Is this legal? - Bank reclaiming money 3 years after DRO

Jasondad

Hi
I was recently (2019) awarded £130 for fees/charges/interest that I incurred prior to my debt relief order. The money was awarded 3 years after my DRO (moratorium period ended 2017). The bank believe they have the right to hold onto this money 3 years latter.

About 6 months after the £130 ( Sept 2019 - three and half years after DRO), I received £60 compensation as a result of a complaint with the bank  They put the money into my current account and blocked it so that I can't do anything whatsoever with the account!

I'm was pretty certain creditors have the 12 month moratorium period to settle any debt. Following that period the debt is written off, making it unlawful for creditors to reclaim money towards written off debts (according to the terms of the debt relief order).

Is anyone familiar which legislation this would come under? Surely an order issued by the insolvency service is worth something!

sourcrates

Moral of the story, never bank where you have had debt.
The right of set off is what you have experienced here, the question is can they do this after a DRO.
The law surrounding set off, is a pretty grey area, my only advice is make a complaint to the bank, then escalate to the FOS if your not satisfied.

fatbelly

I agree with sourcrates. I did have some success arguing that banks couldn't do this with ppi reclaims. But I have to tell you that if it gets to FOS,  they will side with the bank.

Jasondad

fatbelly said:

But I have to tell you that if it gets to FOS,  they will side with the bank.

Your 100% correct. First stage at the FOS has gone towards the bank. It seems that rules/laws only apply to consumers and not the corporations / institutions.

Looking online, reading all the Ombudsman reviews plus the Dispatches program on Channel4, their decisions seem pretty random and often questionable.

Based on my previous experiences dealing with FOS its a complete waste of time even on black & white cases. No wonder said bank promptly declines complaints and is quick to push customers towards the Ombudsman. It reminds me of Parking firms playing the "numbers game" with POPLA !

Jasondad

sourcrates said:

Moral of the story, never bank where you have had debt.

Completely agree. Unfortunately its an old account that's rarely used. I did ask for a cheque but they "conveniently" put it into the current account and blocked the entire account! then handed me the old Ombudsman leaflet.

sourcrates said:

The right of set off is what you have experienced here, the question is can they do this after a DRO.

The law surrounding set off, is a pretty grey area, my only advice is make a complaint to the bank, then escalate to the FOS if your not satisfied.

As far as the "Right of offset" I hadn't heard of it until you mentioned it. However, what would they be offsetting against? The debt was written off by the DRO 2-3 years prior. The credit report reflects this.

I've found references to similar cases that should confirm they aren't allowed to be doing this:

https://forums.moneysavingexpert.com/discussion/comment/63019404/#Comment_63019404

https://forums.moneysavingexpert.com/discussion/comment/63124359/#Comment_63124359

https://forums.moneysavingexpert.com/discussion/comment/62484813/#Comment_62484813

Legislation - s251g and s251i of the Insolvency Act 1986 (unfortunately won't let me post the direct link)

I'm wandering if there's any point trying to contact the bank any further (currently at FOS stage) referring to the legislation above. I suppose the alternative is taking them to county court?

jocelyn75

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