Lloyds still piling on overdraft charges even though I’m in a debt management plan

Classybird

Recently I tried to reclaim overdraft and interest charges from Lloyds on the grounds of financial difficulty, which they refused, even though I have been in a debt management plan with Step Change since 2011. I have been paying £5 a month towards the overdraft, but their fees amount to £12 a month, so the overdraft has been growing ever since. But because in 2011 I was within my overdraft limit, and technically I still am, they take the view that I haven’t defaulted on the debt, so there is no problem. The fact that they have received correspondence from Step Change and receive payments through them, cuts no ice. And the Ombudsman seems to agree with them! Today I received a letter stating:

“Lloyds has reviewed your account when CCCS offered it a reduced payment proposal of £5.00. It has explained that because the account has always been run within the planned overdraft limit, it would not agree the repayment plan or freeze the interest and charges on your account. I do not doubt that you are experiencing financial difficulties. However, I would expect your account to demonstrate it for Lloyds to step in and assist you."

Apparently what I should have done was to ask them to cancel the overdraft facility, so that the outstanding amount would be referred to their Collections Department. So even though they've known there’s a problem, Lloyds are able to rely on a technicality to avoid doing anything about it. This seems contrary to the spirit of the Lending Code requirement that banks must treat customers fairly and be considerate if they are in financial difficulty. The other bank I had an overdraft with at the same time, also within its limit, simply froze the overdraft and stopped the charges. That debt is gradually being reduced, while the Lloyds one is steadily increasing.

Obviously I would like to appeal the Ombudsman’s decision. I would be grateful for any advice regarding whether Lloyds are actually able to do this or the precise grounds on which I can appeal. Thanks everyone!

dunstonh

even though I have been in a debt management plan with Step Change since 2011.

Debt management plans are designed to allow you to repay debt within your budget. So, you would no longer be in hardship because of that.

Apparently what I should have done was to ask them to cancel the overdraft facility, so that the outstanding amount would be referred to their Collections Department. So even though they've known there’s a problem, Lloyds are able to rely on a technicality to avoid doing anything about it.

you can ask but ultimately, it is up to the bank what it decides to do. You cannot just cancel a facility if you are already overdrawn.

Obviously I would like to appeal the Ombudsman’s decision. I would be grateful for any advice regarding whether Lloyds are actually able to do this or the precise grounds on which I can appeal. Thanks everyone!

The ombudsman has no power to make the bank refund anything. it can only encourage and ensure the bank is considering your case fairly. You need to be able to persuade those looking at it that you are in genuine hardship. The FOS are generally slightly consumer biased. Technically they are impartial but in reality, it does not work out like that and they do have a slight consumer bias. They dont rely on technicalities. They can consider fairness. So, if you cant persuade the FOS, then there really is no hope.

Classybird

Thanks Dunstonh, I appreciate the feedback .

You say I can’t just cancel the facility when I’m already overdrawn, so how can Lloyds say that’s what I should have done? Surely it would have been up to them to withdraw the facility in those circumstances, as the other bank did (Nationwide)? I also had a credit card with Lloyds at the same time, on which they did accept repayments through Step Change, so I struggle to see how they can argue they didn’t know there was a problem. And if what I can pay each month, is less than half what they’re charging me, how can that be considered fair? I’m really struggling to get my head around this. At this rate by the time I’m debt free everywhere else, I will still owe Lloyds about £1000 in accrued charges!

javorb

lloyds are a nightmare i had simliar problems ,they agreed a debt management plan ,then after 9 months unknown to me they defaulted me ,3 year battle and received a full refund on charges and default removed .