Unauthorised transfer from joint account to personal account

[zabba1]

Hi,

 

I am currently in dispute with HSBC. I had a joint account covering a shared freehold, which had been unused and in credit since December 2007 until I received a letter to say that it was overdrawn by £179 and could I make arrangements to pay it back. when I went in to the bank I was told that money had been transferred from the joint account into the personal account of the other account holder to cover his overdraft. The bank have told me various different stories about how this happened, including that he went into the branch (he is housebound), that they phoned him to get his agreement, and that he phoned them to authorise it. They have since chased only me for the debt and are now threatening to take us both to court.

 

My understanding of banking regulations is that transfers cannot be made from joint accounts to personal accounts held at the same bank without the permission of all account holders. HSBC keep saying that he was allowed to authorise it within the terms and conditions, but I can find nothing that says they are allowed to do this without consulting me. Their T & C say they can use accounts in credit to cover debts in other accounts, but not that they can do so without notifying us, nor that they can make the joint account overdrawn.

 

Can anyone advise me on this? I have just written a response to their service quality team and am ready to take it to the financial ombudsman. They are threatening to refer it to a credit reference agency in 18 days. the other account holder is both devious and flaky and I think my chances of getting him to pay anything are zero, which makes me entirely responsible for his debt.

 

Please help me anyone - advice would be very welcome

[JonCris]

Its disgraceful but the banks CAN transfer funds from one linked (if only by name) account to another with or without consent it's known as 'setting off'

[zabba1]

Thanks for the quick reply.

So how does that fit in with the banking regulations? According to the CAB, they can't do it without permission of the account holders, unless they specify that they can in their T & Cs. I can't find this anywhere. Also how can they make one account overdrawn to remove the overdraft from another? I understand that I might lose the credit that was in the account, but I find it hard to accept that they are allowed to do this - they certainly didn't make me aware of it when I opened the account.

[maroondevo52]

Hello and Welcome,

 

This might help..................

 

banking: firms' right of 'set off'

 

Regards.

 

Scott.

[zabba1]

Thanks, that's very useful - one of the situations that they describe is almost identical - fingers crossed

[maroondevo52]

Let us know how you get on.

[zishi]

Do they have the right to set off from my business bank account for my personal credit card payments??

[johnnymitch]

Hi Zishi , they really are breaking all the rules here ....and need to be told to return the accounts to their previous position immediately or be reported to the Ombudsman .

 

Basically , they cannot take funds from any account to service another , if by doing so they put that account in Debt . Also , they are not allowed to use rights of set-off between Business and Private bank accounts ......

 

Right of set-off ...............

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/40/40_setoff.htm

and there are some examples in the above link ...........

 

(courtesy of vint54)

They are allowed to take regular payments or offset a defaulted loan, from a credit balance only.

You need to write to them, insisting that they return your account balance to as you had left it. Remind them that the terms of ‘set off’ only allow them to dip into a CREDIT balance - NOT create an overdraft, even if the overdraft is an agreed one.

 

They know all this , they're trying it on , and lying to you into the bargain . It might be woth while asking them for a written explanation of what regulations they are using to perpetrate these transactions .... if you get their lies in writing it'll help you with the Ombudsman ......

Edited June 21, 2010 by johnnymitch

[johnnymitch]

OOPS ! sorry MD - we're using the same link

 

Great ,minds and all that eh ? lol!

[maroondevo52]

 

Great ,minds and all that eh ? lol!

 

[Mel19861986]

When you say 'Joint account' - is this a joint personal account?

 

If one party of the joint account requested the transfer, then that is allowed. HSBC ARE also allowed to transfer funds without agreement from a sole personal account TO a joint account. They can transfer back and forth between a sole trader account and a linked personal account, or a partnership business account and it's linked personal accounts.

 

Without customer authorisation they are NOT allowed, under any circumstances, to transfer from a joint personal account to a sole personal account, or from a Limited company account to a personal account (or personal to Limited account)....those I believe are the only 2 restrictions.

[JonCris]

When you say 'Joint account' - is this a joint personal account?

 

If one party of the joint account requested the transfer, then that is allowed. HSBC ARE also allowed to transfer funds without agreement from a sole personal account TO a joint account. They can transfer back and forth between a sole trader account and a linked personal account, or a partnership business account and it's linked personal accounts.

 

I think you'll find they are allowed to transfer funds between accounts irrespective of their status. Its known as 'setting off' & they can argue 'change of position

 

Without customer authorisation they are NOT allowed, under any circumstances, to transfer from a joint personal account to a sole personal account, or from a Limited company account to a personal account (or personal to Limited account)....those I believe are the only 2 restrictions.

 

I think you'll find they are allowed to transfer funds between linked (by name) accounts irrespective of their status. Its known as 'setting off'. Also they can argue 'change of position'

[johnnymitch]

The rights of set-off are quite stringent ...... hope this may help ... thet can't just go plundering when they feel like it .. much as they try to ...

 

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/40/40_setoff.htm

 

and :

(courtesy of vint54)

They are allowed to take regular payments or offset a defaulted loan, from a credit balance only.

The terms of ‘set off’ only allow them to dip into a CREDIT balance - NOT create an overdraft, even if the overdraft is an agreed one.