Charges taken from Benefit payment

[andydd]

Whats the situation with this, I have £40 of charges from Lloyds, however the only income I have is the weekly £64 JSA paid in, can the charges be taken out of this ?

 

Andy

[MIKEY DABODEE]

I thought it was illegal to take bank charges out of any benefit.

Can you ask to be paid by giro untill you sort out another account

What does the bank think you are going to live on ?

[antone]

I've read some discussion on whether banks can legally take charges from benefits, and I really don't know what the answer is.

 

You could call your benefit delivery centre (BDC, the number will be on any letter you've received about your JSA) and ask if you can open a Post Office Card Account. That would allow you to get your benefits in cash, without any hassles from the bank or any problems with giros being delayed because of postal strikes etc.

 

As Mikey said, you could ask to be paid by giro until you get something else sorted out. BDC staff will generally be sympathetic to such requests.

[andydd]

Welol..I phoned bank and complained and they agreed to waive them this time so it sorted for now, although I thought there was a definitive rule or law about not taking charges from benefits but it seems unclear.

 

Andy

[MIKEY DABODEE]

there is an Act of Parliament that Under section 187 of the Social Security Administration Act 1992: apparently, this makes it a criminal offence for banks to take bank charges out of the accounts of people who are entirely dependent on social security benefits.

 

so if your bank has taken charges out of your Benefits eg:

 

if you are in receipt of any of the following benefits.

Income Support

ESA

Tax Credits

Child Benefit

Job seekers allowance

Incapacity benefit

Disability living allowance

Attendance Allowance

CSA payments

Other DWP payments.

 

which means:

That the bank can not apply any charges to money received as benefit, and any such charges are unlawful and therefore disallowed.

Edited November 8, 2009 by MIKEY DABODEE

[James 01]

The charges in the legislation don't refer to bank charges so the banks can charge for being overdrawn.

[andydd]

187 Certain benefit to be inalienable

(1) Subject to the provisions of this Act, every assignment of or charge on—

(a) benefit as defined in section 122 of the Contributions and Benefits Act;

(b) any income-related benefit; or

© 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.

(2) In the application of subsection (1) above to Scotland—

(a) the reference to assignment of benefit shall be read as a reference to assignation, “assign” being construed accordingly;

(b) the reference to a beneficiary’s bankruptcy shall be read as a reference to the sequestration of his estate or the appointment on his estate of a judicial factor under section 41 of the [1980 c. 46.] Solicitors (Scotland) Act 1980.

(3) In calculating for the purposes of section 5 of the [1869 c. 62.] Debtors Act 1869 or section 4 of the [1882 c. 42.] Civil Imprisonment (Scotland) Act 1882 the means of any beneficiary, no account shall be taken of any increase of disablement benefit in respect of a child or of industrial death benefit.

Anyone care to translate !?

 

Andy

[MIKEY DABODEE]

Oh!! you learn something every day

[maroondevo52]

Hi, andydd.

 

This has been looked at many times, and theres no real clarity.

Basically its hit and miss- but nothing to lose by trying.

Often the banks have observed it simply because they are unsure if there is a legal requirement.

 

Whilst a customer can try this, there are 2 possible problems;

 

1) Ideally, they should give the bank 7 days notice before the first Housing Benefit payment is due to be credited to their account. Otherwise the bank could disregard the request.

 

2) They may just disregard it anyway and swallow up the money.

 

Sorry I can't really give you a better response.

 

Regards.

 

Scott.

[ManOfHarlech]

Hello first time poster here,

 

It is my understanding that bank charges cannot be levied against monies deposited into a bank for Income based IS, ESA or JSA. Child Benefit and Child Tax Credits are also protected.

 

I'm not 100% sure but charges might be deducted from deposits related to other benefits such as Contribution based ESA/JSA IB and DLA which are not means tested or child protected benefits.

[James 01]

I think the law prevents any charges on benefits / tax credits before you receive them. Once they are paid to a bank account the bank has the right to impose bank charges on an overdrawn balance due to the terms and conditions.

[MIKEY DABODEE]

so if your benefit is paid into an account that already is overdrawn due to charges already incurred, then the bank can take your benefit and leave you with nothing to live on, unfortunately I have seen that.

 

But if benefit is paid into an account that has charges due to be imposed by the bank, they cant take the charges

ie by the benefit going into the account the bank has now got the funds to take the pending bank charges out

[andydd]

Hi, andydd.

 

This has been looked at many times, and theres no real clarity.

Basically its hit and miss- but nothing to lose by trying.

Often the banks have observed it simply because they are unsure if there is a legal requirement.

 

Whilst a customer can try this, there are 2 possible problems;

 

1) Ideally, they should give the bank 7 days notice before the first Housing Benefit payment is due to be credited to their account. Otherwise the bank could disregard the request.

 

2) They may just disregard it anyway and swallow up the money.

 

Sorry I can't really give you a better response.

 

Regards.

 

Scott.

 

I thought so, anyway..I phoned and grovelled and they've waived the charges. I didnt mention that they paid me back £2400 in charges (I got in there before the current court case )..hee

 

Andy

[maroondevo52]

Good stuff, andy glad you got it sorted.

[ManOfHarlech]

As a matter of interest I telephoned the Financial Service Ombudsman to ask their opinion.

 

The answer I received was:

"If in the terms and conditions of your bank account allow the bank to impose bank charges for unauthorised overdrafts then yes a bank can impose a charge.

However, if you are suffering from financial hardship (being in receipt of Income Based Benefit would qualify as 'hardship') then a bank is prevented by the 'Banking Code' from adding to your financial hardship by imposing bank charges.

In the event of charges being imposed the customer should at first complain to the bank along with evidence of hardship (e.g. a letter confirming receipt of Income Support) and the bank should waive the charge, if they don't then refer the matter to FSO."

[andydd]

As a matter of interest I telephoned the Financial Service Ombudsman to ask their opinion.

 

The answer I received was:

"If in the terms and conditions of your bank account allow the bank to impose bank charges for unauthorised overdrafts then yes a bank can impose a charge.

However, if you are suffering from financial hardship (being in receipt of Income Based Benefit would qualify as 'hardship') then a bank is prevented by the 'Banking Code' from adding to your financial hardship by imposing bank charges.

In the event of charges being imposed the customer should at first complain to the bank along with evidence of hardship (e.g. a letter confirming receipt of Income Support) and the bank should waive the charge, if they don't then refer the matter to FSO."

 

interesting !

[Bookworm]

It's worrying that the FOS should say that, as the Banking Code is now defunct.

 

http://www.consumeractiongroup.co.uk/forum/general/229426-bye-bye-banking-code.html

[ManOfHarlech]

It's worrying that the FOS should say that, as the Banking Code is now defunct.

 

http://www.consumeractiongroup.co.uk/forum/general/229426-bye-bye-banking-code.html

 

Actually they mentioned Banking Regulations which I interpreted as the banking code.

 

Any way thanks for clearing that up.