Credit Union mess up

Gemsie666

Good evening, I’m really looking forward to some advice. 

About 5 years ago I took out a loan with my credit union I do regular savings with them for the last 15 years so would occasionally take out the odd loan. For this one all paperwork was sent out including payroll for funds. 

Last August I contacted them to ask if the loan was paid off or if there was still a balance, this was due to me getting a mortgage. I was advised I had paid off the loan and had £1800 in savings, I took out the funds to go towards the house. 

I contacted them again in October as I have continued to pay £50 into the account, so wanted to withdraw this to pay for a holiday. I received an email back saying there had been an error and that I didn’t have any money in savings as the loan wasn’t paid off. 

I have asked for clarification around this and they have advised that the payroll request went in late, so I had not paid the loan off when the funds were originally released to me and that I still owed money on the loan. They report they have taken off any additional interest due to the error. Apparently, this was not picked up until this went over to a new company that took over our Credit union, though they didn’t contact me. 

This has now left me in a pickle, those funds were to pay for a holiday, so I’m now struggling to find the funds to pay for this. Is this right that a year later they can say it isn’t paid off? Everything comes out of payroll, so I haven’t avoid not making payments it’s all been above board. 

Can I do anything? 

pramsay13

If they are correct then you owe them the money to pay off the loan, but they may accept it being paid back over a longer period of time and you being given your savings back for the holiday. 
You need to check the figures carefully and then speak to them. 

ManyWays

A lender is normally allowed to correct a mistake that has been made. If they had come back to you a month or so later, that would be fair.

However, you asked them more than a year ago about the loan and was told it was paid off and they returned the savings to you. As you had been paying it for years, you had no reason to think this was wrong. They have also not taken any more money via payroll, which they could have. 

You have therefore arranged your finances on the basis that what you were told was correct. There is a legal name for this, "estoppel", which means that you have relied on what you were previously told. 

I suggest you point this out to them and suggest that as they have made a series of errors here (stopping taking payment for the debt, giving you incorrect information about the loan last August, letting you withdraw the savings before the loan completed), they should write off any money that is owed. Say you will be going to the Ombudsman if they do not agree to this.