Co op basic account and charges deducted from benefit

geministar2008

Hi

I have had the co op charge me £45 for unpaid direct debits. i have a cash minder account and i am on benefits. The £45 has been deducted from my account today and has come out of my housing benefit money.

Are they allowed to do this?
Is there a template any where to get this sum back? I have now cancelled all direct debits on this account for fear of further money being deducted. I do not have an overdraft and do not want one.

Any advice or pointers would be wonderful. Merry Xmas everyone

Thank you

jwruk

According to their Ts&Cs they charge £15 for an 'unpaid item fee'. Have you had a look at these yourself?

Was there enough money in the account to cover any direct debit payments, if not then this is likely to be the reason for the charge.

Edit - and surely they haven't taken the money from your benefit, they've taken it from the balance on your account which happens to be your benefit money that was paid into your account?

c-m

I thought that the charges on the ca!!!!!er account were just £8 for failed DDs and other things.

If it's your fist time having a problem you can call them up and they will more than likely refund the money.

jwruk

c-m wrote: »

I thought that the charges on the ca!!!!!er account were just £8 for failed DDs and other things.

If it's your fist time having a problem you can call them up and they will more than likely refund the money.

£8 to obtain a list of DDs and SOs, unpaid item fee is £15.

dunstonh

Are they allowed to do this?

yes

Is there a template any where to get this sum back?

On what basis would you be asking them for a refund?

I do not have an overdraft and do not want one.

It appears you had some transactions that created one (or would have created one if they were not bounced)

Most banks will refund on a first time error if you ask nicely and point out the situation.

brettcta

with the cashminder accounts (and similar accounts with no OD facility), overdrawn situations can be created very easily by pay @ pump petrol stations.

you have £30 in your account and take £25 petrol. the pump takes an authorisation amount of £1 and claims the other £24 later. whilst in reality you have £5 left, your available balance will read as £29, albeit temporarily. this relies on you, the account holder, managing those funds and making sure you don't spend more than the available £5 and making sure no other card payments/direct debits/standing orders are paid from that £24 that hasn't been claimed yet

if other payments are taken from that £24, the bank doesn't know that the petrol station are going to take this extra money, so will pay the direct debit etc., they then can't refuse payment to the petrol station, therefore your account goes into an overdrawn state.

fortunately, whilst there are charges for unpaid items etc. on a cashminder, you're not charged for being overdrawn, but it can lead to your account ultimately being closed if you keep misusing the facilities.

brown1950

dunstonh wrote: »

yes



On what basis would you be asking them for a refund?



It appears you had some transactions that created one (or would have created one if they were not bounced)

Most banks will refund on a first time error if you ask nicely and point out the situation.

Would BCOBS apply ???

Subsistence Balance
(in BCOBS) any sum of money payable by a firm to a consumer or standing to the credit of the consumer in an account with the firm where that sum is needed by the consumer to meet essential living expenses or priority debts (whether owed to the firm or a third party).

AND -
4.1.4
G
The appropriate information rule applies before a banking customer is bound by the terms of the contract. It also applies after a banking customer has become bound by them. In order to meet the requirements of the appropriate information rule, information provided or made available by a firm to a banking customer should include information relating to:
…
(8) information about compensation arrangements in accordance with COMP 16 the terms of any compensation scheme if the firm cannot meet its obligations in respect of the retail banking service;
…
4.1.4A
G
(1) This guidance applies to a firm only with respect to its communications and dealings with consumers where a firm has a right of set-off.

(2) To ensure compliance with the appropriate information rule, the firm should:
(a) (i) provide an explanation of the nature and extent of the firm’s right of set-off; and
(ii) if the firm considers that it is entitled to exercise a right to set off or combine a debt due solely from a consumer, or a debit balance on an account held in the sole name of a consumer, against or with a credit balance on an account held in the joint names of that consumer and another consumer, also provide an explanation of that right to the consumers in whose names the joint account is held; in good time before the consumer is bound by the contract for the retail banking service. This information may be incorporated in the terms and conditions that apply to the contract for the retail banking service;
(b) (i) on the first occasion that the firm proposes to exercise a right of set-off in its dealings with the consumer; and
(ii) where appropriate, on any subsequent occasion that the firm proposes to exercise a right of set-off in its dealings with the consumer;
provide general information in relation to the nature of the firm’s right of set-off and the generic circumstances in which the firm may rely on that right within a reasonable period before the firm seeks to exercise its right of set-off. The FSA considers that this information should be provided at least 14 days before the firm seeks to exercise its right of set-off. It may be communicated in a standard form of words and may be incorporated in another communication sent by the firm to the consumer; and
(c) where it has exercised a right of set-off, provide prompt notification of this to the consumer. This notification should clearly identify the date that the firm exercised its right of set-off and the amount debited from the consumer’s account in reliance on that right.

(3)
The information referred to in (2) should be provided in plain and intelligible language on paper or in another durable medium.

(4) In determining whether it is appropriate to provide general information under (2)(b)(ii), the firm should consider the period of time that has elapsed since the firm last provided that information under (2)(b)(i) or (ii).

(5) Nothing in (2)(a)(ii) should be considered as expressing a view on the validity, enforceability or fairness of any right of set-off in relation to a joint account that a firm considers it is entitled to exercise.


Set-off
5.1.3A
G
To ensure compliance with its obligations under BCOBS 5.1.1R and Principle 6, on any occasion where it proposes to exercise a right of set-off, a firm (other than a credit union) should, with respect to its dealings with consumers:
(1) review the information available and accessible to the firm relating to the consumer’s account, on an individual basis, and estimate the amount of any subsistence balance;

(2) refrain from seeking to set off or combine:
(a) any debt due from, or a debit balance on an account held by, a consumer against or with that subsistence balance;

(b)any debt due from, or a debit balance on an account held by, a consumer in a personal capacity against or with any sum of money payable by the firm to the consumer or standing to the credit of the consumer in an account held with the firm, where the firm knows or reasonably ought to know that:
(i)a third party is beneficially entitled to that money or that the consumer is a fiduciary in respect of that money; or
(ii)the consumer has received that money from a government department, local authority or NHS direct payment body for a specific purpose or is under a legal obligation to a third party to retain and deal with that money in a particular way.

(1) If it becomes apparent to a firm after it has exercised a right of set-off that it has set off or combined a debt due from, or a debit balance on an account held by, a consumer against or with:
(a) the consumer’s subsistence balance; or
(b) money payable by the firm to the consumer, or standing to the credit of the consumer in an account held with the firm, that falls within BCOBS 5.1.3AG(2)(b)(i) or (ii);
the firm should refund to the consumer the sum debited from the account of the consumer in exercise of the right of set-off unless it is fair not to do so.

(2) If, in the circumstances referred to in (1), the firm does not provide a refund of the sum debited from the account in exercise of the right of set-off, the firm should be able to justify that it is fair not to do so and should consider taking other remedial action having regard to its obligations under BCOBS 5.1.1R and Principle 6.

bengal-stripe

geministar2008 wrote: »

Are they allowed to do this?

Yes, they are. - A 'bank charge' is not a 'charge' in the meaning of the law.

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?title=Benefits_and_the_Social_Security_Administration_Act&redirect=no