Bank charges for people claiming benefits

Angiebmw325

I found a post on my facebook page stating that it is unlawful for banks to charge those in receipt of benefits any type of bank charges is this true does anyone know the answer.

tomtom256

Did the post not provide a link?

Maybe ask the poster of said link?

p00hsticks

Angiebmw325 wrote: »

I found a post on my facebook page stating that it is unlawful for banks to charge those in receipt of benefits any type of bank charges is this true does anyone know the answer.

Yes, I know the answer.
No, it's not true.

https://forums.moneysavingexpert.com/discussion/4881094

davehughes182

Not true. As with most posts on Facebook, its a lie.

didimbeach

There is an Act of Parliament which over-rides banks taking charges from your account if you are in receipt of any of the following benefits.

• Income Support
• Tax Credits
• Child Benefit
• Job seekers allowance
• Incapacity benefit
• Disability living allowance
• Attendance Allowance
• CSA payments
• Other DWP payments.

These social security benefits are granted to stop hardship and are designed to meet basic day to day needs, and are exempt and are protected under the Social Security Administration Act 1992 sub section 187. from arrestment in terms of section 187 of the Social Security Administration Act 1992 (see Enforcement of Civil Obligations in Scotland, Scottish Executive report, at paragraph 5.245).

Section 45 of the Tax Credits Act 2002 Chapter 21 part 1 is an identical provision to the said section 187 of the 1992 Act. This stipulates that the banks can not apply any charges to money received as benefit, and any such charges are unlawful and therefore disallowed.

Write or contact your bank and quote the above Act.



I told a friend about this a few years ago, she got all her charges back.

rogerblack

didimbeach wrote: »

I told a friend about this a few years ago, she got all her charges back.

In short - the bank are free to choose to give money back.
However, the above act does _NOT_ refer to bank charges made for (for example) going over your overdraft or any other normal bank charges.
It refers to http://en.wikipedia.org/wiki/Charging_order .

It means that someone can't get a charging order against the funds paid from certain benefits.
This has nothing whatsoever to do with bank charges.
May in some cases the bank choose to give the money back - sure.

BP1987

Google 'First Right of Appropriation' you should find some templates somewhere online to write to your bank, not so sure about previous charges that have taken your benefits but any future amounts must be made available.

bengal-stripe

didimbeach wrote: »

There is an Act of Parliament which over-rides banks taking charges from your account if you are in receipt of any of the following benefits.

Not that old chestnut again! :mad:

The act refers to "charges" in the meaning of the law (assignments). "Bank charges" are not "charges" but an "expense".

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

rds60h

The Act mentioned did result in many people having their Bank Charges refunded so it is not "that old chestnut".
However, the Banks then discovered a way of getting round the Act by challenging the meaning of "Charges" and a ruling was made in the Banks favour.
If you are on Benefits and it is obvious that your only income is those Benefits then it is worth writing a letter pointing the fact out and from what date, total up all the charges you have accumulated since that date and state the amount and mention that having to pay that has led to financial difficulties and quote in your letter the "First Right of Appropiation" and then request that all Charges and Interest are repaid.
The result of this will all depend on your Bank and it's staff, I tried this and the reply I got was an offer an amount that was almost half of the Charges and Interest I had accrued from the date of starting on Benefits and it more than wiped out the overdraft that had accumulated, so I was more than happy to accept.
But as I say it will be hit or miss depending on your Bank but it is well worth trying.

tomtontom

rds60h wrote: »

The Act mentioned did result in many people having their Bank Charges refunded so it is not "that old chestnut".
However, the Banks then discovered a way of getting round the Act by challenging the meaning of "Charges" and a ruling was made in the Banks favour.
If you are on Benefits and it is obvious that your only income is those Benefits then it is worth writing a letter pointing the fact out and from what date, total up all the charges you have accumulated since that date and state the amount and mention that having to pay that has led to financial difficulties and quote in your letter the "First Right of Appropiation" and then request that all Charges and Interest are repaid.
The result of this will all depend on your Bank and it's staff, I tried this and the reply I got was an offer an amount that was almost half of the Charges and Interest I had accrued from the date of starting on Benefits and it more than wiped out the overdraft that had accumulated, so I was more than happy to accept.
But as I say it will be hit or miss depending on your Bank but it is well worth trying.

You've got your information completely messed up there! There has been no legal challenge to the meaning of charge in this context, it has always been quite clear. The legal challenge I expect you are thinking of related to the legality of charges in general, which was found in favour of the banks.

If in financial hardship you can ask the banks to consider refunding charges/ fees they have placed on your account. This is different from the first right of appropriation, which in effect asks them to ring fence money in your account which is required for essential outgoings. Note that the bank can still apply charges/ fees whilst ring fencing your money, they will just accrue on your account until you have sufficient funds to pay them (or the account is closed and sent to debt recovery).

Morglin

Not sure why people on benefits shouldn't pay bank charges, to be honest. :think:

We all have to learn to live within our means, wherever our income originates.

Lin