Help interpreting FOS final decision.

masonic

nic_c wrote: »

We also don't know that the son requested no more credit, just the mother. Offering a basic bank account would have meant the OD needed repaying. The argument, it seems, is RBS were informed of the vulnerability before the OD was increased. No timescale here and rules dealing with vulnerable customers have changed over recent years.

Yes, I was assuming a conversation with the bank about suitability of an account with an overdraft facility happened prior to the overdraft being raised above £250. Between the bank and either the son or the mother (with power of attorney or deputyship).

masonic

trouble00z wrote: »

I informed bank he had mental health issues shortly after they issued 3k bank loan. Family repaid loan when he became unable to again bank made aware of this. Shortly after he requested small overdraft this was then increased over the next couple of months until it was 2.5k. This despite him having 4/5 different jobs within a 6 month period.
He had full mental breakdown resulting in hospitalisation in 2016, 2 years after warning RBS he was ill.

It sounds like most of the information about mental health issues came from you rather than your son, and your son's wishes were contrary to your own. Unfortunately, by law the bank must assume your son has mental capacity to make his own decisions unless it can be shown otherwise, and being told by a relative may carry little weight if the individual does not agree with the relative's assessment.

JuicyJesus

FOS are extremely unlikely to instruct that a consumer, regardless of circumstances, should not be liable for a debt or that a bank should write it off - while it's considered fair that the lender shouldn't profit from these circumstances, it's not considered fair that the consumer should essentially receive the benefit of spending free money, or that refunds of charges against a debt be paid directly to the consumer while leaving the debt itself intact (not least since this arguably makes their position worse). As such they only request the write off of capital sums in extremely rare circumstances, or when endorsing an offer to do so already made by the bank.

The effect of this is that the bank does not get to profit from (using your term) mis-sold lending, and indeed makes a loss. That's fair in the circumstances as your son has - regardless of the bank's actions or his mental health - had the benefit of the money he borrowed. Whether he should have been allowed to borrow it or not, he still borrowed it and has (presumably) spent it.

trouble00z

Had the bank exercised due dilagence this money should not of been lent in the first place - several jobs in period up to overdraft increase. Agreed he spent the money but they gave him a huge overdraft (6 times more than mine ). If he had been made to take the same credit checks as my bank insists on this would never of been granted.

eskbanker

trouble00z wrote: »

Had the bank exercised due dilagence this money should not of been lent in the first place - several jobs in period up to overdraft increase. Agreed he spent the money but they gave him a huge overdraft (6 times more than mine ). If he had been made to take the same credit checks as my bank insists on this would never of been granted.

Surely it's already been agreed by all concerned that the bank shouldn't have lent the money so there doesn't seem to be much point in revisiting the fundamental issue of RBS's culpability?

Having reached that conclusion, the matter at hand is then the level of redress, which is obviously where you differ from RBS and FOS. If you've only had the FOS response from an adjudicator and remain unhappy, you can escalate/appeal to one of their ombudsmen, and if you're still not satisfied then you have the option of court proceedings.

masonic

trouble00z wrote: »

Had the bank exercised due dilagence this money should not of been lent in the first place - several jobs in period up to overdraft increase. Agreed he spent the money but they gave him a huge overdraft (6 times more than mine ). If he had been made to take the same credit checks as my bank insists on this would never of been granted.

Credit checks are there to protect the bank from lending money to borrowers who won't keep up repayments in line with their agreement. It's up to the lender how risky they want to go. Having multiple jobs leading up to the loan request does not put an individual in the highest risk category of borrower and I'd expect a frequent job-switcher to be viewed more favourably than someone who had just one job, followed by a period of unemployment.

The issue here isn't the credit check or the employment history, but the mental state of your son at the time he was offered credit. The FOS has ruled on what's fair in hindsight, given the circumstances, but it doesn't prevent your son entering into an IVA to reduce the amount he ends up repaying if he is unable to clear the debt in full. Obviously that would not be without consequences for his credit file.

JuicyJesus

trouble00z wrote: »

Had the bank exercised due dilagence this money should not of been lent in the first place - several jobs in period up to overdraft increase. Agreed he spent the money but they gave him a huge overdraft (6 times more than mine ). If he had been made to take the same credit checks as my bank insists on this would never of been granted.

Let's put this another way. So say that FOS agrees that the overdraft should never have been there. If that's the case, FOS would say that your son should be put back in the position he would have been had the overdraft not been increased. So that means refunding the charges, as a minimum. However, at the moment the factual position is that your son has spent £X amount of pounds, borrowed from RBS, and thus has effectively received £X but owes RBS £X pounds in return. You can say this shouldn't have happened, but that is how it is in reality.

If they just write off the debt, that's not putting him back in the position pre-overdraft; he'll have benefitted to the tune of £X because RBS would effectively have simply given him this money. That wouldn't be fair, in the same way it wouldn't be fair for RBS to request that your son gives back all the stuff he bought with the money they lent him but also keep the debt outstanding (this wouldn't happen for a variety of reasons, but it's an illustrative example.) So the correct means of fixing this is to still keep the debt as it is, reflecting the position (i.e. son has borrowed £X from RBS) but also not levying charges on it. Which appears to be what FOS have done.

What could be helpful is, if this is a final decision from an ombudsman, posting the decision reference number. All FOS final decisions are published with these reference numbers, and posting this DRN won't actually identify you in any way, but it will allow us to see what FOS' reasoning was.

trouble00z

What could be helpful is, if this is a final decision from an ombudsman, posting the decision reference number. All FOS final decisions are published with these reference numbers, and posting this DRN won't actually identify you in any way, but it will allow us to see what FOS' reasoning was.[/QUOTE]

DRN8308095

JuicyJesus

trouble00z wrote: »

DRN8308095

Thanks for that. It doesn't look like FOS have published that one yet - if it's very recent (after say June 19th) then it might not be published for a while.

I'm confident that the reasoning they give will be broadly in line with what I've said though.

(The site, for anyone interested, is http://www.ombudsman-decisions.org.uk - some entertaining cases come up on there sometimes and it's useful for anyone with an interest in complaints handling i.e. sad sacks like me.)

Greta_Sharbo

Interesting. Didn't realise FOS decisions were published (or probably more accurately, I'd never really thought about it). Will bookmark that for a good read from time to time. Thanks.

OP best wishes to your son.