Advice needed regarding a bodged account switch

ZetaSeeker

Hi all,

My first post here, and I am hoping someone can help me.

Short version: Two weeks ago I made enquiries with NatWest to switch my HSBC student account to them. The switch happened, the HSBC account closed, and then I discovered that I would not be given an overdraft with my NatWest account as I am not eligible. I had £1700 outstanding on my interest free overdraft with HSBC, and when I asked them if I could reopen my account they told me it was not possible as it had already been closed, and I would have to open a new account, and there would be no guarantee of getting an overdraft.

Longer:
I have been with HSBC since 2005, and had a student account with them from my foundation year in 2007, undergrad from 2007-11, and postgrad study 2011-present. My overdraft limit has been £1750 since 2010.

I get paid quarterly, roughly £5000, and I am not due to be paid until the end of this month (June). It has been very tight this quarter due to moving house and some extra expenses, and given that HSBC declined to extend my overdraft a year and a half ago when I asked, and that it is difficult to see anyone in person in our local branch, I thought I would try NatWest.

While I was not promised an overdraft by the advisor who helped me set up my account, neither was I given any warning that it would be a problem. We switched me to a current account with NatWest until the HSBC account had closed (can't have more than one student account), and then changed that current ('Select') account into a student account at the end of last week. The adviser then gave me a number to call to arrange the overdraft.

When I called them, I was told that because I have not made three debits a month since the beginning of my course (2011, but I have been a student at the same university since 2007), and in fact not used my card at all (the account had only been opened the day before), I would not be eligible.

Suddenly I went from having £100 left to spend on my overdraft for the month, to having no available cash, two bills due to go out immediately, and HSBC requesting the outstanding amount on my overdraft (£1700).

When I enquired about reopening my HSBC account I was told it would be set up as a new account - presumably wiping all my good history with them - and there would be no guarantee I would get an overdraft.

So, in trying to avoid borrowing from friends and family, I have actually shot myself in the foot and I'm not sure what to do, who to be angry at (NatWest for their advice? HSBC for their lack of acknowledgement? Me for being stupid?), and what my options are.

Any advice would be greatly appreciated. I have bills in the region of £80 to pay immediately, and I have promised HSBC to pay my overdraft balance in full on July 3rd. This is fine in the short term as I am paid quarterly, but in three months time I will be in trouble unless I can agree an overdraft with someone.

Footnote: HSBC also requested that when I pay the £1700 outstanding overdraft, I do so in cash at my local branch, as they might reject any phone or internet payment. Can someone tell me why this is?

Thanks for your time if you made it this far.

amiehall

Did you use their official switch service? If so, they should have specifically discussed what would happen to your overdraft and if they didn't do this, you have a valid complaint. They are supposed to ask you directly if you have an overdraft on the account that you're switching and then explain what will happen to this.

If you didn't use this service then I have NO IDEA why you would close your old account before the new one was operating fully with overdraft.

Finally your account won't be officially closed until you have paid HSBC the £1700 you owe them. They will want this immediately and will pursue you for it through the courts if necessary.

I have switched an account with an overdraft before and the key is to get the overdraft agreed on the new account before commencing the switch. I am entirely baffled as to how this has come about. You must contact HSBC immediately to set up a repayment plan, do not ignore it. Also chase up Natwest as to how you can become eligible for an overdraft. It is certainly not the case that new accounts are not eligible for overdraft so perhaps there have been some crossed wires. Make an appointment in branch and get the staff member to deal with the team on the phone on your behalf.

ZetaSeeker

Hello, thanks for your response.

I used the official switch service with NatWest, and we did discuss the overdraft. The adviser told me that we would have to open a 'Select' current account (non-student account) first, and then change it to a student account once my other account had been closed. This is to avoid me being in the illegal ( I think) situation of having two student accounts.

I said that I wanted the overdraft facility to be transferred, and I was told that the overdraft could not be arranged until the account was both set-up and changed into a student account, but I was not warned that I might not be eligible.

I spoke to HSBC on the same day that I was told I would not get an overdraft, as I immediately tried to back-pedal when I saw the danger I am now in; they told me that the account is officially closed and only remains partially open in order for the outstanding balance to be paid. I spoke with their collections department and they are happy to wait until I get paid at the end of the month, and we have arranged a date for me to pay them.

I don't know whether I should be chasing NatWest to set up an overdraft, or asking HSBC to reconsider reinstating my account?

amiehall

The official switch service cannot operate properly if you don't set up an overdraft on the new account. Then at the time of the switch, the new bank repay the old bank and your overdraft comes with you The alternative is for you to pay off your overdraft before initiating the switch.

This is because the old account is closed as part of the process. It seems clear that they will want their overdraft money back!

If I were you I would be chasing Natwest. If they drag their feet, open an official complaint regarding their handling of your switch. Staff should know that you can't switch an overdraft without either paying it off or setting up an overdraft on the new account.

It's absolutely not illegal to have more than one student account although it may well breach Natwest's t&cs. They wouldn't even know you had another one unless you told them... If you're switching the old account then clearly there is no problem with having more than 1. Did you not think about the implications of not getting an overdraft?

As far as I know only the co-op offer guaranteed OD amounts, so even if you were accepted they could have granted you £500 for example. It just seems like a total recipe for disaster and if this was the route suggested by the Natwest staff when they knew you had an OD on the HSBC account you were switching then I would raise a complaint. If this episode ends up leaving a mark on your credit record then you may find that reduces the OD you are eventually awarded.