Thread: Help required on Bank Charges whilst on benefits **SUCCESSFUL OUTCOME**

HI

My Son inadvertantly went overdrawn by £20. He is on Jobseekers allowance. He did bury his head in the sand for a while through ignorance, but when I found out, I sent them a letter about the social security act 1992.
£100 has been paid in to his account by his sister, which I think is a good deal of interest on £20 already. They want more though (another £187).

Whilst it was in dispute they sent the account to their debt collector. So I sent them a letter of dispute (Not heard back on that yet) but the response from the bank after asking for details of his income was that they cannot refund any of the charges because regular deposits were going in to his account, prior to him being on Jobseekers? No Money has gone in to that account since this £20 was overdrawn but they are saying it would not be considered under the financial hardship guidelines?
His Joseekers is paid in to his savings account.

I am going to go through their complaints procedure but can anyone advise me on what I can say? They seem to be ignoring the social security act.

Thanks
JP08

Just some swift questions here. It's usual after 6 months has expired for debt collectors to be involved. You would also be made aware of what would happen as they progress by letter. From what you have said it would seem that the initial debt is not new so a few more details and what actually happened might be useful.
Somewhere in the small print there will be a clause that states they can move funds from an account with funds to repay the one that requires them. I would be surprised how JSA managed to be paid into a savings account as normal payments are by BACS and into a fully accesable 'current' account unless otherwise agreed. JSA by the way is taxable and counted as 'income' for that reason. You'll even get a P60 for the inland revenue for it at the end of the tax year. contribution based JSA lasts for 6 months only and then means tested for 'income based'.
I think with all the details and time elements there are many here who could suggest and advise you accordingly.
MIchael

Hi Citizen B
Thank you for this, I will send them the letter you advised. I do not know the logic in what they have said either.
Michael, in answer to your questions, yes the intial £20 overdrawn was before xmas, not sure how long, but it had not got to the debt collectors until after the £100 had been paid to the account and I had written a leter to the bank stating about bank charges and the social security act 1992 section 187, which says they cannot take charges from his benefits as it is money he will need to live on . Their refunds department sent a means form which of course would only be for his JSA payments. And I sent that back to them. The reply was what I had put in my first entry.

The savings account is called a smart account, money can be paid in by any means to it, but he cannot have direct debits etc. the flex account they are talking about is only a basic one and should not have an overdraft on it anyway. So the fact that they let it go overdrawn in the first place is weird. I have not heard back form the Debt Collectors who I believe are in house anyway yet on the letter of dispute. Will cross that bridge when and if they come back.

I will send off this letter and see what they come back with now
Thank you both for your help !!!
JP

Hi
I received a reply to my first letter (account was in dispute) from the debt collectors. They came up with an offer saying to pay some off, no actual amount shown and that they will partially clear the default on his credit file and no more would have to be paid, he would just have to call them within 7 days to fnd out how much they would take off.
I sent them the second dispute letter and also stated that the debt was made up entirely of bank charges, but have not heard back on that one, even though they sent another letter stating as they had not heard the offer had been withdrawn.

I have also sent letters to the credit ref agencies and a dispute letter to the bank as well that you advised Citizen. I am still waiting on a reply to that one as well.
I will keep you posted.
Thanks again for all the advice
JP

They will in fact be showing on the credit file a different amount in the 'default/delquent' box. That's nowhere near what you want as it'll still show as default. The problem is that it'll show for 6 years unless totally removed and it's only the the account holder (as in the bank) who can alter it.
The notice of dispute will last 28 days or until the bank reply either way. The reality is that a bank hates to adjust CRA entries once made. They believe they are always right which we all know is often in dispute.
You need take no rush to contact the DCA and you need to find out if it's 'in house' or 'external' and if the debt has been sold which is probably doubtful. Whatever happens your aim is to have the 'default' removed. By the sounds of it you have mitigating circumstances so there's a reasonable chance of them (reluctanly) backing down.
Whatever you do from now on, write down everything as in names, dates and times and the jist of your calls be they incoming or outgoing. Think I'm right in what I've said here.
Michael

Hi Michael

I have still not heard anything back yet, but the DCA is inhouse at the moment according to the letter. They haven't tried calling yet, but I will list the calls if they do.
Thanks
JP

Thanks Citizen

I received a letter back from Experian basically stating to request a copy of his credit report after sending them the letter which says about defaults on credit ratings that are made up purley of bank charges. It goes on to say more but says any queries once the credit report is received to go back to them. I will request that and then see what is actually on it, as the internal DCA had said that there was a default on his credit rating?
Will update after that
Thanks
JP

JP08 ... that'll cost you £2 for the credit report snail mail. However they are doing a 30 day on line tempter for free so that might be an idea.
The credit report will at least show when the account became 'deliquent' and the overdue periods logged at it progressed. It certainly sounds to be well over 6 months of 'no action' though and you might like to have a close look at the default notice they'll have sent.
The banks normal reaction is that if there's no overdraft facility agreed and dependant on how much below zero would define the charges. Personally I'd have been on the phone to them immediately because not doing anything about it means the charges continue to pile up - aka the nightmare scenario.
Michael

Hi Michael
Thank you for this, I will do the 30 day online version. My son also received another letter back from the bank after the last letter. It is basically saying that although the refund request is currently on hold pending the outcome of the OFT test case, it does not prevent them from continuing to collect outstanding balances through it's collection process. They will be happy to discuss an arrangement if he calls their collection team. Obviously not going to call them but they have already had the £20 back plus £80 in charges. They are still accruing more charges every month currently another £187 and counting. His Jobseekers is not being paid in to that account. But with the charges still being added on even after the letter of dispute, I am wondering just how much it is going to rise to. I will go through their complaints process now.
Will keep you updated
Thanks JP

Originally Posted by JP08

Hi Michael
Thank you for this, I will do the 30 day online version. My son also received another letter back from the bank after the last letter. It is basically saying that although the refund request is currently on hold pending the outcome of the OFT test case, it does not prevent them from continuing to collect outstanding balances through it's collection process. They will be happy to discuss an arrangement if he calls their collection team. Obviously not going to call them but they have already had the £20 back plus £80 in charges. They are still accruing more charges every month currently another £187 and counting. His Jobseekers is not being paid in to that account. But with the charges still being added on even after the letter of dispute, I am wondering just how much it is going to rise to. I will go through their complaints process now.
Will keep you updated
Thanks JP

So your (you/)son has paid £100 into the account at an earler date but it did not bring it back into credit? HSBC penalties are under £10 a £10 charge and over £10 then a £25 charge. Letters of Dispute will not stop the charges because they will take them as being valid and correct. There would have been an original transaction that 'triggered' the 1st ever 'penalty'.
HSBC prior to applying charges send a letter to that effect. Has you son actually been given a default notice from them or is that default for something else? I get the impression that the default you mentioned earlier is for something else.
Michael

Hi Michael
Yes, £100 was paid to the account after finding out that he had a problem. We also requested that the rest of the charges be refunded to bring the account back to zero, as my son is on jobseekers. They ignored that saying that before the charges started he was having regular payments paid in so they were not going to refund them. He is at the moment getting no money at all apart from crisis loans as there is some problem with the DWP records. This account is Nationwide not HSBC?
He has had 2 letters from the internal debt collector saying it is in default and that it is affecting his credit rating, it is purely bank charges as the £20 has been paid off plus £80 in charges already.
JP

Hi Michael
No, I have not got the credit reports yet, however I have sent off the complaint, I will be getting the reports shortly
Thanks
JP08

Oh thought you were getting the on-line free deal?
The problem though is regarding the continuing monthly 'charge'. It will not stop however until a decison is made. It's that Credit File that's important to this as if their charge was £80 then that means 4 months had passed. Being on JSA or whatever (which I suspect after 6 months stopped) will not be a factor when they automatically enter the charge monthly. One would assume that the monthly £20 charge ceased once the account was declared 'in default'? Who did you make your complaint to?
Michael

Hi Michael
I am going to do the on-line free deal but have not got around to it yet as I have had to sort out a lot of other things as well. The complaint has been sent to NW. Still waiting on a reply. I am not sure what is happening on JSA as he has not been on it for 6 months this time, however there is some kind of decision going on, which seems to have stopped his benefits at the moment. The unfair charges has been logged with the bank and confirmed as on hold until the decision.
I will get round to the credit files this weekend.
JP

Okay, well regarding JSA (in a nutshell) - one gets it for up to 6 months (contribution based). Then depending on their circumstances a means-tested income based method (if applicable) is used which will mean nothing(!) or something and advice.
Now for the results of the credit file, eagerly awaited.
Michael

Hi Michael

We received an unexpected result. When I complained to the bank, they reviewed the postion and have agreed to write off all charges going back to Sept 2008, and then close the account. As it was all charges that leaves a balance of zero to pay. So the credit file should show as settled? Still not got round to checking yet as he wasn't there at the weekend but it should change anyway if there is an entry on there, I am sending off the acceptance to the bank at lunchtime today.

Result!
Thank you for all your help.
JP