Bank charges and Acts of Parliament governing benefits

The two Acts of Parliament that govern how benefits are paid are the Social Security Administration Act 1992 and the Tax Credit's Act 2002. Both of these have clauses which apparently make it unlawful for banks to impose bank charges on benefits:

Social Security Administration Act 1992 Section 187:

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

© child benefit,

and every agreement to assign or charge such benefit shall be void;

45. Inalienability

(1) Every assignment of or charge on a tax credit, and every agreement to assign or charge a tax credit, is void;

Although there is some ambiguity, if you took a case to reclaim bank charges to court based on s187 of the Social Security Administration Act 1992 or s45 of the Tax Credits Act 2002 the court would almost certainly find against you.

No one is saying that the banks have the right to take money from benefits, only that you can't use the Social Security Administration Act 1992 or the Tax Credits Act 2002 to stop them. Money taken from benefits is unlawful - but unlawful by virtue of the Unfair Terms in Consumer Contract Regulations 1999 (although this is still the subject of litigation in the High Court), not under the Social Security Administration Act 1992 or Tax Credits Act 2002 (unfortunately).

What you should do if your bank is taking your benefits in charges

Unfortunately, if you are on benefits (or even on a low income), once you get into the cycle of bank charges it is difficult to get out. A lot of people find that a large proprtion of their benefit is taken by the bank as soon as it is paid in every week or every fortnight.

You need to put things in place so that at least you stop this happening.

This is what you need to do:

1. Open a basic account at a differrent bank or at the Post Office and arrange for your benefits to be paid there instead of your existing account. This will at least mean you have access to all your benefits from that point onwards.

2. Start a claim for the repayment of bank charges in the 'normal' way. You will not get the charges repaid until after the end of the current High Court case but you need to get your claim regitered as soon as possible.

What to do if your bank takes you to court

If you bank takes you to court because you are not paying back an overdraft and there are significant bank charges in what you 'owe' then you should countercalim for the charges as part of your defence. Curent experience is that you can get that part of the bank's claim stayed until the end of the OFT case. Start your own thread in your bank's forum and CAG users will help you through.

Steven If the Social security act not applicable to bank charges can you tell me how to claim back the charges my bank is charging me. I get JSA and DLA but am stuck in the loop that when the bnank applies the charges and interest it takes me over my limit again.

I bank with HSBC

Hi Gwarp

Welcome to CAG.

The charges are unlawful, just not under these 2 Acts. You should start a claim using the same method that everyone on CAG uses. It will take a little time because of the OFT case which ended on Friday but the expectation is that you will get them back.

Take some time to read various threads on the HSBC forum and read the FAQs too. Finally, start your own thread on the HSBC forum and there will be plenty of people to help you.

If your benefit keeps getting swallowed by charges you may want to look at opening another account at another bank to pay your benefit into. If you can't pass a credit check to get a full account, the following banks offer debit cards with their basic accounts and so give near full account facilities.

Natwest (solo)

Halifax (electron)

RBS (solo)

Lloyds TSB (Visa Debit/Delta)

Co-op (electron)

Yorkshire/Clydesdale (Maestro)

Probably one or two others I've missed

Good advice Dave

hi all

i have read this with interest and yes i have printed the whole lot of the acts which has been mentioned below laughs every page i have got lol

but i or i should say it has left me wondering as to why they have dss acts when yet the one we are all talking about hasnt been passed by the high courts etc cos i have said i would take it to the high court and i dont think it is fair that when we get letters and they state there acts/rights/etc

they are no good pointless as they havent been threw the courts

i even went to a welfare officer and told him everything even he said the same as me and said he agreed with me as they are not legal

its all wront isnt it

hugs

abg

I was hoping to get the £38.00 back they took out of my child maintenance back, oh well back to the long way round I suppose, but I have only one charge for natwest but if you don't ask you don't get

You can always try going to the branch and take a copy of the relevant sections in both acts, and get a little upset. It worked for me with RBS when they took charge from my sons DLA, they refunded the charge and arranged a small OD (£50 ) for him so that he would not get caught again. I think it proves that bank mangers are not as clever as they think they are. LOL

I've several cases on here where a good (loud) sob in the bank works wonders

Steven If the Social security act not applicable to bank charges can you tell me how to claim back the charges my bank is charging me. I get JSA and DLA but am stuck in the loop that when the bnank applies the charges and interest it takes me over my limit again.

I bank with HSBC

Hi Gwarpt1,

I only read down the first few replies, so someone might have already told you this.

I have been charged a few times when I've had no money in my account on direct debt day, I bank with the Natwest and everytime it has happened, (normally over a weekend), ive popped into the bank and they have given me a refund there and then (I get income support and DLA), they have always been really good about things, but of course they give me a telling off.

not sure how this helps, unless you wanna change banks...lol

Hi unpleasant and welcome to CAG

I think you have been lucky. Usual experience with NatWest is that they pay you back the first time but dig their heels in after that

I've several cases on here where a good (loud) sob in the bank works wonders

Belive me ive tried that

You could always ask the Benefits agency to pay your benefit to the Post Office, but this means that you can only withdraw money from them and not cash points.

If you are in overdraft with your bank, and in the Tax Credit system, they are obliged to advise that the Post Office Card is an option. The Tax Credit system fully understands issues of debt, and they also fully understand their legal obligations to ensure that those entitled to Tax Credits actually receive them.

My advice to anyone in debt with the bank is to call the Tax Credits hotline, and ask for advice regarding the Post Office option to have their Tax Credits paid into...

 

HOWEVER by 'charges' they DO NOT MEAN BANK CHARGES. What is meant is things like attachment of earnings and charging orders.

 

Steven could you explain what attachment of earnings and charging orders are please.

Sally x

Attachment of earnings is an order of a court that money is taken from income at source (like income tax).

A charging order is a court order against a property. It is noted on the land regisrty entry so that, when the property is sold, money goes to pay off the debt first. (Which means that what I wrote in the quote you referenced is a little misleading )

xxxxxxxxxxxx

Thanks

Can,t believe it phoned the bank up and used the rulings at the top and they backed down and refunded the charges. Although they did say it was a one off

What about low income cases, too high for working tax credit, help with rent etc, but outgoings level with incoming?

Is there anything about this? Can they be an 'extreme hardship case'?

Sally xx

halifax wont, they just say the law doesnt apply to them.they have taken 100% of my neighbours benefits leaving her no money to feed her two children or put electricity or gas on her meters.

ive brought her food and gas and electricity, and now have any future benefits paid into a different account.

they have also put charges onto her account making her over her overdraft amount, then charged her for going over her overdraft.

war has just started.

k65

Benfits are no different from any other income whan it comes to bank charges. Despite what keeps on cropping up on these threads, the two Acts that govern benefits (Social Security Administration Act 1992 and the Tax Credits Act 2002) do not say that bank charges may not be taken from benfits.

The 'charges' referred to in those Acts are attachments to pay off debts.

Once bank charges are once and for all declared unlawful, then everyone will get them back - benefit claimants and peolpe with wages.

Not sure if steven would mind me mentioning this on his thread.

I have made a claim for compensation on my bank charges and the claim amount is a 6 figure amount.

I have got the county court to accept my claim and they are willing to hear it. I over heard one of the ladys in the branch saying my advice would be to settle his claim before it got to court. One of them said do you realise how much it is the other said yes. But we would recommend that the claim is settled.

The branch stamped the claim form and the particulars of claim after they phoned head office. I am looking to see if we can get some sort of info from them As I am getting on quite well with one of the lasses inside of the branch.

All bottles down to when they will settle.

I have recived the Notice of Issue N205A form and it says the form will have been deemed served on the 8th of December. So they have until the 22nd.

Ive my fingers crossed and a donation waiting when they settle.

Good luck Josh - if it gets to court it will most likely get stayed

Hi steven.

It is now going through the court system.

No reply from the banks yet.

I have aproached them (lloyds) with info that clearly states that Northern Rock staff used to apply a penalty charging structure to account that are not penalty free.

This is exact wording form the manual I was given when I worked for there headquarters..

The idea was to rattle the cages and the lady i spoke to said this info was way over her head. I showed her some of the case work I have got off cag and she said she didnt understand but she had a smile on her face and said the manager is off on a training course.

The idea would be to comvince a a judge if they did not show up but I guess i can use this info on my account they closed when I left as a member of staff at Northern Rock.

I no its a LLoyds case but we are compareing info from other banks which is what I have picked up on here when we go to court right.

When Lloyds buy NR they buy all the contracts as they are with all the liabilities associated with them. THere is a process called 'due dilligence' they are supposed to go through which identifies all of this but I bet they haven't gone into much detail.