HSBC " informal overdraft"

[casbah]

Hi Everyone

 

What can I do about an overdraft that is made up entirely of bank charges and interest?

Had a loan and joint current account ( with my son) with HSBC, current account was put into dispute because of previous bank charges, loan account was my Son's and I believed he too had challenged this as it was a 'managed' loan. Due to personal circumstances he transfered the monthly repayment direct debit onto the joint account, believing the loan account was indispute, hsbc wrote and said they were waiting for outcome of court case regarding bank charges, but for 15 months they called for DD on loan, (they made the payment then rejected it) hitting me with a £25 + interest bank charge, so I have the loan account outstanding but the joint account was not used since I requested bank charge refunds in June 07, yet with the "unpaid direct debit" charges, now stands at nearly £1,000 and they want it.

Is there anything I can do, I accept the loan account, as I had the money and should (and will) pay it back.

[the_shadow]

Hmm think your son should have stopped the DD if he felt the loan was "in dispute" in any shape or form.

 

As the test case went sour I believe they only have to show that the terms and conditions state the charges will be applied to prove the charges are correct. You say the balance is £1000 and this is an informal overdraft... have they increased the level of overdraft to allow them to add charges?

 

S.

[casbah]

Hi Shadow

 

No they never gave us an overdraft, the nearest I got was a letter dated July 07 whereby they say

" You will realise that no formal limit has been agreed between us"

They then go on to say the interest rate.

I'd written the month, (15th June 07), before requesting the refund of the bank charges.

 

Cas

[the_shadow]

Hi Shadow

 

No they never gave us an overdraft, the nearest I got was a letter dated July 07 whereby they say

" You will realise that no formal limit has been agreed between us"

They then go on to say the interest rate.

I'd written the month, (15th June 07), before requesting the refund of the bank charges.

 

Cas

 

Hmm interesting.. basically the bank has just created its own money for no service then? Unfortunately the informal overdraft is probably in the terms and conditions and using the account equals your agreement to them. Have to say I'm surprised they let it get so much without putting a total block on the account.. £1000 in just charges seems excessive in the extreme.

 

Might be worth just complaining to the bank that the overdraft was never used, it was made up totally of charges therefore you see no reason why you should pay for the banks own method of money creation... then at least get the final response from them and take them to the FOS, it'll cost HSBC £450 for the fos to investigate and worth a punt in my eyes.

 

S.

[casbah]

Hi Shadow

That makes interesting reading,they had passed it to a dca (their inhouse dca) so spitting my dummy out I wrote and told them account in dispute, they replied that they have put it on hold and would I let them know the details of my dispute, so am now trying to figure out how to word the letter.

I like what you had to say and will mention that FOS route in my letter, but of course I won't let on I know the fee they would be charged.

I'm not asking for this money to be "returned" it wasn't mine but nor did I ever use it, its just the fact I feel its constructive debt.

Best wishes

Cas

[the_shadow]

Absolutely agree, I've a niggle in my mind that they are not allowed to "create" an informal overdraft to cover their own costs and that it has to be a formal agreed overdraft to allow them to do this, but its only a niggle and I've nothing to back it up. I would suggest looking through the new Lending Code which all banks have signed up to and see whats in there to use against them... I know there is a section on overdrafts in there.

 

S.

[casbah]

Hi Shadow

 

I will check out the new lending code.

The inhouse dca has given me food for thought,don't want to go into too much detail yet, but once its resolved will let you know how it goes

 

Best wishes

cas