Not entirely sure if this should be in the banking forum, the benefits forum, or the debt forum, as it touches on all three. Site Team, m’dears, please move it to where you deem it best suited. Merci.

My sister has a credit card debt with NatWest.

Some time ago, they stopped her method of online payments which was her only way of getting money to them.

Consequently the debt built up as it wasn’t being serviced.

At about this time she had little or no income, eventually having to enter the benefits system.

She has, I understand, been harassed by debt collectors regarding this debt.

Whilst she has anxiety problems, amongst other issues, she is also the primary carer for her disabled son.

Consequently, carer’s allowance and his PIP payments are made into her account. S

ome of which is transferred into a savings account,

her son is in need of alternative accommodation which would be more suited to his needs.

The accrued sum is to pay a deposit and rent in advance whilst a housing benefit application is made.

They are not currently in receipt of HB as it’s unnecessary for the current property.

Without any notification, a couple of days ago, NatWest removed all the funds from her savings account and used it to pay the credit card debt. It is a four figure sum, the loss of which has been most devastating to her.

A quick look through the process

– it’s not my forte

– and I’m assuming they are doing what is called ‘setting off’.

This, apparently is something they are legally allowed to do, taking funds from one account to pay a debt on another.

However, the guidelines for setting off appear to be quite clear that DWP benefits should not be taken and extreme caution must be used when dealing with financially vulnerable people.

Not to mention that this is her son’s money and not hers.

She has emailed NatWest to that extent, requesting the funds be returned asap.

She is not in a fit state to talk to anybody on the phone and, as you may appreciate, is neither eating nor sleeping with the anxiety this has caused.

Regarding the debt collectors, I’m assuming they shouldn’t be bothering vulnerable people at all.

In the possible likelihood that NatWest refuse to return the funds, what would be the next sensible move?

In the possible likelihood that NatWest refuse to return the funds, what would be the next sensible move?

I'll let others answer regarding the debt collectors and NatWest.

The priority is to protect all future payments from the DWP. To this end, she should set up a new account with a completely different bank and have all funds paid into this account.

its a very difficult one TBH.

you could issue a notice of Appropriation but that would need to be done each time a large sum accrues.

the issue here is that the money , which was paid as benefits

and can be seen as being a benefit payment in the line' of the statements

has actually been transferred into a savings account

whereby it 'losses' its 'label'

if you get me drift.

now it might well be that a letter to the CEO could sort it.

but I don't think at the end of the day they have actually done anything wrong.

theres no rule that now exists as far as I know

that says they cant do that even if it was from the main account either.

Many thanks, Mr P. Hopefully that will be done in the near future.

Interesting points, dx, particularly about the moving of benefits from one account to another. The reason it was moved was to keep it separate as it's her son's money.

I was looking at the Lending Code, of which NatWest is a signatory (via the Lending Standards Board) and which provides guidelines on how setting off should occur.

It states:

The bank also needs to:

• Look into whether you have, or are heading towards, financial difficulties. If you are, it should leave you with enough money to cover reasonable day-to-day living expenses and priority debts such as a mortgage, rent, council tax and food bills.
  
• Take special care when it knows your income mainly comes from state benefits, or if expenditure is needed for certain purposes such as healthcare.
  

At the very least, they appear to have failed to take 'special care' ...

Thanks, dx.

The contents of this thread may be of interest to you.

http://www.consumeractiongroup.co.uk/forum/showthread.php?260099

The second from last posting on the thread highlighted in the previous post may be the most useful bit.

yes there at all kinds of things you could try

BCOBS too.

and the Hardship statutes too.

but the issue is a large sum of money sadly means no hardship....

The second from last posting on the thread highlighted in the previous post may be the most useful bit.

sadly most of that is now obsolete.

... and the Hardship statutes too.

but the issue is a large sum of money sadly means no hardship....

Aye. Under a normal situation I'd agree. Unfortunately, this isn't her money.

but the bank don't know this and i'll bet this is difficult to prove they ever could have known

I don't think benefit identify whom they are for well bar their NHI number

and a bank wont know that's not yours?

difficult situation.

dx

I appreciate what you're saying, dx.

I do think that, with a little bit of patience and understanding from the bank, it is quite easily illustrated what the funds were, where they came from, why they were accrued, and whose they are. There should be sufficient a paper trail for that.

That doesn't mean to say that the bank would automatically have known that from the word go, but certainly that they should be able to see the situation for what it is now.

As you say, difficult.

I think it would be beneficial Rae if we could back track back to the actual debt and why Nastvest felt the need to set off from the savings account ? You state they blocked her on line access ? Do you know why ?

Are you sure there was no written notification of the "Set Off " ?

Regards

Andy

I'll answer your last question first, Andy, as that's the easiest one. She received no notification at all. It was a shock when she checked her balance and discovered what had happened.

Your first question, I may have to come back to you. She has online banking, that hasn't changed. But (I think) the card account she was paying into was closed down. I'm afraid I'd need to ask her for more precise details. From memory, I believe there was a lot of chopping and changing by the bank as to what needed to be paid and when.

I'd just like to come in and point out here that all the rules relating to set-off, relate to a bank's entitlement to use this mechanism. This means it has a power to use it but it does not have a duty to use it.

This means that there is a discretion to use it and it seems to me that there is an overriding duty (not discretion) to use the discretionary power of set-off fairly as per the BCOBS rules.

I think that the fair application of any discretion is a principle that controls pretty well every activity that the bank conducts except where it conducts it as a matter of duty.

The next thing to say is that the advice from the DWP which is contained in one of the links given above, amounts to legal advice which frankly I don't think that they are necessarily competent to give and frankly it amazes me that they were prepared to give this advice in response to an FOI request. It's a shame that we are only given the answer and not the question that was asked which produced that response.

I think what the DWP has stated may amount to a statement of their usual practice and also how they interpret a certain situation – but I think that it is significant that there is absolutely no reference to an overriding requirement of fairness or to BCOBS. I expect that the DWP doesn't even realise that BCOBS exists or how it should impact upon a bank's behaviour.

I agree with Andy that we certainly need to know what the circumstances were that the bank took steps to prevent money being paid in. Also, if it was fairly clear that the money had been paid in as a result of benefits, then even if the bank missed it, once it is drawn to their attention it seems to me within the requirements of fairness that they return it.

Of course, money for a separate person should have been kept in a separate account and this would be normal prudent behaviour and I think that this should be remedied immediately. But this doesn't relieve the bank of its overriding duty to act fairly to its customers – including giving proper notice and also making proper enquiry before exercising its entitlement to set off one account against another.

BankFodder. The question, and the full exchange, that prompted the response from DWP that you seem to find unacceptable can be accessed at:

https://www.whatdotheyknow.com/request/disability_benefits_and_bank_cha_2

The response merely reiterates the situation vis-a-vis an account holder with a bank when using the account to deal with benefit payments. It also points out that the bank is obliged by law to show a duty of care to customers when handling such accounts.

There is no doubt that the customer being discussed on this thread was experiencing severe financial difficulties of which the bank was well aware. In fact they took steps with scant regard to any other circumstances to secure their own interests.

There is also no doubt that benefit payments into the customer's account would show up as such.

The customer took steps to secure some those benefits in a separate account in order to use them for the purposes that they were intended.

It is obvious that the bank, who took sufficient interest and actions in the customers' affairs and accounts to secure its own ends and interests did absolutely nothing to exercise the duty of care that it is obliged by law to show to the customer.

BCOBS gives to the customer the right to take the bank to court if the bank is seen not to have discharged its duty of care to vulnerable customers . Surely not even notifying the customer of what they were up to, far less consulting, shows not merely a failure in its duty of care but arrogant contempt.

Thanks BF and Lapsed. I'll certainly meander through BCOBS.

At this precise moment, I can't give any further info regarding how and why the bank cut of her means of payment etc without the risk of getting some details wrong. I do recall it was both convoluted and unfair at the time. I have emailed her with a link to this thread and asked for a few comments vis-a-vis means of payment. Hopefully will be able to give you that information over the weekend.

In the meantime I've also been trying to brush up on the vulnerability side of this. It's been a few years since I last had to deal with it. I found the press release from the BBA quite interesting and give a link here for others who may wander this path.

https://www.bba.org.uk/news/press-releases/financial-services-establishes-new-gold-standard-for-customers-in-vulnerable-circumstances/#.WHAgoX1cPpt

BF and Andy, I have now got information relating to the original card account being removed. She says:

 

I had some difficulties in keeping up payments on my credit card.

 

I contacted NatWest who said not to stress about it,

they would give me time to catch up.

 

I was advised to keep paying whatever I could afford every month so there was no default on my account.

This I did, but still missed two payments in total.

 

I had spoken to several different customer service people who had said everything was fine but keep paying. Obviously, I had to call again.

 

This time I spoke to an unpleasant woman who said I needed to catch up with all payments within two days.

 

I had a little money left in my savings account and borrowed a little from a friend.

This enabled me to make the catch-up payment within the time she said.

 

The day after paying,

I checked my card balance and the account had been removed.

 

I rang customer services and was told that it was just tough and the account could not be reactivated. Even though I had brought it up to date as requested.

 

Before falling into difficulty over that one period,

I had never been late with a payment. Ever.

 

I genuinely feel they deliberately lied to me in order to gain every penny they could and that, when I spoke to customer services that last time, it was already their intention to close the account.

 

Regarding the later removal of funds from the savings account,

I received two letters from NatWest today claiming they sent notice of intent on December 5th. I believe this to be a falsehood.

 

I would have thought if you were going to send important letters - say, about cleaning out a savings account completely - you'd send them recorded or signed-for.

Would it be worth a SAR to see what has been done by the bank and when? I've no idea about those sort of things and it's been a while since I dealt with debts and the vulnerable.

Many thanks for your help thus far.

Def sar time

Some clarification on the following points may be appropriate here RaeUK:

In your first post of this thread you write:

"Without any notification, a couple of days ago, NatWest removed all the funds from her savings account and used it to pay the credit card debt. It is a four figure sum, the loss of which has been most devastating to her."

In post #20 : you write:

"I had a little money left in my savings account and borrowed a little from a friend. This enabled me to make the catch-up payment within the time she said."

Those are two contradictory statements, if we are talking of the same savings account.

"The day after paying, I checked my card balance and the account had been removed. I rang customer services and was told that it was just tough and the account could not be reactivated. Even though I had brought it up to date as requested."

I presume we are talking here of the credit card account, the one that was brought up to date with the money from the savings account and the friend.

"Regarding the later removal of funds from the savings account, I received two letters from NatWest today claiming they sent notice of intent on December 5th. I believe this to be a falsehood".

What funds are those? Or what savings account? You write earlier that the little money left in the savings account was used as the catch-up payment.

I agree that a SAR would be your next step. This would shed some light on exactly what went on.

Just to quickly clarify, Lapsed, we're talking about two different time periods. The 'small amount of savings' were the last dregs of her own money, the other sum taken was her son's benefit money which he is trying to save up to facilitate a move to more appropriate accommodation. As her savings account had become empty, I suspect it seemed a sensible idea at the time, keeping it separate from her carer's allowance.

So, same savings account - there be only the one of them - two different times. And, yes, we are talking about the credit card account being closed (my phraseology, I don't understand credit cards never having had one). The funds removed were her sons benefits, she had no money of her own in there.

Actually, thinking about it, I'm not terribly sure of the time between her paying the catch-up installment then the Bank closing the account regardless, and the removal of her son's money. It could be anywhere up to a year.

Thanks for the clarification RaeUK.

The money taken from the savings account during the second period was all benefit money which was deposited there with a view to keeping it separate and safe and the bank took it all to recoup a further lapse in credit card account repayments for the second period without notification or permission?