Default on overdraft?

[Ingrid]

My son had a £1,100 overdraft with HSBC. They would write to him periodically to advise him that they hadn't received a credit. They account never was always under the agreed overdraft but they would always point out that "As you know, the overdraft limit you agreed with us is £1,100."

 

He didn't withdraw any funds whilst he had the overdraft, but paid money in every now and again. Anyway, he didn't make a credit for a couple of months and was written to as the overdraft was up for review. He then received a letter from them asking him to return his credit card "Due to the way you have been conducting your HSBC Bank Account"

 

He received a Final Demand regarding his overdraft, along with a Statement of Means. He contacted HSBC and advised them that he had applied for a 0% card to transfer his credit card balance to but was unable to pay the overdraft off in full (balance of £1074). The girl he spoke to told him to phone back when he had the new card, which he was expecting within days. This would then reduce his overall borrowing with HSBC and the overdraft could be discussed.

 

He contacted them a couple of days later and they couldn't access his account, so he wrote to them and asked if the overdraft could be transferred to a loan to be repaid over the next 12 months. Instead he received a letter confirming receipt of his letter and confirmation that he had received a Final Demand.

 

He then received a letter from Metropolitan Collection Services and made arrangements to pay them £50 per month, which he has stuck to since last March. (Funny thing is, they included a standing order mandate - guess what, HSBC had closed his current account so he couldn't actually use the form!!) Consequently he pays by yellow card.

 

He recently applied for a small business account and was turned down so he applied for his credit file. HSBC have filed a Default on him for his Bank Account! Can they do that? There was never, to our knowledge, a credit agreement drawn up as it was only an overdraft.

 

Should he have received a Default Notice - they only correspondence he received was the Final Demand informing him that "Action will be taken against you through Debt Collectors or solicitors if you fail to comply with this demand. As a Defaulting Debtor, details of your default including your name and address may be given to the credit reference agencised named at the bottom of this letter."

 

Sorry for the long post but I don't know how to advise him!

[freakyleaky]

Bump!!!!

Does anyone know about default notice's?

[jowalshy]

Defualt notices are placed on your file if you fall behind with payments. According to the terms and conditions for HSBC:-

 

"whenever your account is overdrawn you should make regular payments into your account. You must tell us if you are unable to do this."

 

"Unless we have agreed other terms with you in writing, we may at any time end or reduce your overdraft and demand in writing that you pay any oney you owe us immediately".

 

When your son opened the account, and if he had an overdraft facility on it, HSBC should have given him the Terms & Conditions for an overdraft. He he applied for an overdraft after he opened the account, then again HSBC should have provided T&C's to go with the overdraft.

 

From what I can gather from your post is that your son had an overdraft, he then stopped operating from the account and just put money in to clear the overdrfat every now and then. HSBC have then withdrawn the overdraft facility and tranfered the debt over to MCS with whom your son is making regular payments to.

 

HSBC probably filed a default notice due to your con not making regular payments into the account. As they issued you with a letter stating that they MAY give detials of the default to credit reference agencies, they may say that they have issued you with a default notice.

 

One of the things your son could do is ask them, in writing, to produce the default notice letter, and also ask for a copy of the original signed contract. Below is a draft letter you could use:-

 

 

The ABC Bank

1 Bank Square

Bank Town

BK1 7TD

 

Date: xxxxx

 

Dear Sir or Madam

 

Account number - xxxxxxxxxx

Sort Code - xxxxxx

 

After recently obtaining a copy of my credit file from Experian I was concerned to note that your company has placed a "Default" notice against my account.

 

Further to this I have no recollection of ever receiving such a notice, and I therefore require you to substantiate this data at your earliest convenience.

1. You must supply me with a true copy of the alleged agreement you refer to. This is my right under your obligation to supply a copy of the agreement under the legislation contained within s.78 (1) Consumer Credit Act 1974 (s.77 (1) for fixed sum credit). Your obligation also extends to providing a statement of account. I enclose a £1 postal order in payment of the statutory fee, PO Serial Number 1587 716732.

2. You must supply me with a signed true and certified copy of the original default notice

3. Any deed of assignment if the debt was sold on

I would request that this data is provided to myself within the next 28 days, if you are unable to provide this data then I must insist that it is removed from my files as unsubstantiated.

Yours faithfully

 

Your son.

[Ingrid]

Thanks jowalshy, that's the sort of thing I was hoping for.

 

Our family business had an account with HSBC at the time so we had a reasonable relationship with them. Our son obtained a temporary overdraft pending purchase/sale of his car. There was a small shortfall and a little extra expenditure so there was an amount still owing to HSBC.

 

As far as I am aware, he was never issued with any terms and conditions, so the letter will certainly help. Thanks!

[Ingrid]

Got a really strange reply from HSBC following the letter jowalshy suggested sending.

 

It's as follows -

 

Dear Mr ....

 

Thank you for your recent correspondence.

 

As we have had no reply to our previous correspondence, your account has now been referred to

 

Metropolitan Collection Services Ltd

56 St James Road

Edgbaston

Birmingham

B15 1 JL

 

Telephone 0500 992299 (freephone)

 

Your letter has been forwarded to Metropolitan Collection Services for their attention.

 

They will contact you direct to discuss your proposals further. If you have any future enquiries, please contact them on the above freephone number.

 

Yours sincerely

 

H Daniels

Manager, Credit Services

 

Someone obviously didn't read the letter properly!!! And as for having not received a reply ........what to???? The account has been with MCS since last March!!!!

 

So we're still none the wiser!

[Castlebest]

Hiya Ingrid, I think the way forward and to start to get the default removed from your son's credit file is to send HSBC a data protection act SAR this should give you copies or at least a schedule of all correspondence they have sent to your son.

 

Also send both HSBC and Metro a Consumer Credit Act section 77/78 letter to get copies of exactly what documentation they both have for your son's account. HSBC will probably tell you overdrafts arn't governed by this legislation but for a £1 its worth sending just to see.

 

pete

[Ingrid]

Well, my son received a letter from MCS today.

 

Content as follows

 

Dear Mr ....

 

Your Account with HSBC Bank plc

Outstanding Balance £573.07

 

We have been asked by HSBC Bank plc to reply to your letter dated 14th January 2008.

 

With regards to the deed of assignment, as we are in-house debt recovery for the HSBC Group this is not required. Please find enclosed a copy of your Default Notice issued to you on 30th January 2007.

 

However in respect of your requesting a copy of your agreement we can confirm that as this is a current account it is not regulated by the Consumer Credit Act 1974.

 

Section 78 of the Consumer Credit Act 1974 (the "Act") does not apply to current accounts. The current account is not a regulated agreement because it provides no credit. The overdraft agreement provides the credit and this sits separately from the current account agreement.

 

Credit agreements normally have to comply with the Part V of the Consumer Credit Act 1974. Part V covers the form and content of agreements, signing of agreements and duty to supply copies of unexecuted and executed agreements. However, current account overdrafts are given specific exemption from all the Part V formality requirements by section 74(1)(b) of the Act.

 

This exemption applies only when the OFT grant a Determination under section 74(3) and this was given for overdrafts on 21 December 1989.

 

The consequence of this is that there is no executed agreement for a current account overdraft and so section 78 (right to demand copy of executed agreement) does not apply.

 

We trust this clarifies matters.

 

Yours sincerely...

 

So, it would appear Castlebest is correct in his assumptions!

 

The Default Notice referred to was a letter that had no heading at all, so we didn't read it as a default notice. Lesson learned here!! In my simplistic mind I figured it would actually say something about it being a Default Notice! FYI, I give the content of the letter referred to by MCS below -

 

Dear Mr ....

 

(ACCOUNT NO)

 

Thank you for your recent letter, the contents of which have been noted.

 

Having reviewed your accounts, I can confirm the balance on your Bank Account was £1074.07 in debit at close of business on 29 January 2007.

 

I can confirm that on 19 January 2007 a Final Demand was issued on your accounts, I note that from our records this is due to be reviewd on 16 February 2007.

 

In normal circumstance, if a customer cannot afford to satisfy the demand made, I would then look to ascertain an acceptable repayment offer. If a suitable repayment offer cannot be made with 28 days, I will pass the outstanding balance onro a debt recovery agency who will then arrange repayment directly with yourself. This action would then be registered with Credit Reference Agencies. Other creditors have access to this information and it could affect any future credit applications the you want to make.

 

In order to discuss repayment options further, I request that you contact us at Customer Credit Services on the telephone number detailed in this letter. Hopefully we can review your situation and give you a solution to help you at this difficult time.

 

You can also get help and advice from independent debt counselling organisations, and find out about free independent money advisors in your area from National Association of Citizens' Advice Bureaux and the Federation of Information and Advice Centres. There are also free national telephone help line services that can give immediate help and advice.

 

National Debtline 0808 ... ....

 

Consumer Credit Counselling Service 0800 ... ....

 

Yours sincerely

 

He did write to them on 24th January, six days before the above letter, "the contents of which have been noted" but no other reference was made to his repayment proposal, namely "I am unable to pay this balance off in one payment. Would it be possible to transfer this balance to a loan payable over 12 months in order to clear it up?"

 

So, he did make a general payment offer, but HSBC ignored it and went to MCS!

 

Sincere apologies for the long winded post, just exercising a little frustration!!