Overdraft removed - then reinstated a year later

therealdessie

Writing on behalf of someone else, so forgive me for the lack of some specifics.


A year ago someone I know received a letter from Halifax informing her that her overdraft facilities were being removed, and that she would need to repay approximately £1,900 on the account balance. On investigating a bit further for her I discovered that she had been using the overdraft as a loan effectively, paying around 30% of her Incapacity Benefit income in fees each month. Losing the account meant losing her benefit as it was paid directly so I immediately sorted an account with Santander for her so that she wouldn't be left without any money coming in.

I complained to Halifax on several grounds: excessive charges, removal of the overdraft without notice, allowing a woman clearly not equipped to handle extensive credit to have such a large overdraft without any review - the long story short is that Halifax failed to address any of the points satisfactorily. The fees she had been paying would have paid off her overdraft several times over, so I referred the matter to the Banking Ombudsman. Without even being supplied copies of the fee statements, they rejected the case and sided with Halifax.


Since then she has been hounded by various debt collection agencies as Halifax shifted the account around to recovery firms - she hasn't negotiated with them because she found them intimidating and confusing. At the same time I was preparing to approach the courts regarding the fees, though it seemed doubtful we'd win I figured at least if we did the fee refund would clear the overdraft balance.


However this past week, Halifax have written to her again to let her know - a year later - that they should not have removed her overdraft and have reinstated it. They offered £5.67 in compensation too. I have advised her not to bank the cheque and not to reply yet - but I want to get some advice. Does this mean Halifax have re-acquired the debt from the collection agencies? Does she have any right to further compensation for the distress she has been put through this past year? If not the Financial Ombudsman (who has always been a paper tiger IMHO), then which body would investigate these issues?


It seems absurd that Halifax can conduct themselves this way seemingly without any oversight!

sinizterguy

Is she an adult with the mental capacity to decide whether she wants an overdraft or not ?

If she is not does she have a carer or other responsible adult to take care of her finances? If not, why not?

Or do you think Halifax should have an adviser available full time to babysit said person's finances ? And make decisions for her ?

stclair

Overdrafts are repayable on demand therefore the bank does not need to advise the customer prior to its removal.

Surly the Halifax are not going to reinstate an overdraft on an accounts that's been sent external. If an error had been made they would have accepted libility and removed all the charges that incurred due to the error.

You need to establish who is now the official owner of the account. If what your saying is correct I would have thought the Halifax own the account again, it all sounds abit far fetched !

eskbanker

therealdessie wrote: »

I complained to Halifax on several grounds: excessive charges, removal of the overdraft without notice, allowing a woman clearly not equipped to handle extensive credit to have such a large overdraft without any review - the long story short is that Halifax failed to address any of the points satisfactorily. The fees she had been paying would have paid off her overdraft several times over, so I referred the matter to the Banking Ombudsman. Without even being supplied copies of the fee statements, they rejected the case and sided with Halifax

Going back to this part of the OP, if the FOS rejected your complaint that would suggest that it didn't have much merit. Were you able to demonstrate clearly that the charges and notification of overdraft removal were in breach of their published terms and conditions? In what way is/was the account holder 'clearly not equipped to handle extensive credit'?

If the debt is legitimate (according to Halifax and FOS) then why wouldn't it be pursued accordingly?

So, based on my reading of the situation, I'm not sure there is a case for claiming compensation for distress, and if neither Halifax nor FOS are sympathetic that does just leave the courts, but proving a quantifiable claim there is likely to be problematic.

pmduk

therealdessie wrote: »

...Since then she has been hounded by various debt collection agencies as Halifax shifted the account around to recovery firms

Are you sure they haven't just been using a variety of internal names such as the fabled Blair, Oliver & Scott?

colsten

therealdessie wrote: »

Writing on behalf of someone else, so forgive me for the lack of some specifics.

An observation and a couple of questions: for someone not knowing the specifics, you seem to have taken a heck of a lot of pretty critical actions on behalf of the person. I assume you have Power Of Attorney for her as otherwise you wouldn't have been able to complain on her behalf to Halifax and the FOS, and take her case to Court? So you would know every last detail of the problem?

therealdessie wrote: »

I immediately sorted an account with Santander for her so that she wouldn't be left without any money coming in.

therealdessie wrote: »

I complained to Halifax on several grounds

therealdessie wrote: »

I referred the matter to the Banking Ombudsman.

therealdessie wrote: »

I was preparing to approach the courts regarding the fees

therealdessie wrote: »

I have advised her not to bank the cheque and not to reply yet

therealdessie

@sinizterguy: She has a limited income, demonstrated by the funds being deposited in the account. A basic budgetary check should have shown her as unsuitable for a substantial line of credit.

@stclair: Which part sounds far fetched? She was sent letters from several "recovery" companies and has now received a letter (I have seen a copy so not paraphrased) directly from Halifax apologising for removing the overdraft

@eskbanker: The FOS declared the charges were acceptable without seeing a statement of them or interviewing the claimant as to her position. It didn't seem feasible which is why I appealed for her, and found that the person who made the judgement had since left, but that the FOS were unwilling to reopen the case due to the lapse in time

@pmduck: It's entirely possible I agree, I'm not familiar enough with their aliases to be sure

@colsten: What was your question? I don't have every piece of paperwork in terms of statements going back to the start of the problem - I'm relying on obtaining as many documents as I can remotely from the claimant

Is anyone out there able to answer the basic questions regarding ownership of the account? Or does everyone come here now just to leave spiteful and mean spirited comments like nasty little internet trolls? This forum certainly isn't the helpful place it used to be.

stclair

It's sound far fetch because....

If the bank have admitted error surly they would have put the customer back in the same position as what they would have been in prior to the error occurring.

How can they reinstate an overdraft on an account that's in debt recovery?

therealdessie

Yes, if they have put her back in the same position the account should be reinstated - a letter has already gone to the bank. What I had hoped to clarify from someone with something useful to contribute was whether this means that the past year of harassment from the collectors was for naught - which, regardless of the opinion of the abovementioned trolls, merits some consideration

therealdessie

Fair enough. I'm deeply saddened that this forum used to be a place where people could come for some sensible advice, and is now seemingly run by small-minded mean little timewasters with little better to do than try to find fault in a post than offer anything in the way of advice or support. How times have changed. Time to delete the account and find someone with an ounce of common sense and a civil tongue.

Congratulations keyboard warriors, you've "won" again.

stclair

therealdessie wrote: »

Yes, if they have put her back in the same position the account should be reinstated - a letter has already gone to the bank. What I had hoped to clarify from someone with something useful to contribute was whether this means that the past year of harassment from the collectors was for naught - which, regardless of the opinion of the abovementioned trolls, merits some consideration

You should maybe ask the FOS to review their decision based on new information that you can provide.