Sheriff puts Bank of Scotland to proof on bank charges

[kennyh]

Booky, Bankfodder, Caro or Martin please.....

ps Thanks elsinor

Edited July 22, 2010 by kennyh
forgot the ps

[Mightyacorn]

MightyAcorn thanks for the link!!!!

 

m2ae

 

No problem.

 

Come on moderators/administrators/site team, either a nod or a shake of the head will suffice regarding FUNDRAISING

[caro]

It's a tough one.

 

The thing about this site is that there are an awful lot of people who use CAG, but the nature of the site means that most are broke, so raising money is very difficult, as we know from the pleas for donations to keep the site going.

 

In case you haven't seen it already, this is what BankFodder has said about historical charges.

 

My own view the moment is that claims which are brought specifically on the issue of the fairness of charges have no chance of success in the courts.

Examples of specific unfair treatment might include,

 

 

• incorrect operation of direct debit instructions
  
• inaccurate recording of customer details onto customer files
  
• peremptory closure of customer accounts
  
• peremptory withdrawal of overdraft facilities
  
• unreasonable demands for repayment of overdrafts
  
• failure to discuss account problems or overdraft problems in a sympathetic and positive way
  
• failure to communicate correctly or adequately with the customer
  
• unreasonably prioritising the bank's own interests over those of the customer when dealing with customer problems
  
• not giving due regard to customer interests
  
• evidence of deceptive practice by your bank
  

Don't forget, that you will have to have evidence of the unfair treatment and you will aslo have to show that the unfair treatment resulted in the loss which you are claiming for.

 

This is not an exhaustive list and there are thousands of these kinds of examples which are contained in real stories on the Consumer Action Group website -- and many other examples which are not contained in this list.

 

The point is that it is most unlikely that there is any basis for a mass refund of historical charges.

 

Full article here

The Consumer Forums - The Bank Charges decision - where to now.

 

I understand that other sites are of the same opinion.

[008139]

Thanks Caro

Edited July 23, 2010 by 008139

[Bookworm]

Booky, Bankfodder, Caro or Martin please.....

ps Thanks elsinor

Nowt to do with me, Kenny!

[Bookworm]

FWIW, these:

 

- unreasonably prioritising the bank's own interests over those of the customer when dealing with customer problems

- not giving due regard to customer interests

are IMO the most important points.

 

I personally think that anyone on Income Support who has had bank charges have a strong case by default so to speak.

 

Income Support is, let's remind ourselves, the minimum the laws says you need to live on, meant, after your rent and council tax have been meant by other benefits, that it should leave you enough to pay for gas, electricity, water and food, and other household expenses, clothing, shoes etc. That's it.

They key words here are "the law says". IMO, a bank taking your benefit in charges (and let's not forget that just 2 charges per week can take away your total IS AND leave you owing more) is automatically breaking the law, and falling foul of the 2 highlighted points above.

[008139]

I don't agree that '' just 2 charges per week can take away your total IS AND leave you owing more) is automatically breaking the law ''

 

It may break current lending code guidance but there is no law against bank charges being taken from an individuals account, as far as I am aware.

 

12. It should be noted that benefits and pensions are normally protected from any form of assignment. The legislation is designed to protect the recipient from themselves and/or unscrupulous third parties, so as to ensure a minimum income for the intended recipient to meet their basic needs. However, once such benefits are paid into a current account, they no longer benefit from such statutory protection, and the banks are able to access them without any concern for the basic needs of the intended recipient.

 

It is basically, in the eyes of the law as it stands, the individuals choice to incur and pay bank charges. It is, I believe, an area being looked at within the LSB and OFT working groups on the future of banking and the opt out of informal overdrafts that we will see reported on, and hopefully implemented, in September.

 

However terms which force consumers into a cycle of debt may be considered unfair under the UTCCR, as well as creating an unfair relationship under the CCA.

 

Individuals can also use their first right of appropriation to set aside money for essential living expenses if they do find they have incurred charges. Whether the banks accept the request or not is ridiculously varied from bank to bank and case to case and the area needs more work.

 

Just my opinion.

[Bookworm]

Ah well, that is where Anthony Scrivener and I disagree.

 

Where does it say in law that "once such benefits are paid into a current account, they no longer benefit from such statutory protection"? Indeed, how is this possible when benefits MUST be paid into a bank account, thereby making the intended recipient the last person to access those benefits? I'd appreciate a link to the piece of legislation/precedent on which Mr Scrivener bases his opinion.

 

Whilst it could be argued that when you went to the PO and cashed your Giro and then put the money in the bank, you were at that point entrusting the bank with your money to do as they wished, there is no way this argument can stand at a time where that method of payment is no longer an option. Even if you go to the bank on the day your benefits arrive and want to withdraw it all, you may not be allowed to if there are charges pending.

 

As for the right of appropriation, the argument was first used by CAG to help people and as you correctly say has been by and large ignored by most banks.

[008139]

Indeed, how is this possible when benefits MUST be paid into a bank account

I receive my IS and CTC into a Post Office Card account, however I do agree that it has become very difficult to have benefits paid any other way than into a bank account, and it has also become the most economical way to pay bills, if you exclude charges.

 

Housing Benefit cannot be paid into the Post Office Account - however in certain cases it can be paid direct to your landlord.

 

Added:

Where does it say in law that "once such benefits are paid into a current account, they no longer benefit from such statutory protection"? Indeed, how is this possible when benefits MUST be paid into a bank account

in relation to social security benefit paid into bank accounts, while most social security benefits are exempt from arrestment, in terms of section 187 of the Social Security Administration Act 1992, that statutory protection is lost once benefit has been paid into a bank account.

from http://www.scotland.gov.uk/consultations/justice/civob-00.asp Edited July 23, 2010 by 008139
added a reference

[Bookworm]

Really? You must be the 1st person who's said that to me in YEARS, I kid you not! I didn't even think it was still possible!

[008139]

How benefits and pensions are paid : Directgov - Money, tax and benefits

Customers can also use a Post Office card account (POca). This is a simple account specifically designed for the payment of benefits and pensions from government departments. From 23rd March 2010, if you are a Post Office card account holder, you will be able to access your account via Post Office® branded cash machines. This is in addition to using the counter service.

I think there are around 4.3 million POCA's in use (that's a 2006 figure I believe) - this is reducing though with the governments financial ''inclusion'' work and the jobcentres targetted (source Hansard Feb 2nd 2010) marketing of bank accounts over POCA. POCA costs the government 50p to make a payment into whereas Bank Accounts cost the government 1p (source Hansard Feb21st? 2010) Edited July 23, 2010 by 008139

[008139]

First Right of Appropriation / Benefits and Bank Charges

Your Reference:

Our Ref: TO/09/4744

Date: 18 June 2009

 

 

Dear 008139 ,

 

Thank you for your e-mail of 25 May to Kitty Ussher regarding the first right of appropriation.

 

I am sorry that Ministers has not been able to reply to you personally but I hope you can appreciate that they receive a very large volume of correspondence and it is not possible for them to respond to each letter individually. Your letter has been passed me for reply.

 

Decisions about charges for overdrafts, loan repayments or other fees for banking services are commercial matters for the banks. The Department makes payments into the account nominated by the customer. Once a benefit payment is credited to the customer’s account it merges with the existing account balance, whether this is overdrawn or in credit and there is no ring-fencing of monies paid in respect of benefit entitlement. If the account is overdrawn, the bank is fully within its rights to offset the benefit payment against the overdraft.

 

However, under the terms set out in the Banking Code, banks are obliged to deal with all cases of financial difficulty sympathetically and positively. Customers who find themselves in difficulty because of bank charges should contact their account provider about their needs in order to come to an arrangement to deal with their debt and safeguard their future benefit payments.

 

Yours sincerely

 

 

 

Miss C Armstrong

Ministerial Correspondence Unit

 

Royal Bank of Scotland's view of First Right of Appropriation

 

Thank you for your further e-mail of 24 March and I will look to answer the further points you have raised.

 

My earlier e-mail did not state that the first right of appropriation can be used only when the account is not overdrawn. It can be used regardless of state of the account - the only criteria are that the debits to which the appropriated fund is to be applied must be identified and the appropriated fund must be in the account no later than when the debits are presented for payment. Our experience is consistent with your statement that this right is mainly used when the customer is experiencing financial difficulties.

 

As regards housing benefit/LHA the appropriation can only work if the rent is debited by direct debit or standing order to the account.

 

You mention the bank 'encashing benefits payments' - we do not cash these cheques or similar orders as they are invariably crossed meaning they must be paid into a bank account. When paying a benefit payment into the bank account the first right of appropriation can be exercised against identified future debits.

 

As to there being no general discretion to waive bank charges, the terms and conditions of an account do state that charges will be levied if sufficient funds are not available to meet a payment. Having said that, my earlier e-mail did say that our policies, developed with the Banking Code in mind, do look to provide support to our customers. Each case will be looked at sympathetically and individual circumstances taken into account. Consideration will be given to waiving fees to help the customer but we do need customers to be open and honest with us so that we have as full a picture as possible of their circumstances.

 

Yours sincerely

 

 

 

Mike Guest

Manager, Group Customer Relations

 

Off topic a little now for this thread, my apologies.

[Bookworm]

Very useful, thank you. I stand corrected on that point. Edit: That was referring to your previous post, our posts crossed.

 

I still think that my first point is a valid one:

 

Where does it say in law that "once such benefits are paid into a current account, they no longer benefit from such statutory protection"?

 

I can not think of a single argument that would support this particular point of view. The law trumps over any T&Cs, and if the LAW says you need x amount minimum to live on, then that's what it is is what it is. I do not see how anyone could argue that putting your benefit money in a bank account could strip you out of that right. It's like saying that because you put your money in a bank account, you give up your right to survival, and I can't see how that could ever be a fair term!

 

Well, as I said, that's *my* opinion, everybody, feel free to discuss, spit out, build on, whatever helps, I'm not proud.

[Bookworm]

Off topic a little now for this thread, my apologies.

[/font]

Still relevant to the bank charges and arguments. ;-)

 

I think the problem with the quoted submissions here is that the 1st one is no more than a fob-off from a civil servant who hasn't got necessarily a grasp on the law, best summed-up as "nothing to do with us, guv, speak to the bank", whilst the 2nd one from the bank, not surprisingly, it's just another fob-off saying "feck off peasant, learn your place" (I paraphrase! )

 

I dearly would like to know what led Mr Scrivener to write such a sentence in his opinion, the more I read it, the more enormously astonishing I find it that he should write such a thing without supporting it with at least SOME caselaw to back it up!

[008139]

I don't think it is fair and it is an argument to use under the UTCCR as I stated earlier. There is a case Woods v RBS a fair while back which is agreeable to your view slightly, and Mike Dailly (in 2003) agreed, although there is also this [ARCHIVED CONTENT] Sections187and45 - epetition response | Number10.gov.uk more recently.

 

You need X amount to live on, however by choice (when it comes down to it it IS a choice, however necessary it is) you have chosen to have your money paid into an account (through ease/lack of knowledge/publicity of other methods) and chosen to incur bank charges (whether necessity forced an overdrawn situation or not). I chose to have a POCA, therefore the only person who can use my money is me, unless it is taken at source for a valid reason (benefit sanction/social fund repayment etc) that is not against the SSA 1987.

 

Banks should be treated more as Utilities as they have become an almost essential part of life in this country.

 

The unfairness is the way the banks treat you in financial hardship and force you into cycle of debt, rather than the fact that some or all of the income in the bank account comes from benefits.

Edited July 23, 2010 by 008139

[008139]

(Crossed posts before so in response to post #689)

 

I agree with your view of the ''submissions'' I posted above, however there isn't (so far as I am aware) any statute stating everything that benefits can be used to pay, which would be a little long and complicated, only statute stating what they can't be used for. Bank charges is not one of them. The law is once they are yours (ie paid into the place you wish by the method you wish - however difficult it is to have them paid elsewhere) they can be used as you wish.

 

It does need sorting legislatively, although I can see that type of legislation will be fraught with difficulties. People should have accounts which are JUST for benefit payments if they must have a bank account. Then, I believe, they have more of an argument along the lines you have stated.

 

Maybe have a word with Vince Again, just my opinion.

Edited July 23, 2010 by 008139

[Bookworm]

Interesting links...

 

I note the govt response to the petition:

 

"The purpose of the Social Security Administration Act 1992 Section 187 and section 45 of the Tax Credits Act 2002 is to prevent people’s benefit money being at risk by it being assigned over to a third party in settlement of a debt. " (the rest is just political guff to soothe the masses)

 

It seems to me that the charges in fact are or create a debt (see what happens if you don't pay them/your overdraft!) and that the bank is in fact a 3rd party, so the govt response is out of sync anyway.

 

My head hurts. I'm going to need some time to ponder all this. I think there is a crack in the wall at the bank account part, where the "lack of knowledge" part stands. One thing which came across loud and clear in OFT reports etc... was the fact that most people had little knowledge about bank accounts and what was available to them, so there may be some mileage in that between the govt and the banks, it's little surprise that people wouldn't know of PO accounts.

 

Sorry, thinking aloud so to speak, there is something there niggling at me, I'll work it out and report once it comes to me. Very useful info, thanks again.

[008139]

I really hope you find the niggle as it would be fantastic to have this resolved as the issue has been simmering for a long time, and given me a fair few headaches of my own.

 

Nice to chat with you Bookworm.

[GuidoT]

Ah well, that is where Anthony Scrivener and I disagree.

 

Where does it say in law that "once such benefits are paid into a current account, they no longer benefit from such statutory protection"? Indeed, how is this possible when benefits MUST be paid into a bank account, thereby making the intended recipient the last person to access those benefits? I'd appreciate a link to the piece of legislation/precedent on which Mr Scrivener bases his opinion.

 

Whilst it could be argued that when you went to the PO and cashed your Giro and then put the money in the bank, you were at that point entrusting the bank with your money to do as they wished, there is no way this argument can stand at a time where that method of payment is no longer an option. Even if you go to the bank on the day your benefits arrive and want to withdraw it all, you may not be allowed to if there are charges pending.

 

As for the right of appropriation, the argument was first used by CAG to help people and as you correctly say has been by and large ignored by most banks.

 

Old Bookie will argue with anyone.

 

Do not start it is not an argument argument (it is a debate).

Edited July 23, 2010 by GuidoT

[elsinore]

 

Nice to chat with you Bookworm.

 

 

..and it makes very interesting reading too! Thanks to both of you.

 

Els

[IainHL]

FWIW, these:

- unreasonably prioritising the bank's own interests over those of the customer when dealing with customer problems

- not giving due regard to customer interests

are IMO the most important points.

This is my feeling too. Particularly the first aspect. It occurred to me as I was writing my letters to the banks earlier this year that they had given themselves preferred creditor status by default. Unlike the rest of my creditors who sent me a bill and I decided when I paid it, if I could, the bank just took the money from my account. I feel a very strong case for an unfair relationship could be made from this fact alone.

 

(And as an aside, noting the subsequent slant of Bookie's post and the subsequent discussion, this is nothing to do with benefits, but a person with ordinary wages.)

[johnnymitch]

by 008139 :

Originally Posted by 008139

Off topic a little now for this thread, my apologies.

I'm inclined to agree with you 008139 ...... this thread is becoming bogged down with topics ! difficult to see the wood for the trees ...... but no need to apologise .... you're not the only one ....

[kennyh]

I'm inclined to agree with you 008139 ...... this thread is becoming bogged down with topics ! difficult to see the wood for the trees .....

Which was why I requested intervention from Booky et al - no other reason; just to get back to the core subject.

Yes it IS all good stuff but lets have it in a dedicated thread (or two).

Edited July 23, 2010 by kennyh
crap spelling AGAIN

[jdes26]

What services will the banks provide?

The banks vary in the services they provide. All banks provide a cash point card to allow you to obtain

cash from machines 24 hours a

Day. HSBC and Lloyds TSB will provide a cheque book to all students and Barclays will provide one on

request for the Student

Solutions account; this can be helpful for paying bills. Nat West will not provide a cheque book. Debit

cards can also be used for shopping and to pay bills and these are provided by all the banks.

Many banks also offer online and telephone banking for which there is no charge; you may like to discuss

the security arrangements with the bank if you use these services. Most banks do not make a charge for

depositing money or making payments (cheques, direct debits

etc). However, if your account goes overdrawn or you make a payment when there is not enough money in

your account you will be charged by the bank. Some banks also offer incentives for opening accounts such

as a Young Person’s railcard, or vouchers for books.

Overdraft

A facility allowing you to spend more money from your account than you have in it. The bank will usually

charge you interest if this happens, and sometimes-other fees as well. If you go over you agreed limit, there

are usually “ harsh financial penalties.”

NOTE DID BANK SAY THERE CHARGES WASNT PENALTIES???????????????????

[Aequitas]

It seems to me that the charges in fact are or create a debt (see what happens if you don't pay them/your overdraft!) and that the bank is in fact a 3rd party, so the govt response is out of sync anyway.

 

The wording of the two Acts is similar: here is the relevant wording from the Tax Credits Act:

 

Every assignment of or charge on a tax credit, and every agreement to assign or charge a tax credit, is void.

 

What that effectively does is to stop someone from disposing of their benefit before they get it.

 

By making arrangements for your benefits to be paid to a specific bank you are nether assigning nor charging the benefit to the bank any more than you assign or charge your salary to the bank if you arrange for it to be paid into your bank account.

 

If you owe money to the bank the mere fact that you owe it does not create an assignment or charge on any asset.

 

I cannot see that either Anthony Scrivener or the government spokesman is wrong.