Re: Arrangement to pay overdraft ignored by bank

On 26 Oct, 10:29, Stephen2 <Step...@xxxxxxxxxxxxxx> wrote:
Long story short, the bank (HSBC) setup an overdraft on my savings
account in March to allow me to pay the balance after my mortgage was
settled & left £2000 outstanding. Due to irregular salary payments I
fell behind with the agreed £200/mth but kept in touch with the bank
to let them know the money was coming. The last time I called was
about 2 weeks ago when I discussed paying £400 to the account (leaving
£900) and then continuing monthly transfers thereafter to clear down
the balance. I payed the £400 as promised 1 week later.

But a few days ago the bank, without any warning, took the outstanding
balance of £900 from my current account and transferred it into the
savings account clearing the overdraft and leaving me with almost £0
in my current account.

I called the bank to query why they had taken this money after an
arrangement had been made to pay over a few months. They told me no
formal arrangement had in fact been made and they were entitled to
take whatever money they needed to clear the balance of the overdraft.
They also said a final demand had been sent to me (which I do not
recall receiving).

I know it's their money but I really thought an arrangement had been
accepted to allow me more time to pay this money. I already
transferred £400 this month and then they took the rest leaving me
high 'n dry with rent to pay in a week and no more money coming in for
a while.

The bank was unwilling to discuss the situation further and said they
have no authority to reverse the transfer of the £900 even if they
wanted to.

There's probably nothing I can do, at least not quickly, is there?

Probably not, unfortunately. In principle, the banker's right of set
off does allow a bank to use money from one account to clear a debt on
another.

You could make an appointment at your local branch, and remind them of
their obligations under the Banking Code. Briefly, they have to treat
customers in financial difficulty "sympathetically and positively" -
although that does not necessarily mean that it has to lend you any
more money. You can find more information about the Banking Code at
http://www.bankingcode.org.uk/thecodes.htm. (It will no longer be in
force from November 2009, but for now the bank should abide by it).
It is possible that HSBC's various departments have got themselves in
a muddle, and the one that made the decision to move the balances
around didn't know that you'd made an arrangement with another
department. If that's the case, once you get to speak to the right
person you should be able to sort it out.

If you do go to see the bank, you need to be clear (and realistic)
about what you want it to do. For example, you might want it to
extend your overdraft for two months by the amount of the rent plus a
bit - but that's no good if you won't realistically be able to pay it
back within two months. Before lending you any more money, the bank
is likely to want to know quite a lot about your income and
expenditure, so it might be a good idea to take evidence on that score
along with you.

You could go to the bank and make a complaint about the way it treated
you, but that's unlikely to solve the problem in time for your rent to
be paid. Normally if something was likely to cause a complaint I'd
say to put all correspondence in writing, but given that you need to
solve this soon (and the post is a real pain at the moment) I think
you're stuck with face-to-face and telephone.

How sympathetic is your landlord likely to be? (Even if the answer to
that is 'not at all', it's still better to tell him in advance that
you won't be able to pay).
.

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