Bounce Bank Loans - can banks deduct arrears

TaraCPe

Hi, I have just applied for a Bounce Back Loan from a lender who I already have a loan with. Due to COVID-19 I am in arrears on this loan. They have messed me around with taking a payment holiday, won't allow me a CBILS but have advised to apply for a BBL, which I have done. I have a contract in place with them for the amount but they have only given me part of the loan as they have deducted the arrears for my other loan from it, without my authority. They are saying that they have the right to do this and it was in the Loan Application Portal when I applied but I do not remember seeing this. If I had I would not have proceeded with the application. They are now stalling to provide me with a copy of the application. The contract makes no mention of the arrears deduction and no where in the contract does it state they can do this. There is also no cooling off period in the loan and they say this doesn't apply to BBL's. I have told them I want to cancel the loan and return the money, including being put back into arrears as I feel I have been completely mislead by them. Surely they cannot be using BBL's to clear arrears. Help, can anyone give any advice as I really don't know what to do.
Thank you in advance.

Thrugelmir

The BBL at least puts you in a better financial position. 

Jeremy535897

You have swapped interest bearing arrears for an interest free (for 12 months) loan, and have other funds to use in your business, again interest free for 12 months. Why would you not have done this anyway? The best use of part of the BBL would be to pay off debt arrears. There is no sense at all in reinstating the arrears and returning the BBL.

adamp87

Your bank probably has the right to offset anything in your account to be fair to cover arrears 

dunstonh

The banks have the right of set-off in their T&C.   So, no wrongdoing here.  They have done you a favour whilst at the same time, protect themselves.   Quite clever for them and beneficial for you.

mattyprice4004

I've also seen the right to offset in most BBL documentation I've reviewed. 
Ultimately you owe the money due to COVID and you're being supplied with money to help you through COVID - so it makes sense to pay this back anyway. 

Mrsn

I know you must feel quiet aggrieved to a point regarding this but actually in hindsight it isn’t a bad thing. As Dunstoh has pointed out banks can offset monies for debts owed, this is nothing new in that regard.

TaraCPe

Thank you for your comments. The lender has now admitted that the BBL loan application and contract T&C's did not mention that funds would be taken to offset any current loan with them. The aim of a BBL is to provide financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.
I have not found any information that says lenders can use government money provided for BBL's to offset arrears. Given the nature of these scheme then it is highly unlikely standard lender terms and conditions would apply.
Whilst there are arrears and it may seem like a good idea to pay these off from the BBL, that should have been a decision I made and not the lender. I now know why they were so keen to offer a BBL to me!
The issue now is what protection I have as a customer if I was not provided with all the information at the outset to make an informed choice and / or when given the contract. Under the CCA it could be the case that the lender would not be able to collect repayments on the loan for such a breach.
Does anyone know what protection under the CCA still applies to this scheme? 

Thrugelmir

A commercial loan is not going to come under the remit of the CCA. 

warby68

Why were you not eligible for a CBIL as your needs are clearly greater than the BBL?
The credit threshold for BBLs is lower with the self-declaration. Perhaps someone was actually trying to do you a favour if your business is not considered viable enough for a credit assessed loan as clearance of any arrears would remove the risk of the bank defaulting you and give you some time to recover. If they put you back into the position you were before with no BBL plus the arrears, how will that actually help you? You might prove a point but I'd be surprised if you ended up with the BBL in full plus the arrears plus a continuing banking relationship.
I know you're indignant and feel misled but just be careful to consider what outcome you really want.

jfinnie

TaraCPe said:

Thank you for your comments. The lender has now admitted that the BBL loan application and contract T&C's did not mention that funds would be taken to offset any current loan with them. The aim of a BBL is to provide financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.
I have not found any information that says lenders can use government money provided for BBL's to offset arrears. Given the nature of these scheme then it is highly unlikely standard lender terms and conditions would apply.
Whilst there are arrears and it may seem like a good idea to pay these off from the BBL, that should have been a decision I made and not the lender. I now know why they were so keen to offer a BBL to me!
The issue now is what protection I have as a customer if I was not provided with all the information at the outset to make an informed choice and / or when given the contract. Under the CCA it could be the case that the lender would not be able to collect repayments on the loan for such a breach.
Does anyone know what protection under the CCA still applies to this scheme? 

You'll probably find the right to set-off / offset / combination of account is something you signed up for with the original loan and / or your current account.  Every account application I've ever seen has this written into the T&Cs.