Has my friend been given dodgy advice or not?

Jo_R_2

Hi, wasn't sure where to put this one so feel free to move if appropriate!

A friend of mine recently lost her job, and has been receiving Job Seeker's Allowance. Upon checking her statement last week, she saw she has been debited two lots of £150 for bank charges as she has gone over her overdraft due to direct debits being taken. For the last month the money she has been receiving has been going into her bank and swallowed up by charges so she hasn't been able to touch any of her JSA.

She went to the bank today. I'd explained about the situation with banks and charges at the mo, but explained that she should ask them to consider her case individually as she is experiencing financial hardship as her JSA is her only source of income.

When I saw her later, she explained that the advisor she spoke to told her the best thing was to transfer from her credit card (which is also with the HSBC) a certain amount that would cover her outgoings and avoid being charged further charges. She explained she'd cut up her credit card because she didn't want to spend any more on it (it's one of the direct debits coming out of her account) and the advisor said she could make a phone call to transfer the money.

What happened was that my mate ended up transferring some of the money and the advisor said she would need to find the rest to cover the money coming out. Friend explained she actually had no money to pay for food or anything else, but the woman overlooked this, said they couldn't refund any bank charges at the mo, and went this route.

I'm quite cross because my friend isn't as knowledgeable about bank charges and whatnot and I feel she has been given bad advice to use her credit card, although can completely understand that it's a great way for the bank to continue to make money out of her! She's had to borrow the rest of the money off her mum to pay into her current account, so I've said I'll write a letter on her behalf asking the bank consider refunding the charges on an individual basis due to hardship. Am I saying the right thing or should I just tell her to put it down to experience?

jonesMUFCforever

Well the first thing she should do is to cancel the direct debits and payments going out of the account.

I don't know about HSBC but other banks do have departments (not in branch) where customers can be referred to arrange a repayment plan and in most cases would release some of the JSA.

It is not the bank's fault that she is O/D the credit from JSA is just that, a credit like any other, which would be swallowed if the charges had been passed.

If this is the first time it has happened they may be lenient but if it has happened regularly then a refund will not happen.
In that case I would suggest that she opens a basic account elsewhere and has her benefits going into that.
She still needs to remember though to discuss repaying HSBC if she is O/D.

Jo_R_2

I do know that since she opened her account she has only ever been charged once for going £20 over her overdraft. It's not something that's otherwise happened before.

When I mentioned the JSA, I meant so in reference to the question of whether bank charges should be taken out of benefits. Ie she has no money coming in to live on except her JSA, and could be considered in financial hardship as this is her sole source of income and she isn't currently working. Thus in such cases the bank can and should consider the case on an individual basis.

The advisor transferred money from her credit card to her current account, and advised she would need to pay cash in to cover the total amount needed to avoid getting charged again. I just find it quite ironic that she went in to explain she has no money and has cut up her credit card because she doesn't want to put any more on it yet the advisor recommended using her credit card and paying in money she hadn't got which was why she went in in the first place!

She has borrowed cash from her mum and paid it in. I have told her she needs to be more careful, having said that again ironically one of the direct debits that she was being charged for was her credit card!

System

There are some rules surrounding the banks' use of benefits to repay a debt to them. I'm not to clued up on it but it is known as 'First Right of Appropriation'.

I found this article through Google which may be of some use:

http://www.corby.gov.uk/docs/supporting/released/2008-3/21193/Corby%20%20right%20of%20appropriation.pdf

It's from a council website so I'd consider it pretty reliable information.

Regards
UNDERGROUND

jonesMUFCforever

UNDERGROUND wrote: »

There are some rules surrounding the banks' use of benefits to repay a debt to them. I'm not to clued up on it but it is known as 'First Right of Appropriation'.

I found this article through Google which may be of some use:

http://www.corby.gov.uk/docs/supporting/released/2008-3/21193/Corby%20%20right%20of%20appropriation.pdf

It's from a council website so I'd consider it pretty reliable information.

Regards
UNDERGROUND

I know my bank has told us that JSA or any other benefit can be appropriated ONCE only. This has to be done through customer care - if customers ask again the account holder will be given a month's notice to close the account.

If OP needs certainty of being able to access benefits I would suggest opening a Post office card account for this - and cancel all the payments from the bank account or this will snowball.

Jo_R_2

Thanks both of you!:T

I had thought of suggesting to my friend that she open a basic bank account. I think unfortunately she hasn't been as 'on the ball' as she could have been with keeping an eye on her money, but hey I can't criticise or else I wouldn't be on here myself!

I shall show her this thread as I think she will find it useful.