LTSB over-limit charges

[BankFodder]

Has he been in touch with the DWP about this, I understood it that banks cannot take benefit payments.

I understand that they can only be prevented from doing so by means of the letter of appropriation.

I would be very pleased to be wrong about this

[cerberusalert]

The Social Security Administration Act 1992 provides certain benefits such as Housing Benefit to be 'inalienable'.

The legislation that can be quoted in any approach to or complaint to a bank should include section 187- "Subject to the provisions of this Act, every assignment of, or charge on-

(a) benefit as defined in section 122 of the Contributions and Benefits Act;

(b) any income-related benefit; or

© child benefit,

and every agreement to assign or charge such benefit shall be void; and, on the bankruptcy of the beneficiary, such benefit shall not pass to any trustee or other person acting on behalf of his creditors"

[BankFodder]

So why are we bothering with the letter of appropriation then? Unless the letter is used to give them notice ahead of each payment in of benefits that the payments are benefits and are subject to these regs.

[cerberusalert]

Banks are not allowed to use Housing Benefit or any other income related benefits to repay an overdraft as the law provides that a customer needs a minimum amount of money to live on.

 

This is called First Right of Appropriation

 

Even if an account is overdrawn, a customer can choose how any further money paid into the account is used (for example to pay rent) using this 'first right of appropriation'. It is necessary however for the customer to contact their bank with new instructions, usually, each time they make a deposit.

Following further queries with Citizen's Advice on the final sentence 'new instruction each time you made a deposit' they provided more detailed guidance: In the written instructions the customer gives the bank, the customer should ensure that s/he makes it clear if s/he wishes any regular payments or future deposits to the account to be used to pay for specific items. If the client does not make this clear, s/he will have to give the bank new instructions each time a deposit is made.

This "Right of Appropriation" allows a customer to assign any funds entering their account to specific events and needs, not just benefits.

This is something all the banks should be aware of, but are loathe to publicise. Some banks however do not understand this process since it is not very often used.

 

 

 

Whilst a customer can try this, there are 2 possible problems;

1) Ideally, they should give the bank 7 days notice before the first Housing Benefit payment is due to be credited to their account. Otherwise the bank could disregard the request. 2) They may just disregard it anyway and swallow up the money. The customer would then have to complain and involve the banking Ombudsman etc and, eventually, get it resolved. This could take a few weeks and would not solve the immediate problem.

 

The Social Security Administration Act 1992 provides certain benefits such as Housing Benefit to be 'inalienable'.

The legislation that can be quoted in any approach to or complaint to a bank should include section 187- "Subject to the provisions of this Act, every assignment of, or charge on-

(a) benefit as defined in section 122 of the Contributions and Benefits Act;

(b) any income-related benefit; or

© child benefit,

and every agreement to assign or charge such benefit shall be void; and, on the bankruptcy of the beneficiary, such benefit shall not pass to any trustee or other person acting on behalf of his creditors"

Information on the following website can help a customer claim back any resulting bank charges.

 

Please find below example letters - Right of Appropriation and Formal Complaint under the Consumer Credit Act 2006

 

Sample letter to bank

[Add Name and Address of Bank]

RIGHT OF APPROPRIATION

Dear Sir/Madam,

ACCOUNT NUMBER: xxxxxxxxx

I am writing to inform you that I am due to have Housing Benefit payments of £xxx paid into my account on xx/xx/xx, and I wish to use my first right of appropriation for this money, for the following purposes; Rent £xx

I have set up a standing order/direct debit/will withdraw the money for the above use, and I would be grateful if you would ensure that any other payments out of my account do not interfere with this withdrawal.

[Add details of the future regular payments if they will be regular payments of Housing Benefit.] Yours faithfully,

[signature]

[Enter your Address]

 

Sample complaint letter to bank

[Add Name and Address of Bank]

Dear Sir / madam,

RE: FORMAL COMPLAINT UNDER THE CONSUMER CREDIT ACT 2006

On DATE, I personally delivered the attached letter exercising my common law first right of appropriation in respect of payments in order to maintain my basic living requirements.

Instead of accepting this appropriation, your staff refused to abide by my common law rights. The bank has instead appropriated my payments for the purpose of paying an overdraft largely consisting of collection charges. I am aware of the FSA waiver (in respect of the current OFT test case), which expressly requires the bank to consider hardship. I am also aware of the Banking Code, which requires you to behave sympathetically.

Please consider this letter a formal complaint under your complaints handling scheme set up under the consumer credit act 2006. I request acknowledgement of this letter in a reasonable timeframe, with a copy of your companies' complaint procedure.

Yours Sincerely

[signature]

[Enter your Address]

[BankFodder]

Ta

[cerberusalert]

The complaint letter needs tweaking to mention the 'phone call rather than the first letter mentioned.

[2Grumpy]

Thanks for all of your support

 

My son is 28

 

His problems were usually insignificant

 

I will be trying another letter about the benefits quoting the legislation. Presumably the letter of appropriation wouldn't be any good because this was paid 6 months ago!

 

Fortunately he had another bank account - also an overdraft but I got his charges back & inside his limit! so he is getting the rest of his benefits ok.

Edited June 26, 2009 by 2Grumpy

[2Grumpy]

There is one more possibly useful thing - he has had the account since he was a minor. I'm not sure whether he was ever informed of charges that might be incurred or whether they made any effort to make sure that he had taken notice.

 

I don't know what they do about that when you open an account over 18 (much too long ago since I did that) but I suspect little if anything.

[2Grumpy]

As an aside, when LTSB have admitted they went wrong and give compensation, they refund a couple of charges.

 

I was wondering if they were doing this with the charges refund case in progress - thinking that they can reduce the bill slightly by saying that some charges have already been refunded when they were really given as compensation?

[2Grumpy]

With regard to Privacy Guard & a SAR - I fear that would be a waste of money.

 

They have already refunded it, just not the compounded charges that were incurred as a result of it.

 

My argument is that they should have put him back to the position that he would have been in had they not taken the money in the first place.

 

Having said that, they don't admit to not selling it to him, or to the distance selling regs. They just refunded.

[BankFodder]

With regard to Privacy Guard & a SAR - I fear that would be a waste of money.

 

They have already refunded it, just not the compounded charges that were incurred as a result of it.

 

My argument is that they should have put him back to the position that he would have been in had they not taken the money in the first place.

 

Having said that, they don't admit to not selling it to him, or to the distance selling regs. They just refunded.

And your argument is absolutely correct. If you are lucky, an SAR may produce evidence of misselling and this will allow you to pursue them for complete compensation

[2Grumpy]

Update ...

 

I thought that I would call the charges refund unit one last time to remind them that I'm claiming back charges applied due to their mistake.

 

The lady on the phone understood (I had talked to her before). Trouble is, all they do is take notes & give the file to a case handler who ignores the notes and sends a standard letter saying wait for the test case appeal.

 

She actually went to TALK to the case handler. Between them they decided that the complaint had been sent to the wrong place and she would send it on to the correct department.

 

She wasn't sure what they could do because my son had closed the account!!!!!!

 

I had to explain that TSB closed the account because he was over his limit entirely due to their overcharging

 

I'm just wondering if the account had been closed and written off? That would be a result but somehow I doubt it.

 

I saw elsewhere that just closing the account without any letters was unlawful termination & that rendered the account unenforceable... (clutching at straws I know).

[2Grumpy]

LTSB have closed my son's current account because it was over the overdraft limit.

 

There are charges that cover the overlimit that I am sorting.

 

However, in response to a complaint, LTSB said that they haven't issued a default notice or termination notice because they say they don't need to.

 

They do say that they issued an enforcement notice (not received).

 

They also issued a demand for just the amount over the overdraft limit a couple of months after the date they say they sent the enforcement notice and after that they closed the account without telling me that they were going to do so.

 

I know that not all of CCA 1974 applies to overdrafts, but can they really get away without default notices, termination notices?

 

Any idea what an enforcement notice is and how it relates to the CCA?

 

They also said that if we want to see any copies of letters we should send a SAR - effectively charging for a complaint about letters not received!

[IdaInFife]

have read of this:

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/217605-halifax-current-account-defective.html#post2424252

 

ida x

[landy_alert]

Hi 2Grumpy:)

 

We are in a similar situation as your son with LTSB - but in our case they threatened to close our account after we put in a claim for charges amounting to more than twice our overdraft (which was around £500 over our agreed limit).

 

Although we did receive a warning, we didn't receive a default notice, but we did get an enforcement notice which says the following -

 

Enforcement Notice (served under Section 76(1) of the Consumer Credit Act 1974)

 

It goes on to request payment of £46.07, against an overdraft balance of £4000+. The remedy date was 19 days after the date on the notice although it wasn't received till 7 days after the notice date.

 

The notice says interest is accruing daily and that our right to withdraw, write cheques etc is suspended (we hadn't used the account for about 8 months at that point anyway).

 

It continues that if we fail to rectify the breach the matter will be referred to LTSB's sols etc etc.

 

We responded by reminding them the account was in dispute over unfair charges and the following month they proceeded to close our account.

 

We did a SAR and received no copies of any default notices, termination notices or indeed enforcement notices.

 

Hope this is of some use and all the best dealing with your son's claim;)

 

Regards,

 

Landy x

[Pinky69]

You do not go into default of an overdraft - you are simply over the limit. Banks can close current accounts at any time - they do not have to have you as a customer.

[2Grumpy]

You do not go into default of an overdraft - you are simply over the limit. Banks can close current accounts at any time - they do not have to have you as a customer.

 

Agreed, but an overdraft is governed by the Consumer Credit Act. although they are exempt from part V. I'm just trying to find out what they should have sent before closing the account.

 

We seem to have different letters on different dates to what they say they have sent anyway.

 

I'm a bit concerned that they are implying that if we didn't get any letters the only way they will send a copy is if we do a SAR!

[2Grumpy]

I've just searched the CCA 1974 & 2006 for the word "enforcement" and although the term is used in several places, there is no mention of an "enforcement notice" but it does say that if you want to terminate the account you have to send a default notice.

[landy_alert]

Agreed, but an overdraft is governed by the Consumer Credit Act. although they are exempt from part V. I'm just trying to find out what they should have sent before closing the account.

 

We seem to have different letters on different dates to what they say they have sent anyway.

 

I'm a bit concerned that they are implying that if we didn't get any letters the only way they will send a copy is if we do a SAR!

 

Hi 2Grumpy,

 

As I said in my earlier post, we received an Enforcement Notice before LTSB closed our account, but there was no copy of it in the SAR:eek: so even if you do this its still not guaranteed they will send you a copy - LTSB are just a law unto themselves it seems.

 

Regards,

 

Landy x

[2Grumpy]

After I wrote asking for a copy of any default / enforcement / termination notices they sent an ambiguous letter that implied they haven't sent any of those, yet they have closed the account & asked for the full balance (even used ****)

 

I have sent a reply asking for an unambiguous statement and a copy of any notices

 

Meanwhile, where do I stand with an obviously closed account and no TN, DN or EN, or even a letter saying "we are going to close your account", just that the account is closed when I the phoned them & demands for the balance

[IdaInFife]

they can recall an overdraft at any time.

 

post 37 by car in the link above explained it

http://www.consumeractiongroup.co.uk/forum/legal-issues/217605-halifax-current-account-defective-2.html

[2Grumpy]

Thanks Ida

 

I'm looking at that post, as well as Car's post#39

 

In this case, there was no warning at all. Might have to do a SAR to check!

[IdaInFife]

you never know what might turn up in your sar

 

ida x

[2Grumpy]

LTSB now say that the Enforcement Notice and Termination Notice were sent to my son's previous address before he told the bank his new address. "The letters were obviously delivered because they weren't returned marked undelivered"!!! My logic is that if he didn't live there, not returned means not delivered, otherwise they would have been returned.

 

They say that they don't have to provide copies of Enforcement Notices and Termination Notices in a SAR, just copies of the account history that say they were sent out, even though they said that if he wanted to get copies, he would have to send a SAR!

 

What are LTSB playing at? Why don't they want to provide copies of the Enforcement Notice and Termination Notice?

 

Do Enforcement Notices and Termination Notices have to follow prescribed text / formatting and require 14 days notice like default notices?

 

His local branch told him that his account was ok - no nasty letters sent to his old address when he did provide his new address - useless

 

They were also chasing just the arrears after the date they say they sent the Termaination Notice!

[2Grumpy]

I think that this is an absolute assignment but I'm not sure. The letters use different terminology. I have asked ... but they haven't responded to that particular question

Lloyds TSB

 

STRICTLY PRIVATE AND CONFIDENTIAL

 

Reference: Current Account Account No. xxxxxxxxxx

 

We are writing to notify you that Lloyds TSB Bank plc has assigned all of its respective rights, title and interest in respect of the above referenced account (including the outstanding balance) to Marlin Europe ll Limited, effective xxxxxxxxxxx.

 

The total balance sold was £xxxxx, as at the date of sale, xx October 2012. Any payments made towards your account after the xxxxxxxx will be forwarded to Mariin Europe it Limited, and wiii be deducted from the baiance shown above.

 

Under the terms of this assignment, and as defined in the Data Protection Act 1998, Marlin Europe ll Limited is now the Data Controller of your Personal Data contained in the records of this account.

 

Marlin Financial Services Limited has been appointed by Marlin Europe II Limited to manage your account and it is essential that all future payments and correspondence regarding this account be directed to Marlin Financial Services at:

 

Marlin House, 16-22 Grafton Road, Worthing, West Sussex BNH 1QP

Telephone: 0333 123 9999 Email: info@marlinfs.com

 

You should contact Marlin Financial Services to organise payment on this account as a matter of urgency on 0333 123 9999.

 

Yours sincerely

 

Xxxxxx Xxxxxxx

 

Lloyds TSB Banking Group

 

Marlin Europe II

 

Marlin Reference: - xxxxxx

 

Dear Sir/ Madam,

 

Original creditor: Lloyds TSB Bank Plc

Original account number: xxxxxxxxxxxxxx

New creditor: Marlin Europe ll Limited

New account number: xxxxxx

Balance: £xxxxxxxx

 

This letter is notification that we, Marlin Europe II Limited have had assigned to us all right, title, interest and benefit in the debts due in relation to the above account, previously owed to Lloyds TSB Bank Plc. this means that we are new entitled to all sums owed under the account and the benefit of any actions taken by or on behalf of Lloyds TSB Bank Plc prior to the assignment.

 

We have appointed Marlin Financial Services Limited (“Marlin”) as our managing agent of your account. You need to give Marlin a call to discuss your circumstances and agree how your account will be paid. You Will be able to make payment by instalments of amounts that you can reasonably afford.

 

It is important that Marlin speaks with you, on our behalf, so please contact them on 0333 123 9999 in the next 5 days. Their opening hours are 8am to 8pm Monday to Friday and 9am to1pm on Saturdays.

 

Yours faithfully

 

Marlin Europe II Limited

 

Important information about the use of data relating to you is stated overleaf

 

Data Protection Act 1998

 

Marlin Europe ll Limited is now a data controller of your personal data contained in the records of your account. Your personal data will be used for the purposes of collecting the outstanding balance from you, which may include your personal data being supplied to third parties. It may also be combined with other data relating to you and which may be obtained from third parties, where that is deemed necessary for verifying the accuracy of data relating to you or if the data will be used to assist with collecting the outstanding balance.

 

Credit reporting

 

Your account will continue to be reported to certain credit reference agencies. Marlin Europe II Limited has asked Marlin Financial Services Limited to report details of your outstanding account to the credit reference agencies on its behalf. The credit report entries will therefore show the name of Marlin Financial Services Limited against your account.

Edited November 15, 2013 by 2Grumpy