Child Tax Credits with held by Bank (Scotland)

[scottybhoy]

Hi Everyone,

Would like your thoughts or experiences with the following issue I have.

I recently entered into a Debt Management Plan (DMP) with PayPlan a couple of months ago. My first payment towards my Creditors was paid on 28th of Last Month which was then distributed. I recently received back dated Child Tax Credits (CTC) which I had been waiting for for some time and which was included in my budget breakdown for my DMP.

As the award for my CTC took so long and happened before I entered into my DMP, I forgot to change my Bank details, so the funds went into my old Bank Account which was placed on an Enquiry only service and is suspended. My DMP includes the account over draft that the CTC went into and there is a plan set up to pay this account overdraft off.

I contacted the Bank (HBOS) in order that they release my CTC but they said that they would not release them until they received my Financial Breakdown from PayPlan and had accepted my offer of repayment. I explained that I was in serious financial hard ship and was relying on these tax credits to clear arrears that I had on various accounts as I had been underpaying them until I received this award. (My Gas and Electricity Bill, Council Tax arrears which are exempt from a DMP).

I have contacted the Branch as well as Head Office to have my funds released but I am constantly fobbed off. On the telephone the head office tells me to go and collect my money from the Branch, at the Branch they cannot seem to check my account as their system was down today, and I may not be able to withdraw my money without a Bank Card, which I was advised by the Bank to destroy when my account was suspended.

Under Scot's law this is supposed to be illegal - see below info on this:

Both the Scottish Law Commission and Scottish Executive concede that social security benefits are exempt from arrestment in terms of section 187 of the Social Security Administration Act 1992 (see Enforcement of Civil Obligations in Scotland, Scottish Executive report, at paragraph 5.245). Section 45 of the Tax Credits Act 2002 is an identical provision to the said section 187 of the 1992 Act.

It is therefore trite law that tax credits and other such maintenance or social security benefits are exempt from arrestment. The case of Woods v Royal Bank of Scotland 1913 SLT 1 Reports 499 is authority for the proposition that where exempt monies are paid into a bank account, those monies remain exempt from arrestment insofar as such monies can be clearly identified within an account.

Section 187 Social Security Administration Act 1992

187.—(1) Subject to the provision of this Act, every assignment of or charge on–
(a) benefit as defined in section 122 of the Contributions and Benefits Act;
[3(aa) a jobseeker’s allowance;]
(b) any income-related benefit; or
(c) child benefit,

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

I have contacted the FSA, Ombudsman and Consumer Credit Council all with varying opinions, but I have been told that the Bank must release these funds even though my account is over drawn and I have a DMP pending on the account.


Can anyone provide me with info if this has ever happened to them and let me know the outcome. I am considering taking legal action against the HBOS due to the emotional distress that this has added to my family.

I am due to go back to the Branch tomorrow so I will let everyone know how I get on. It is about time that large organisations stopped holding customers to ransom and bullying them. Don't you agree?

[scottybhoy]

Hi Folks,

Just an update if anyone is interested in this thread. Went back to the Branch today and withdrew my Child Tax Credits. With me I took a copy of section 187 from the Social Security Administration Act 1992 and also section 45 from the Child Tax Credits Act 2002 which basically states that you cannot withold Benefits - even if you are in arrears or do not have a DMP setup. It is illegal for these benefits to be with held from you.

I politely explained my case to the Bank Manager - whom was very helpful and nice. She contacted the head office and got an authorisation code then produced me with a Bankers draft, which I promptly deposited to my new bank (which was next door, ha!).

A few more details about my case that may help other people.

-This applies in Scotland (not sure about England)
-You need to provide Photographic ID and two forms of ID
-You DO NOT need your bank card (mine was destoyed as requested by the bank)
-My account was in arrears and frozen.

To summarise - Benefits can not be with held or a charge applied to them!

I will be taking my case to the Financial Ombudsman and requesting compensation for the added distress that has been caused to my family.

I'll keep you posted. And remember, keep your calm in these situations and you are liklely to be helped and not arrested.

[Arransmummy]

HI ALL,

Im going thru the exact thing right now with my bank!!! they also keep fobbing me off,aswell as annoying the heck out of me!!!

i wrote them a letter explaining that their charges were irrecoverable in law and had also explained that the scottish law commission and the scottish exec have said that social security benefits are exempt from arrestment in the terms laid out in section 187 of the social security administration act 1992 etc etc

i also gave them an example of a case that took place regarding the exact same situation!

i then received a letter from the bank a few weeks later basically blaming me!! when what they are doing is illegal!!!

i am in the middle of writing another letter to them and have a copy of section 187 of the SSAA 1992! If they do not agree to pay this money back to my account i will be taking legal action. what they are doing is illegal,but as usual they always pass the buck!!!! goodluck to everyone doing the same!! but im sticking to my guns and i hope everyone else will too xx

[rory32]

This may be of interest as it is a more up to date case than Woods and directly relates to modern state benefits http://www.govanlc.com/nlc-crossan-judgment.pdf

This case in binding on lower courts e.g. sheriff courts.

[scottybhoy]

What to do is go into your local branch. You will probably find that they will help you out if you explain the situation to them.

If you have no luck at your branch, write directly to the Financial Ombudsmen. They will get in touch with your bank for you and they will sh*t themselves.

We have been offered compensation, but I am refusing it and holding out for more as what they are doing is bullying people who are struggling and rely on this money. It's ok for the greedy fat cat bankers or should that start with a "W"!!!