RBS empties and closed all accounts

SarahDFW · 16 September 2017 at 12:16PM

Hi,

I am writing on behalf of a friend. Her husband has entered an agreement with step change almost a year ago. One of the debts was a joint personal account overdraft of £2000. RBS agreed on payments with step change.

My friend has a successful business and a few personal accounts with them. She has no debts or step change plans etc. They got in touch with her a few weeks ago demanding she pays the £2000 overdraft or they will close all her accounts and take all the money in them. She phoned to sort this out and had been waiting a few days to get a call back from the correct department. Yesterday they called back and said that another department would need to get in touch with her but was reassured that her business account would not be affected and that no further action would be taken at the moment as she has called to sort it.

Last night she watched her online banking cancelled all her direct debits, emptied all her accounts and closed them all.

She's tried phoning this morning but only the personal banking dept is open and they have said that all her accounts and mortgage has been classified as business accounts and then they had been all closed. Even though she had phoned 3 times this last week to arrange some way of making payments.

Is this all allowed?! She has no bank accounts now and no money except some cash and her husband obviously has limited amounts as that's why he has a step change plan in place.

Any advice???

Buzby · 16 September 2017 at 12:33PM

They have a habit of doing this, I'm assuming the 'business' account is a sole trader? Not a Ltd Co or other legal entity? A wife is not normally deemed to be responsible for her husband's indebtedness, so something has spooked the bank - or they're just in protection mode (theirs). Not a lot she can do until the department that did the deed is open and they explain their reasoning.

SarahDFW · 16 September 2017 at 12:44PM

Buzby wrote: »

They have a habit of doing this, I'm assuming the 'business' account is a sole trader? Not a Ltd Co or other legal entity? A wife is not normally deemed to be responsible for her husband's indebtedness, so something has spooked the bank - or they're just in protection mode (theirs). Not a lot she can do until the department that did the deed is open and they explain their reasoning.

She was previously told last week that it was due to her husbands stepchange. The overdraft was a joint debt but he asked for it to be included within his step change plan, step change spoke to RBS and they agreed term for him repaying that debt. He has been making all his step change payments for almost a year. The account with overdraft is no longer used as it's being paid off.

Yes it's a sole trader business account. But all her personal accounts got switched to business accounts then empties and closed last night. Is this even legal? I'm shocked

xylophone · 16 September 2017 at 1:03PM

They got in touch with her a few weeks ago demanding she pays the £2000 overdraft or they will close all her accounts and take all the money in them.

There was an agreed repayment plan for the overdraft - by now this is less than £2000 because the repayments have been taking place.

RBS has reneged on the repayment plan for the joint debt and want it repaid in full.

RBS retained 'right of set off" for the accounts?

http://www.moneysavingexpert.com/banking/setting-off

Presumably there was more than the amount required to repay the debt in the accounts your friend had?

If so, what has happened to this money? The bank cannot take more than it is owed?

SarahDFW · 16 September 2017 at 1:21PM

xylophone wrote: »

There was an agreed repayment plan for the overdraft - by now this is less than £2000 because the repayments have been taking place.

RBS has reneged on the repayment plan for the joint debt and want it repaid in full.

RBS retained 'right of set off" for the accounts?

Presumably there was more than the amount required to repay the debt in the accounts your friend had?

If so, what has happened to this money? The bank cannot take more than it is owed?

RBS are still taking the money via step change but they are continuing to charge interest which is why it's at £2000 roughly. She can't understand why RBS agreed to a plan with step change only to decide so many months later to start chasing her for the debt?

No, luckily for her she had a few cheques to cash and had just paid out all her bills so there was not as much as the debt owed in her accounts. However, her business account was where she received all payments to her business, now that all her accounts have been closed she needs to open a new account and re-arrange all these payments before she will receive any money.

I've heard of banks setting off before but no idea what they benefit from taking her money but also cancelling all her direct debits and also closing all her bank accounts?

Surely they can't do this if they know it will put her into financial hardship?

takman · 16 September 2017 at 3:14PM

This is a perfect example of why you should always have bank accounts with more than one account. If anyone is reading this thread and has all their accounts with just one bank then open another one now!.

OP you say tour friend has no debts but it was a joint account so that is legally her debt aswell and it will always remain her debt as long as her name is on the account, no matter what repayment plans are in place. So it has always been her joint responsibility to pay it and it was abit silly to have all her accounts (especially a business account she relys on for income) with a bank that she owes money to and is being repaid using a debt management plan.

SarahDFW · 16 September 2017 at 7:45PM

takman wrote: »

This is a perfect example of why you should always have bank accounts with more than one account. If anyone is reading this thread and has all their accounts with just one bank then open another one now!.

OP you say tour friend has no debts but it was a joint account so that is legally her debt aswell and it will always remain her debt as long as her name is on the account, no matter what repayment plans are in place. So it has always been her joint responsibility to pay it and it was abit silly to have all her accounts (especially a business account she relys on for income) with a bank that she owes money to and is being repaid using a debt management plan.

Thanks, she realises this now, too late unfortunately

however I don't think it's particularly helpful to call her silly, I understand what you mean but it's not something anyone expects a bank to do, especially when she said she was happy to pay them back and was trying to set up payments when this happened. She is going to try and open new accounts on Monday, with separate banks. She won't be risking anything again.

Yes I meant she has no additional debts other than the one they made agreements with husband about via step change.

Does anyone have any other advice? Does anyone know if she can get statements for these accounts that have been closed?

Thanks

colsten · 16 September 2017 at 9:34PM

Unfortunately, she could be hit with more troubles as she has a financial connection with her husband who has the IVA, and this is registered with the credit reference agencies. I am afraid, I don't know of any way to bypass this. Perhaps your friend could ask Citizens Advice, or Step Change, for some guidance. Good luck with whatever you do.

SarahDFW · 19 September 2017 at 2:51PM

colsten wrote: »

Unfortunately, she could be hit with more troubles as she has a financial connection with her husband who has the IVA, and this is registered with the credit reference agencies. I am afraid, I don't know of any way to bypass this. Perhaps your friend could ask Citizens Advice, or Step Change, for some guidance. Good luck with whatever you do.

Thank you, however, he doesn't have an IVA, he just has a DMP. She has since managed to open a new bank account and begin the process of setting her direct debits up etc. She has also lodged a formal complaint with RBS, she has recorded all phone calls etc. They have said she was given incorrect information last time she called, they are looking into it all. They also acknowledged it was incorrect of them to close her account without notice when she was doing exactly what they asked, as they didn't assess whether this would put her into financial hardship, which it obviously has as she can't receive any pay from her business which is her only income. They have filed her complaint and she will be going to the financial ombudsman if they do not deal with this to her satisfactory.

RBS empties and closed all accounts

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