Right of Set Off with ppi claim

[weejay6000]

Hi,

 

my uncle owes £5000 to a credit card and £3000 to an overdraft. He suffered a stroke at the end of last year and is no longer working. Natwest have agreed to monthly payments of £5.00 to each.

 

We've recently been offered £1200 and £800 for 2 mis-sold ppi claims. On the acceptance form Natwest state the money will be paid to the overdraft account.

 

I've been reading about the Right of Set Off and believe the bank can take money from a Current/Savings account to pay off arrears and missed payments so just wondering

 

(i) the ppi is not a Current/Savings account so can they still take it? and if so

 

(ii) Natwest have agreed to reduced payment plans in which no payments have been missed, so is there any arrears?

 

Any thoughts please

Thanks

[Crocdoc]

This is a very difficult one to fight as the bank will dig their heels in. It is important to remember that the bank do not need to accept token payments and could decide to look at other means of enforcement to recover the outstanding debt.

 

Personally I would swallow on this one.

[maroondevo52]

Hi,

 

I think they can this is what the FSA said recently about the 'offset' rules............

 

Using set-off fairly

 

If a bank is considering using set-off on your account, it should now:

 

* consider each case and estimate how much money needs to be left to meet your priority debts and essential living expenses like mortgage, rent, council tax and food bills;

* provide a refund, in most cases, if it becomes apparent to the bank that money taken in set-off was intended for priority debts or essential living costs; and

* not use set-off on money that it knows or should know is intended for certain purposes, such as where the NHS provided it for healthcare or a third party is entitled to the money.

 

You are also protected under guidelines from the Lending Standards Board, which say that banks should:

 

* try to contact you to discuss your options before set-off is used, and to explain when and how set-off can be used; and

* tell you when set-off has been used for the first time.

 

Information about set-off

 

From 6 September 2011, banks should provide additional information if they have a right of set-off.

 

This includes an explanation of the circumstances in which set-off can be used, both before you open an account (which might be in the terms and conditions of the account) and when the bank looks to use set-off for the first time. You should also be told promptly each time set-off is used on your account.

 

Regards.

 

Scott.

[Crocdoc]

I fully agree with the previous points surrounding the current rules, however the bank will argue that as they have accepted token payments they have already taken essential expenditure into account. My other concern and without knowing the finacial circumstances of the claimant, is that the bank may decide to look at other types of recovery if offset is challenged.