Your bank is taking your benefits in charges

[steven4064]

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;

Tax Credits Act 2002 Section 45:

45. Inalienability

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

HOWEVER by 'charges' they DO NOT MEAN BANK CHARGES. What is meant is things like attachment of earnings, which is a court order allowing a creditor to take money from income at source (like income tax).

 

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.

 

Edited August 19, 2008 by steven4064
Links to Acts inserted, clarification of 'charges', advice added

[steven4064]

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.

[steven4064]

Good advice Dave

[steven4064]

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

[steven4064]

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

[steven4064]

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 )

[steven4064]

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.

[steven4064]

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

[steven4064]

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.

[steven4064]

Hi seeker

 

You need to pay off the council tax bill before everything else as it is a priority debt (MBNA can go ....)

 

You need some proper advice on managing these debts - if you have not done so, go to CAB or contact National Debt Line (National Debtline – Free, Confidential Debt Advice – Call 0808 808 4000, phone 0808 808 4000) ASAP.

 

The income and expenditure statement you have already is a good start. You then need to budget to pay off priority debts first. THese are

 

Rent/mortgage

secured loans

Council Tax

electricity/gas (not water)

fines (if any - may not apply but others may find this useful)

maintenance arrears (as above)

hire purchase debts

 

in that order.

 

Anything left over can bve offered to non-priority creditors at £1 a month. THis includes MBNA however loudly they shout. Do not speak to them on the phone but keep detailed records of when they call. THey are particularly nasty to deal with. THe reason they harass and bully you is just because they are non-priority creditors - they hope to bully you into paying them money that would otherwise be used to feed your family or pay priority debts.

[steven4064]

i know that the banks cant take benefit any forms of benefit to pay for charges or when an account is overdrawn, they have a legal right to pay the money back to the customer, in fact if you go into the jobcentre there is a letter they can send to the bank requesting this. however the jobcentre do offer post office accounts which may be a good route for now - tey are free.

 

If this is the case that we cant claim back our charges under the social security act 1992, then shouldnt the template letter stick for claiming bank charges back when on benefits in the template letter section be removed?

 

Both - please see post #21