Nationwide Offseet Loan From Current Account - Now In OD!

[Stagparty]

Hi all

 

I've just opened a bank statement from Nationwide and had areally nasty shock.

 

I have a current account with Nationwide and an "e-loan" with them. I think the e-loan had a seperate agreement and basically gave you a credit limit and you could spend up to that, or not as you wished. The only restriction with the e-loan is that funds had to be transferred through your current account. So if you wanted to pay a bill for say £1000 you firstly transferred the money into your current account and then paid it out of there.

 

A few months ago I got into difficulties and wrote to all creditores etc.

Again a few months ago (but after I'd written) I got a call from Nationwide about the arrears on the e-loan account. I explained I'd written etc and wrote again with copy correspondence. During the conversation the girl said she could "merge" the overdraft and e-loan into one account if I wanted. I said definately NOT as, apart from any other reasons, the e-loan was at a much lower interest rate than the overdraft.

 

Anyway I heard no more and continued making token payments as I'd been advised.

 

This week I opened my current account statement and found at the end of August there was a payment out of my Current Account which was a transfer to another account - I think it's to my eloan account and I think that would probably clear the eloan.

 

Now this really shocked me and I need some advice as to what to do - From my point of view,

 

1. The e-loan is at a lower rate than the overdraft.

 

2. The eloan (I think) is covered by a formal loan agreement which would be regulated by the CCA and hence I'd get the protection of the Act whereby I don't think an overdraft is.

 

3. An unauthorised transaction has been made from my account.

 

My guy reaction is to write to Nationwide and query the transfer out, to write seperately and CCA them for the E-Loan agreement and to stop any potential skulduggery to write again and DSR them. That having been said, I'm not confident about this and would welcome any advice as soon as possible.

 

Thanks all,

SP

[dx100uk]

if you are saying the nationwide took a sum from one account with them to pay another account with them, then sadly they can do this - its called off-set banking.

 

you need to open an a/c not with NW and pay your wages/income to there so they canot do this.

 

dx

[Stagparty]

Hi DX

 

No, I'm not saying that. One account was a current account that was overdrawn. The other account was a loan account.

 

It appears that the loan account has been "transferred" to the overdraft making the new overdraft balance the total of the two previous accounts.

 

By doing this I think they will remove any protection I may have had under the CCA with respect to the loan account.

 

I already operate my day to day banking through a different bank who I owe absoltely nothing to so there should be no chance of set off there.

 

Sorry if my original post was confusing, I hope it's clearer now.

Edited September 11, 2009 by Stagparty
Spelling!

[dx100uk]

no. i must have read it wrong. sorry

 

dx

[Stagparty]

No problems dx, thanks for reading it anyway!

 

Do you think my suggested way forward is ok?

[Stephan56]

I do not know what POWER or authrority they claim to have to enable them to do this. I do think it is a way to screw you and anything you can do to reverse it I would try. I don't know what will work, however.

[Stagparty]

I tend to agree with you Stephan.

 

I'd really like to get something off in todays post so I'd be *really* grateful for some guidance.

 

Thanks in advance everyone!

[enamae]

dx100k is correct in that they do have the right to transfer money from your current account to pay off any "outstanding" payments to a loan/credit card or any other account that you hold with them.

 

As to them transferring an amount to clear the complete balance owing, I would query their right to do this.

 

 

 

enamae

[Stagparty]

Thanks enamae, I agree that banks generally have the right of set off. Normally though this would involve taking money from an account in credit to pay off one in debit. For example taking money from a savings account to pay off an overdraft.

 

This though is different.

 

They have taken money from my current account (which was at its overdraft limit) to pay off a loan account in full. This has caused my overdraft to go over it's limit by over £10,000.

 

By then treating the account as a one current account I think this would, as far as they are concerned, remove the loan from any protection under the CCA. In effect they have paid off the loan account (which was at a lower interest rate and goverened by the CCA) and created a huge overdraft at a higher rate which does not fall under the CCA.

 

I'm really concerned about the implications and could do with some help please!

[Stagparty]

Could someone in the early evening shift please have a look at this for me?

[Stagparty]

Anyone? Please?!?

[IdaInFife]

i beleive they can only do this with a credit balance. this would come under unfair terms i.e causing more interest and charges.

 

i would send for a sar for the account and cca for te loan asap

 

ida x

[Stagparty]

Thank you for your reply Ida

 

I sent the CCA for the loan yesterday and a letter querying and disputing the transfer. Does that sound OK for starters?

[IdaInFife]

yes

 

ida x

[Stagparty]

If it's Ok with you Ida I'll let you know how they respond~?

[cerberusalert]

I think a complaint to the OFT & the FSA may be in order here because they have settled an a/c which is regulated by the CCA 1974 by using another a/c which is not regulated in the same way.

[Stagparty]

Thanks for that Cerberus - I was sure they were trying to stitch ,me up hence making the original posting. I just didn't know what to do about it.

 

So far I have written to them disputing the transfer and requesting they reverse it, making sure I am no worse off by way of interest charged (IE the overdraft interest rate is higher than the eloan). I also told them to take the letter as a formal complaint.

 

I'm also annoyed that the only way I found it was by reading my statement - they didn't even have the courtesy to write and tell me what they intended to do.

 

Do you think I am on the right track so far? Should I wait for their response before contacting the OFT and FSA? I have a feeling this is probably payback for me putting my credit card into dispute with them... obviously thats not something I can prove.

[vint1954]

They can use off set, but I am fairly sure that it should be from a credit ballance. If it was an overdraft, then they would be using one form of credit from them to pay off another?

 

To enable them to terminate a regulated credit agreement, they need to send you a default notice, then termination notice. Have you had any of these? If not, they should only have taken the arrears from a credit ballance.

[cerberusalert]

Still make a complaint because they are causing you to become overdrawn on a separate a/c which will incur extra penalties and probably a higher interest rate.

[Stagparty]

Thans for that Vint - I'd agree that set off from a credit account is normal - in this case by transferring to the e-loan account they have caused my current account to go over its limit and the normal overdraft rate is higher than the e-loan rate let alone the "unauthorised" overdraft rate.

 

I can confirm that I have not had a default notice, nor a termination notice - not even a letter saying what they intended to do, nor a letter saying what they have done.

 

Again thanks for your response Cerberus, am I right in thinking that the FSA etc require the internal complaints procedure to be exhausted before they will get involved? I have no doubt that Nationwide will refuse to reverse the transfer but I wonder if it's better to have that ammunition before involving the FSA or OFT so that at NW can't then say "oh we're sorry, it was keyed in error" - as we all know that these wonderful financial institutions train their staff amazingly well but human error does occassionally still happen

[cerberusalert]

am I right in thinking that the FSA etc require the internal complaints procedure to be exhausted before they will get involved?

No that's FOS.

[Stagparty]

Ah - thank you - at least I got the first letter correct! If I draft a complaint letter would you be good enough to casy your eye over it for glaring errors please?

[Stagparty]

This is the first attempt at a letter to send to the FSA and OFT...

 

Dear Sirs

Formal Complaint re Nationwide Building Society

I regret to be in the invidious position of needing to report NW’s recent conduct to you and ask for your assistance in remedying the situation.

The situation is as follows:

On X date NW, without my permission, transferred X from my current account to my e-loan account. This had the effect of clearing the e-loan.

My current account was already at it’s overdraft limit. This transaction took it over its limit by £X. NW now appear to be charging me interest at their “unauthorised overdraft rate” as well as the flat monthly unauthorised overdraft fee. It appears that the funds have been used to pay off my “E-Loan” account. The e-loan account was fee free and had an interest rate of X%.

Furthermore I believe that by effecting this transfer NW have replaced a loan which afforded me protection under the CCA 1974 (as it was a regulated agreement) with an increased overdraft which is not regulated and hence falls outside the Act. This is particularly important to me as I am currently in financial difficulty, and communicated this to NW on two occasions, both times enclosing an Income & Expenditure account drawn up in conjunction with the CCCS. To date NW have not responded to these letters.

I should also add that I have received absolutely no correspondence about this from NW – the first I knew was when I opened my latest bank statement. I have written to NW about this and a copy of my letter is enclosed for your reference.

I trust the above is self explanatory but should you require further information please do not hesitate to contact me. I look forward to receiving your urgent, kind attention in resolving this matter.

Y/f

[cerberusalert]

That looks fine.

[diddydicky]

the bank is NOT allowed under the banking code to create (or increase an existing) overdraft under the rights of set off and you should write and tell them this and demand that they reverse the transaction within 7 days failing which you will report the matter to the banking ombudsman

 

 

the banks can only use funds from another account that is in CREDIT under the set off rules

 

Personally i would also e mail tony hetherington at the sunday mail who i am sure will get involved and highlight this case in his column WITHOUT revealing your identity

Edited September 14, 2009 by diddydicky