Do Banks have the right....

jamesd

ejones999, depends on the details but on the face of it there's a good chance that I'd end up agreeing that the customer had received notice if it was recent. If it was annual review sort of thing, I probably wouldn't agree that just the initial notice was enough.

boo_star

jamesd wrote: »

Twinkly, two complications there: "The debt must be due and payable" and "We would not generally expect a firm to use ‘set off’ before giving the customer a reasonable opportunity to pay the debt".

I guess you missed "[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]However, what is ‘reasonable’ might depend on the customer and the history of the account."

For a customer who is constantly overdrawn. I.E. never in credit and who is obviously using their overdraft as a long-term interest only loan, I'd say their history would be pretty bad and the bank has every right to reign in the debt ASAP before it turns bad.
[/SIZE][/FONT]

jamesd

boo_star, certainly it may depend on history but the description was of an overdraft varying between 1200 and 1600 so there seems to be significant variation in the use of the facility. The action here seems excessive in amount and lack of notice when something like a request to reduce it by 50 a month could perhaps have been made instead.

Still pretty inefficient use of an account when a personal loan would be a more cost-effective and appropriate funding vehicle for the customer for a term of a year or two. Suggesting that was perhaps one option that could have been taken, acting in the customer's best interests.

Here I notice that the reduction in the facility was greater than the monthly variation in use and that the motive may be to cause both accounts to be subject to overdraft and related transaction charges, something the customer has presumably been successfully avoiding by splitting the account usage. Acting directly against the customer's best interests.

Lloyds TSB has probably solved one problem, though: there's no longer much doubt about what the fate of the account will be. The customer now knows that they should move the active money to a different bank to protect from a repeat of this causing unexpected disruption in their bill payments. Loss of the regular income payments to the other account will in its turn increase the chance of further reduction in the overdraft facility. And with the main banking activity no longer with Lloyds TSB, that'll increase the motivation for the customer not to comply, compared to the situation before this incident. Nice way to turn active accounts and regularly serviced debt into bad debt. Still, it'll "prove" that the decision to reduce the limit was appropriate, if you ignore the fact that it will actually have been the cause of the debt becoming bad.

If this customer is now getting charges on both accounts, I'd certainly be considering going with a complaint about inappropriate set-off use.

I don't disagree in any way that Lloyds TSB was entitled to seek reduction in the overdraft, just about the method and amount chosen in this particular set of circumstances, based on the limited information in the description here.

Sillychuckie

RayWolfe wrote: »

Read first, then reply. :rolleyes:
You must have been having a bad day ...

Misunderstood... apologies :A and a peace offering :easter_ba

Mikeyorks

The OP ..... an ever increasing occurrence ..... is noticeably absent:rolleyes:

Still never mind .. I've digested it all;)

boo_star

jamesd wrote: »

boo_star, certainly it may depend on history but the description was of an overdraft varying between 1200 and 1600 so there seems to be significant variation in the use of the facility. The action here seems excessive in amount and lack of notice when something like a request to reduce it by 50 a month could perhaps have been made instead.

Still pretty inefficient use of an account when a personal loan would be a more cost-effective and appropriate funding vehicle for the customer for a term of a year or two. Suggesting that was perhaps one option that could have been taken, acting in the customer's best interests.

Here I notice that the reduction in the facility was greater than the monthly variation in use and that the motive may be to cause both accounts to be subject to overdraft and related transaction charges, something the customer has presumably been successfully avoiding by splitting the account usage. Acting directly against the customer's best interests.

Lloyds TSB has probably solved one problem, though: there's no longer much doubt about what the fate of the account will be. The customer now knows that they should move the active money to a different bank to protect from a repeat of this causing unexpected disruption in their bill payments. Loss of the regular income payments to the other account will in its turn increase the chance of further reduction in the overdraft facility. And with the main banking activity no longer with Lloyds TSB, that'll increase the motivation for the customer not to comply, compared to the situation before this incident. Nice way to turn active accounts and regularly serviced debt into bad debt. Still, it'll "prove" that the decision to reduce the limit was appropriate, if you ignore the fact that it will actually have been the cause of the debt becoming bad.

If this customer is now getting charges on both accounts, I'd certainly be considering going with a complaint about inappropriate set-off use.

I don't disagree in any way that Lloyds TSB was entitled to seek reduction in the overdraft, just about the method and amount chosen in this particular set of circumstances, based on the limited information in the description here.

I don't per-se disagree with you. Of course the best solution for both parties would be a realistic repayment programme.

That being said, in light of the looming (or is it already here) credit crisis banks are most certainly trying to pull in debts as soon as possible. The one thing both of us lack here is clear information as to the usage of both accounts. Ignoring the constantly overdrawn one, is the other one consistently going overdrawn? Do they possibly have credit cards that are maxed/overlimit? Do they have a loan that they're failing to make on time?

Neither of us can possibly say definitively why the bank took the action they did. But I will say, as maligned as banks are today, they don't tend to make knee-jerk reactions, they generally have good reason to do what they do..

Twinkly

jamesd wrote: »

Twinkly, two complications there: "The debt must be due and payable" and "We would not generally expect a firm to use ‘set off’ before giving the customer a reasonable opportunity to pay the debt".

James you may well be long gone from this thread however this bears saying for the continuity of the thread and future possible readers. I agree with this portion of your post. The link given provides the OP with all the information he will need to advise his brother whether the banks have the right to do what they have done, which I believe is what the original question was.

I have made no assumptions as to anything that isnt stated in the original post nor assertions that it was right or wrong to do so