Big overdraft - was it irresponsible lending?

sandcastle11

Hi all - I hope someone can help with this - I wasn't sure whether to post it here, in the banking forum or on the 'ask a debt advisor' thread. But thanks in advance for any advice!

My situation: I've been on a DMP for a few years and use one of my two bank accounts to make the payments. Last summer while I was making my usual payments I noticed online that an overdraft facility had become available, interest-free for 12 months.

I thought it'd be a good way to help pay off the few creditors who were still charging me interest, including a couple of payday loan firms. The problem is that in the coming months every time I clicked on the overdraft link online I was allowed to borrow more - taking it from £200 up to almost £6,000 now. I was an idiot to keep clicking, but it seems like a good idea at the time...

The bank gave me this overdraft despite me: a) not paying my salary into the account (at most about £500 went in, per month); b) having multiple defaults on my credit record; c) making payments to debt collection firms each month; d) using payday lenders and, e) even more stupidly than that, gambling online - a big part of how I ended up in this mess in the first place. Again, I've messed up over and over for a few reasons - and I do accept responsibility.

But my issue is this... they are due to start charging interest on this overdraft soon and it's going to tip me over the edge (again). I really want to find a way to repay it. But my question is whether I should complain first about a breach of their responsible lending guidelines. Would that serve any purpose? Do I have a case? What might they do, for better or worse?

I've actually had refunds from a few payday loan firms who acknowledged they should never have issued loans to me, so I'd have thought a mainstream bank must have some sort of similar view? Any advice would be very much appreciated! Thanks

sourcrates

Hi,
From what you've said, I would agree that the bank has failed to do proper affordability checks on you, that said, as you freely admit, you have also borrowed irrisponcibly.

I think it's a 50/50 blame situation here, and you should take your share of it, but the bank should really not of lent to you whilst you were in the situation, you were in.

I think you would be justified in complaining, someone at the bank has clearly messed up, what result you will get I don't know, but defenatly worth a letter.

If they don't agree, you can take your complaint to the ombudsman, there have been recent cases were the FOS has sided with people who borrowed beyond there means, so always worth a try.

National_Debtline

Hi sandcastle


It certainly sounds like there are some grounds for such a complaint. Whether the Ombudsman recommends any action that actually leaves you personally better off is another matter altogether. As it's free to involve the Ombudsman and you are looking at an additional debt of £6K on top of those already in your DMP, I would suggest you have nothing to lose.


On a separate note, do you know where all this leaves you in respect of your DMP? It's more or less a standard requirement (whether you're using a fee charger or a free service) that you seek no further credit while the plan is in place, at least not without the blessing of the debt management company.


Have you been able to seek help to bring the online gambling issues under control?


Dennis
@natdebtline

sandcastle11

hi Sourcrates and Dennis - thanks very much for taking the time to read all that and for your quick replies!

I do take responsibility for being an idiot - it just seems that by any standards the bank haven't been 'responsible' either - and I wondered how they would deal with it.

I know I will have to contact the bank first before approaching the ombudsman. I'm just not sure whether to begin with an inquiry about their responsible lending policy while asking for a repayment plan to clear the debt - or whether to go straight in with a formal complaint about irresponsible lending and see how they respond.

(I just don't really want to provoke them into immediately shutting and defaulting the account or something like that, as that'd cause me difficulties too. I'd rather work with them to find a solution.)

And in terms of the DMP - I know, it was stupid to take on this overdraft. Once I know where I stand with the bank I will have to prepare a new DMP budget - though as I have a pay rise due hopefully my regular payments to other creditors will not have to change. I'm also aware of gamcare etc for the gambling issue. Many thanks again for your advice.