Another case of no agreed overdraft but 3000k overdrawn BARCLAYS BUSINESS ACC

[vsbarclays]

Similar tale to the other two threads , myself and a partner had a business account for about a year and a half , were told no overdraft facility possible , and never asked again or signed any agreement.

I used the debit card to make some online purchases without checking the balance last year until the card was eventually declined and assumed the balance was now zero and never used it again.

 

Cue debt collection letter asking for 3000 pounds in charges !

 

Barclays declined to give me ANY information at branch level and told me to go through the debt collection company called Credit Style. I have contacted them to ask for a breakdown of their claim including any evidence we applied for an overdraft with Barclays. They asked for 3-4 days to supply this.

 

I am interested to know the following

1. Why is it that my personal account with no agreed overdraft will not allow me to make card purchases at 0 balance , but the business account (similarly with no agreed overdraft) will. What are the mechanics of this process within the bank system?

 

2. While i dispute this claim with Credit Style and Barclays , what happens to my partner's credit score ? He is worried about this as he wants to remortgage.

 

I have succesfully claimed charges back from Abbey many years ago and not adverse to taking on Barclays along with others in the same boat.

 

Any help , most appreciated!

[slick132]

Hi vsBarclays and welcome to CAG

 

I think Barclays were wrong to refuse to deal with this, and to refer you to the DCA.

 

Did you not receive monthly statements from the bank which showed an overdraft and rising default charges.

 

1. When was the last transaction refused and you assumed the a/c was at zero.

 

2. Do you know what the balance in fact was.

 

3. Over what period has the balance increased to £3K.

 

If you don't have all the a/c statements, you'll need to get them by sending the bank a SAR - http://www.consumeractiongroup.co.uk/forum/content.php?417-A-Subject-Access-Request-for You should send the SAR in your personal name but refer to the business a/c number specifically. This may not necessarily get you the data you need if they decide the a/c is strictly a business a/c.

 

Re your credit rating, any unpaid balance is likely to be reflected in adverse CRA entries. You need to check on this by sending off £2 to one or each of the 3 CRA's and see what adverse entries appear.

 

[vsbarclays]

Thanks for the response and welcome Swift ,

 

We moved during this period so didn't recieve any statements or phone calls until DCA

1. October '11

2. No

3. The final balance was - 3 K in purchases and charges

 

Again , no overdraft facilitty was ever applied for or agreed to by either partner or bank , but card authorised for purchases at 0 balance for a period of about July-Sept '11

 

Re credit rating , are CRA's obliged to mark the account down as disputed until this is settled one way or another? Does disputed status in itself affect CR?

 

Thanks again ,

[slick132]

Do you know what amounts were paid for purchases, so you know how much is default charges.

 

You need to get the missing statements asap, either by telling the DCA you need these to consider what, if anything, you owe or sending a SAR to the bank.

 

You should tell the DCA this matter is in dispute fro various reasons and that they should withhold all collection activity until you resolve the matter with Barclays themselves.

 

Get hold of your CRA data and you can decide what action, if any, you need to take about adverse data. If there IS any adverse data, you can notify the CRA of this and they must show that the matter is disputed. But this will probably still reflect negatively if anyone is doing a credit check.

 

[slick132]

Can you also please confirm about the name on the business account.

 

Was is something like Vsbarclays and Mrs Vsbarclays t/a business name.

 

[vsbarclays]

It was simply 'companyname' myself and brother were joint account holders , around 2000 in purchases , the rest i assume charges

[slick132]

Ah, understood now. You were, or maybe still are, in business with your brother.

 

I see why your miffed that they allowed the unauthorised borrowing to rise to £2K. However, I don't see that you would have much chance of success in arguing that the bank have acted improperly or unfairly.

 

If you made purchases of approx £2K when there was no money in the a/c, this could be seen as negligent and I think you and/or your brother will be wholly responsible for what is owed to the bank, including their default charges.

 

You will each be responsible for the debt and will probably have "joint and several liability". So the bank or their DCA can pursue either one, or both of you to recoup the debt. They will not waste time seeking half the debt from each of you and may just pursue whoever is the most likely to pay.

 

The unauthorised o/draft rate they will be charging you will be pretty high so it's important that you try to reduce the o/d as quickly as you're able. If you don't, I think the debt could spiral upwards.

 

If one or other of you is experiencing Financial Difficulty, you could contact the bank or DCA to try and get them to stop adding further interest or default charges. This would be easier to do if the account wasn't a business a/c. However, you may be able to get the bank or DCA to compromise if you are willing to come to a repayment arrangement.

[vsbarclays]

Appreciate the response ,

 

My question is really , what is the process by which the bank can , at zero balance on an account with no authorised overdraft agreement , let the account go into negative balance without breaching the terms of the account?

Why weren't the payments simply declined as one would expect on accounts without any overdraft agreement?

What happened , after 2000 pounds in payments, for them to be declined?

Surely by authorising the payments , the bank are tacitly extending a line of credit , for which there was never any contract on our part.

If there was a line of credit available, what were the terms ? Shouldn't they have been countersigned by one of the account holders?

Irresponsible lending ?

 

If anyone knows , please enlighten me!

[vsbarclays]

What is the point of the term unauthorised borrowing , when in fact the borrowing has to have been authorised by somebody in order for it to take place. A better phrase would be permitted unauthorised borrowing !

[slick132]

HI Vsb,

 

I really do get where you're coming from but I don't see that you have a strong enough case to argue for irresponsible lending.

 

Yes, they allowed the transactions to be paid, but only because you instigated them.

 

You'd have a better case if you'd only gone slightly overdrawn and then covered the error by paying money in. If this had happened but you got clobbered by a load of charges that were disproportionately high compared to the transgression, you'd have a better case to argue.

 

But, from what I've read, you :-

 

1. Made purchases without knowing your a/c balance, thus going o/d.

 

2. Failed to check the balance, even when you knew a purchase was declined.

 

3. Failed to check on the a/c at any stage after.

 

4. Failed to notify the bank of your new address.

 

Although I can see why your annoyed about this, I think you've failed to exercise due diligence. Accordingly, I also think any attempt to complain about this would be fruitless. The FOS would not uphold any such complaint and I doubt a judge would allow a defence against any court claim that the bank made.

 

If you want to avoid any more adverse credit data being registered in respect of this, you need to negotiate with the bank and/or DCA and get a repayment plan in place.

[vsbarclays]

Thanks again for the response ,

 

I accept it's most likely will have to repay this , but i would still like to address these points

 

1.Why weren't the payments simply declined as one would expect on accounts without any overdraft agreement?

2.What happened , after 2000 pounds in payments, for them to be declined? Why not after 200 ? or 600? etc.

3.Surely by authorising the payments , the bank are tacitly extending a line of credit , for which there was never any contract on our part.

4.If there was a line of credit available, what were the terms ? Shouldn't they have been countersigned by one of the account holders?

[slick132]

1. Because they bank make profits by doing this.

 

2. They decided that £2K was the max they'd risk, seeing you hadn't paid funds into the a/c.

 

3. Any credit extended to you was done so under the Terms and Conditions of your joint bank account by way of an overdraft. You had already signed a contract for this.

 

4. Not countersignature was needed - the credit was effectively sought by you through the purchases you made.

 

Perhaps you would get different answers from the bank if you address your queries or complaints to them. But I really think this will get you nowhere as you made the purchases without first checking that you had funds to cover them.

 

We are actively encouraging users to take on the banks using COBS and BCOBS but this won't work in cases where the customer hasn't acted reasonably.

[johnvernon74]

I thinks its fair to say most people would know if they had £2k in their business account. The bank charges may be excessive but I find it hard to believe you did not know you were going overdrawn.

[vsbarclays]

Thanks again for the response , i will check the terms and conditions and get back to you. From memory , we were told categorically on opening the account there would be no credit given for this account.

I would have expected some sort of communique from the bank during this period to say 'ok , we have allowed you to make purchases up to value of 2K' or 'You now have a 2K overdraft'

 

To be told no credit given and then given credit seems fishy to me.

[MARTIN3030]

Was the debit card regulated under CCA?

[MARTIN3030]

What periods do the charges relate to ?

When was account opened/closed or is it still open ?

[MARTIN3030]

Barclays are not right to say that you should deal with Credit Style or indeed any third parties-they have a responsibility to deal with your complaints/disputes.

I would write to Credit Style and inform them of the dispute as regards the amount being claimed and ask them to send you a copy of their complaints procedure.

Credit Style are members of the CSA so are not only bound to comply with their codes of practices but also the OFT as holders of a CCA licence;

 

Business NameCompany Registration Number Credit Style Limited6133356

Categories:

 

Debt administration Debt collecting Provision of debt-adjusting on a commercial basis Provision of debt-counselling on a commercial basis

 

Right To Canvass Off Trade Premises:No

 

 

Issued Date: 22-Aug-2007

Expiry Date: 22-Aug-2012

 

 

Legal Formation:

 

Body Corporate (incorporated inside UK)

 

Current Individuals that run the organisation:

 

NamePosition Clare Alison Butt Richard John Martin Steven Bramley

 

Historic Individuals that run the organisation:

 

NamePosition Mario Thomas

 

Nature of Business:

 

Other

 

Current Address(es):

 

Address TypeAddress Accept Notices/DocumentsRoundwood House, Red Lane, WORKSOP, Nottinghamshire, S81 8BP Correspondence5 Rutland Court, 161 Rutland Road, Sheffiled, South Yorkshire, S3 9PP, United Kingdom Principal Place Of BusinessRutland Court, 161, Rutland Road, SHEFFIELD, S3 9PP, United Kingdom Registered Office5 Rutland Court, 161, Rutland Road, SHEFFIELD, South Yorks, S3 9PP, United Kingdom

 

 

 

 

Any loans or elements of the account which is regulated under the CCA gives you the same scope and protection as that of a consumer-although Barclays have a history of choosing to have you believe that as a business customer you cannot rely on many consumer protective legislation-as it suits them to do so.

I think your thread may benefit by being moved to the business forums where other business users will give some input.

[slick132]

Thread moved into Business Bank a/c's forum as per martin's suggestion.

 

[MARTIN3030]

Thanks-have also added to thread title.

[vsbarclays]

Thanks for the responses and moving the thread!

 

A small update , about three weeks after requesting statements to cover the period , Credit Style have supplied me a pdf.

 

Interestingly there don't appear to be any charges for going overdrawn , but a monthly amount of roughly 36 pounds labelled 'commission' is present.

 

The account was finally shut in DEC '11

 

I'm still none the wiser as to whether we were at some point simply given an authorised overdraft (and what the terms and conditions of this overfdraft were) or whether the account was allowed to go overdrawn 'temporarily'. If it was temporary , surely the frequency and timescale of the withdrawls would make it more like a regular feature of the account.

 

Again , we were told categorically no credit on the account and never applied for any credit. Why was the account allowed to go overdrawn and do we have a case for breach of terms of the account? Irresponsible lending?

 

Thanks

[foxyred]

Did you ever ask the bank this question when the purchases were first approved? I'm a bit confused as to if you and your brother knew there was no overdraft facility or credit on the account, why were you making purchases. Did you not think that you'd get a massive bill in the end as this was obviously an oversight by the bank? If it wasn't capped at £2000 would these purchases have continued?

 

I think these are the questions that a judge would no doubt be asking!

[kirsun10]

I do not think you have much success in arguing this case in any capacity, it may be, in your eyes the fault of the bank to give you money you did not have, but the underlying responsibility rests on your shoulders.

 

You as a business person should have had some knowledge of your situation and circumstances, yet you failed to take action and continued to spend.

 

Banks do give leeway for people who go overdrawn with the expectancy that you will pay this back as soon as possible, especially with business accounts. However as always as their is no personal touch within banking, but automation your previous record maybe allowed this temporary line of credit.

 

There is no way this could be fought in court as you, without any checks or diligence continued to purchase until the banks automation stated enough is enough.

 

Sorry to be a bearer of bad news but this is also also happens on normal current accounts, and they state on their terms and conditions you are wholly responsible. So in essence you are responsible for what you do with your spending, whatever the circumstances.