Question about reclaimed Charges

Lucy1982_2

Hi

I normally post over on the Debt Free Wanabee board, but thought you might be able to help me.

My boyfriend has just reclaimed his charges from Natwest (i think) and they have used the money to pay off his OD (which he is ok with) and a really large lump off his loan (which he's not happy with) are they allowed to do this? There are no defaults on the loan so he doesn't understand why they have done this.

I don't know if anyone would know the answer to this, but he thought he had taken the loan over 5 years, but apparently his paperwork says that it is over 8. Can this be seen as mis-sold?

If anyone can help I would really appreciate it.

Thanks

Twinkly

Lucy1982 wrote: »

Hi

I normally post over on the Debt Free Wanabee board, but thought you might be able to help me.

My boyfriend has just reclaimed his charges from Natwest (i think) and they have used the money to pay off his OD (which he is ok with) and a really large lump off his loan (which he's not happy with) are they allowed to do this? There are no defaults on the loan so he doesn't understand why they have done this.

I don't know if anyone would know the answer to this, but he thought he had taken the loan over 5 years, but apparently his paperwork says that it is over 8. Can this be seen as mis-sold?

If anyone can help I would really appreciate it.

Thanks

This is my pet subject. Apologies in advance for the long post

The banks are doing everything they can to retain monies taken unlawfully in the first place and expecting customers to just lie back and think of England while they do it. I believe it is an abuse of the Right Of Set Off to retain refunds of bank charges that were taken unlawfully in the first instance and it should be contested at every oppertunity to highlight the issue.

Whether they are entitled to do this depends on the criteria applied to their Right Of Set Off. Have a read here it explains this right a bit more and how it can and cant be applied:
Right Of Set Off

Basically the amount must be due and payable. If the loan isnt in default and he hasnt missed any monthly payments due then this right doesnt apply.

Further it is contrary to the Consumer Credit Act 1974 which states:

PART VII
DEFAULT AND TERMINATION
Default Notices
87.—(1) Service of a notice on the debtor or hirer in accordance with section 88 (a "default notice ") is necessary before the creditor or owner can become entitled, by
reason of any breach by the debtor or hirer of a regulated agreement,—
(b)
to demand earlier payment of any sum

They must issue a default notice if he has breached his agreement on the loan before they can retain the refund. He hasnt breached the agreement, there has been no issue of a default notice, therefore they have breached this law.

Personally I would write and state that they have no right to retain any of the refund of bank charges against the loan for the above reasons and see what they officially have to say for themselves. I assume they have not given any justification in writing for taking the money.

Treat it as an official complaint, do not telephone on the matter no matter how tempted you are. Get absolutely everything in writing and complete their complaints procedure. If you arent satisfied at their final response take the entire matter to the Financial Ombudsman. It may well be that they werent entitled to take the overdraft if it wasnt in default either.

These issues are reliant on the customers personal circumstances and of course everyone is different so there isnt a clear answer. I have given you indications of what may be done and strongly suggest you investigate this matter thoroughly with the Ombudsman at your side.

Best of luck

Edited to add; Sorry I dont know about the loan issue of 5 as opposed to 8 years. It depends entirely on him knowing what he signed for really and may be decided better if you have anything in writing from the bank that might have misled him.