Issues with payments from Lloyds Business Account to Barclays Personal Account

E111S

Hi there,

I make weekly payments to employees on a Wednesday for funds to clear the employees accounts on Friday. I pay everyone using the same BACs method, however I have been made aware that those with Barclays current accounts are showing the money in as a standing order receipt. This obviously negatively impacts any credit applications made by those employees and I am now getting it in the neck from some understandably disgruntled employees.

I have spoken to Lloyds Business who assure me that payments are being made as BACs and that it is Barclays adding the incorrect reference during their processing of the receipt. Barclays bank will not talk to me as I am not a customer of theirs.

Using the same payment method, payments to Halifax, Lloyds and Natwest current accounts are correctly showing as BACs receipts.

Has anyone come across this before, or knows of some way that I can try to rectify this? Thanks for your help.

[Deleted User]

Why is receiving money under a standing order reference impacting their credit applications?

eskbanker

E111S wrote: »

This obviously negatively impacts any credit applications made by those employees and I am now getting it in the neck from some understandably disgruntled employees.

Really? I'd have thought that anyone needing to evidence regular salary payments to potential lenders would be able to demonstrate the existence of those payments, correlated with supporting payslips - it would surprise me if the chosen delivery method was viewed as significant? There's no obligation on employers to use BACS to transmit salaries....

E111S

One of the employees went to do a money transfer however they were told that because they were paid by standing order and not BACs there was no proof of income (I don't quite understand this as it shows on their statement as coming from our company). They then checked their credit rating and it was showing a lot lower than expected and again, was told that it was the standing order that was causing the drop.

[Deleted User]

That's not going to be true. He can evidence his income through payslips if required, which is unlikely in itself.

And the credit score given by the CRA has no bearing on credit applications.

E111S

Ok thank you for confirming what impact (or lack of) this payment method has on a credit rating. I am only going by what I am being told, but at least I can go back to them explaining that it shouldn't affect it. I imagine that the person in question has tried to do it on an app and been declined, rather than sitting with a bank manager and showing them payslips.Thank you for your responses!

nick74

I pay wages to around 100 employees by BACS through Lloyds, some of whom bank with Barclays, and no one has ever complained of this issue to us. Credit reference agencies don't get to see actual transactions on people's current accounts so they would never know whether it was showing as a standing order or not anyway.

I suspect the person has been turned down for credit for some totally different reason and is clutching at (irrelevant) straws.

flo22

Bacs payments into Barclays show as Bank Giro Credit on the statement

Marchitiello

There is truth to Salary payment being recognised as such by banks and credit agencies that have signed up to a particular scheme (maybe the BACS indicator is one of such factors) and that they use to identify “true” earning rather than accounts turn over. We have discussed this in the past and it was covered in the following article: https://www.telegraph.co.uk/personal-banking/current-accounts/how-your-bank-spies-on-your-exact-monthly-income---and-shares-it/

born_again

E111S wrote: »

One of the employees went to do a money transfer however they were told that because they were paid by standing order and not BACs there was no proof of income

What has money transfer got to do with "No proof of income"?

mwarby

Many previous employers would simply take the view that the salary has been paid as agreed, on the date agreed to the account agreed and how the employer does this is up to the employer.

I would suggest this is an issue with the employee and their bank, and if their bank isn't happy they should look at other banks

Lets say they use the RTI that some employers are required to use (special fields on BACS transfer for HMRC), would you then rework the payroll system to do this at perhaps considerable cost, you might end up making a rod for your own back