How would they go about trying to get back the lost amount?

Any advice would be much appreciated, thanks.

natweststaffmember

The answer is no because the charges themselves should be equal to the amount lost if the money was outside of an agreed overdraft. To ask for the benefit money and the charges, would effectively be to claim back the charges twice.

crazyworld_2

I'm sorry, but I cannot agree to what you've said in that regard natweststaffmember.

I stated very clearly that the amount that my friend had effectively lost was somewhere in the region of £2000 swallowed up by the overdraft (both authorised and unauthorised)

That's in addition to the amount lost due to the unlawful penalty charges imposed of around £1000.

I believe that my friend's benefits should not have been used to pay off any debts owed to the bank, and thefore the £2000 figure is entirely separate from the amount of charges applied figure. They were entitled to ALL the money they were due to allow them to keep a roof over their head, that is what the Housing Benefit is paid for - for this use ONLY.

The Department of Work and Pensions will be informed about the banks misappropriation of funds in this way when they reopen tomorrow, as will the local authority concerned, as they may well also wish to pursue their own criminal proceedings against the bank concerned for using state benefits in such a way in order to profit from them.

natweststaffmember

The authorised overdraft is useable and so not deprived from them. If they have had benefits eaten by benefits then they were charged and those charges forms the basis of reclaiming it back. I agree with you that they should not use benefit money for the charges, but had they known then they would have been able to take the money from the bank regardless of whether it would have put them over an overdraft facility. The charges are a definitive winner. But you need a legal argument to claim back funds more than the charges. Ok, there is the bill with regards to taking benefit money but why did they not query it with the bank? I didn;t know does not justify additional costs. Do you see what I am getting at? You need to look at what you are claiming and that is the charges unlawfully taken from the account. If the money was available in an authorised overdraft, it was not taken unlawfully nor was it if it was not queried. People still get charged today and it does come from benefit money but they simply accept it blindly(wrongly in my opinion). Knowledge is power. As i said before what legal basis will you claim double the amount? This will be something you would have to argue in court. If the charges are refunded then what have they been deprived of? That is what a court will look at. The DWP will have had many cases like this but what can they do? There is no penalty in law for witholding benefit that I am aware of(and I do want you to correct me if i am wrong on that last bit).

crazyworld_2

I can't honestly speak for them as to what they have and haven't done, but I can say in my own case I know that there is a related loss on top of the penalty charges.

For example, I have a balance on one day of +£10, with no authorised overdraft as I haven't incurred charges up until that point. Then on that day i'm charged £30 for a direct debit which has been returned, taking my balance to -£20.

I was going to put £50 in to the account on that day, but forgot about that charge, or didn't realise as I hadn't checked my last statement, this takes my balance to +£30.

In that one instance alone, instead of having a balance of +£60, i've now got a balance of +£30, and lost not only the £30 taken as a result of the penalty charge, but also the £20 that I had to pay the bank back for temporarily giving me the "service" of an unauthorised overdraft.

In effect i've lost all of that £50 deposited, plus i'm still £30 short of where my balance should have been (a real loss of £80 from a £30 charge), and i'm going to be charged an extra £20 next month for being a "delinquent account holder" on this occasion.

So i'm sorry if I don't share your view that my friend is attempting to claim their charges back twice.

Unfortunately they don't run a bank, so aren't in such a privelaged position as to be able to charge people up to 3 or 4 times the amount of the original charge.

tripled

The unauthorized overdraft charge and returned dd charges are both charges you can claim back.

Your earlier post gives the impression you not only want those back, but also to sue them for money 'swallowed up by the overdraft'. I'm not sure where your logic is going with that one. From what I can work out, you are saying that, say your friend was at their overdraft limit and withdrew £50, putting them £50 overdrawn plus charges, you want the bank to refund the account with not just the charges incurred but also the £50 they have withdrawn?

crazyworld_2

Tripled, what I was saying basically was that there were obviously losses incurred by my friend, I know that on a number of occasions they had had to increase their overdraft limit purely to cover the charges imposed from looking through their statements yesterday.

In my last post I was attempting to explain that I didn't feel that my friend would be trying to reclaim the charges twice by trying to recover the full amounts gobbled up by the overdraft, and gave an example from my own case that a penalty charge imposed of just £30 could actually incur a real loss of more than that - if the account balance was at +£10 when the £30 charge was imposed, instead of having a balance of +£60 after depositing £50, the available balance was +£30.

(The entire £50 deposit had been gobbled up by both the £30 penalty charge and the £20 which I was overdrawn by (That £20 overdraft was unauthorised, and only happened due to the imposition of the penalty charge), and I was still £30 short of the amount I would have had if the charge hadn't happened in the first place)

You see, on the face of it that only looks like a £30 loss (which you would presume was down to the penalty charge - most people looking at a statement from years ago wouldn't remember the exact circumstances surrounding a charge), however when, in general you're looking through statements for charges, you don't really tend to take much notice of the deposits, as well as the charges until you start to take a closer look at them. Then you start to notice just how much money you really have lost!

LozBingley

see my post in answer under "Its a Crazy World" posted 21 June 2007

LozBingley

crazyworld wrote: »

For example, I have a balance on one day of +£10, with no authorised overdraft as I haven't incurred charges up until that point. Then on that day i'm charged £30 for a direct debit which has been returned, taking my balance to -£20.

I was going to put £50 in to the account on that day, but forgot about that charge, or didn't realise as I hadn't checked my last statement, this takes my balance to +£30.

In that one instance alone, instead of having a balance of +£60, i've now got a balance of +£30, and lost not only the £30 taken as a result of the penalty charge, but also the £20 that I had to pay the bank back for temporarily giving me the "service" of an unauthorised overdraft.

In effect i've lost all of that £50 deposited, plus i'm still £30 short of where my balance should have been (a real loss of £80 from a £30 charge), and i'm going to be charged an extra £20 next month for being a "delinquent account holder" on this occasion.

OK I've dug out your post and here is your calculation problem

You say your balance should have been +£60 and its +£30 - so whats the difference? £30 not £50 as you are trying to say!The -£20 was an overdraft! And the £30 has already been deducted and is in your calculation so you can't still say that the bank wants £30 as they already have it! So your total loss here is £30 and not £80!

OK lets but it simply for you


I'll give you £10 of mine to look after.

The next day I ask to borrow it back and want to borrow another £20 off you.

So how much do I owe you? £20, yes? OK

If the next day I give you £50 to look after for me

Then the day after that, I ask for it back, will you give me £30, being the balance of the £50 less the £20 I owe you, or will you give me £50 and say I don't owe you anything? Thats what your example is saying!

crazyworld_2

Loz, please see this message:

http://forums.moneysavingexpert.com/showpost.html?p=5527629&postcount=20

Having been an accountant for 21 years, you are surely aware of the ways and means of hiding various incomings, and/or outgoings? Please don't be modest, i'm sure you're very intelligent.

I've given you the exact figures for my own circumstances now, and the way in which I calculated that I actually lost more than the charges themselves.

Additionally, i'd welcome an explanation why you'd attempted to paint me as an idiot, claiming that I was wrong in saying that I couldn't post a private message to yourself, following your own private message to me. Given the message which showed up which i've also posted there.

It seems that you've taken a lot of trouble to both attempt to paint me as an idiot in both this and the other thread. (By the way, why exactly did you feel it necessary to post in this thread also when we were discussing the issue on the other thread? It seems a very deliberate attempt by yourself for some reason.)

On the £80 - yes that was a genuine mistake, you know that my overall argument is correct though, given your knowledge on accounting issues, i'm almost 100% certain now that you do know.

natweststaffmember

Carzyworld, i think the logic is explained above. I agree with going specifically for charges, ie the loss incurred by an unlawful practice. The charge itself is the loss. If there is no overdraft then the interest is also a loss. Those are the claimable bits. The post to me read as though you were claiming what you had lost and ALSO benefits that had been swallowed up by charges meaning that you were claiming charges twice from my reading of it. Apologies if my reading of the post was incorrect.