HSBC right to set off

[The Gruffalo]

I've already posted about a loan I have had with Northern Rock as this year I'm determined to get things sorted and fight back against my creditors.

Baiscally I opened a current account with HSBC back in 1994, had the account for many years. In 2008 the account had an overdraft of £3531 (default balance) and I had gone over the limit as I was made redundant. I cant remember what the limit was but it was allot lower than the default balance At the time I was stuck in a cycle of charges that put me over the overdraft limit. Current balance is £3,307

In 2006 I also took a loan out with HSBC. Again when I got made redudant in 2008 I fell behind with the payments. The default balance is around £5159 on the loan. The current balance is £4831 both according to experian.

Last payment on both the loan and overdraft was Oct 2008.

They defaulted both the loan and the current account in April 2008. However what they did with the loan was pay it off with funds from the current account under the right to 'set off'

I've emailed the CCA for the loan and have no doubt its enforceable. However section 12 of the credit agreement which is on page 4 explains HSBC stance of 'set off' it states

We may use any credit balance on any other Account you hold with HSBC Bank plc to reduce or repay any sums you fail to pay under this agreement.

Now the loan is fully repaid but they used funds from the current account to repay the loan. The current account didn't have a credit balance. It was overdrawn and the amount was an unauthorised amount.

I have had it in writing from HSBC that the loan has been repaid by the current account but I don't have a copy anymore of it. I seem to have lost it. I normally have everything but cant find this. I know if I was to send a SAR it would show up that the loan was repaid.

In 2009 I tried to reclaim charges on the current account and it was put on hold while the test case was resolved. When this was resolved they wrote to me and said they rejected my claim for charges. I haven't heard anything since and I've left it.

They aren't chasing me at the moment and the default's will drop off in just over 2 years time.

Should I let this lie or should I be pro active, in case they start chasing me again?

[garlok]

Re: HSBC right to set off

No they cannot access an account that is already overdrawn. It is against all of the guidelines in every code that it is not allowable to put a debtor further into debt with any other account. DCAs technically, although they do, are not allowed to ask you to pay a debt via credit card, they may ask for a debit card.

You may like to remind HSBC of this and complain directly to the OFT. I am pretty sure the FOS will not be of much use however. See what others say as to detail.

regards
Garlok

[Undercover Elsa]

Re: HSBC right to set off

I agree, that's well out of order.
Personally, if the account has been defaulted/terminated and no further charges are being added, I'd let sleeping dogs lie if they're not pestering you, but go straight back at em with a SAR if they start again.
On the other hand, if they're still merrily adding charges then SAR them ASAP and start the complaints once you have the ammo.
Just my opinion, see what others say

xx Shep xx

[The Gruffalo]

Re: HSBC right to set off

I agree, that's well out of order.
Personally, if the account has been defaulted/terminated and no further charges are being added, I'd let sleeping dogs lie if they're not pestering you, but go straight back at em with a SAR if they start again.
On the other hand, if they're still merrily adding charges then SAR them ASAP and start the complaints once you have the ammo.
Just my opinion, see what others say

xx Shep xx

No they stopped adding charges when they defaulted the 2 accounts and my gut feeling is to let sleeping dogs lie.

My aim is to try and get everything sorted with my credit file as get it tidied up and looking a bit better than it is now. Plus I would like to get this put to bed where I wont be bothered by them again in the future.

I also think the reason they are not pestering me is because of the set off.

I take it they can't reinstate the loan and put the funds back?

[Never-In-Doubt]

Re: HSBC right to set off

Hiya

Thanks for the email and sorry for the delay - ok, as the others have hinted above I would sit this out, leave sleeping dogs and all that.....

If they contact you, come back to us and we'll then deal with it, but regardless the bank are in the wrong, your defaults are 4 years old so will have little impact themselves (on your credit file) - I would, if I was you, just forget this for the time being.

That also means you cannot raise any disputes etc with the bank, FOS or CRA's.

[The Gruffalo]

Re: HSBC right to set off

Right will do and put this one on the back burner

[mgfboy]

Re: HSBC right to set off

On right to set off, should they be able to use it when the debt is in a single name and the account is a joint one, also if I reading this correctly they shouldn't use it to go over any agreed facility is that correct????

[garlok]

Re: HSBC right to set off

In actual fact mgf, they should not touch any acccount that is already OD. It is forbidden in the OFT guidelines which I can't find at the moment for a creditor to make you any more indebted on any other account. We chatted only very recently with a full partner at our sols practice and he said that should BC try anything on with us in the future he will slap them with a very large counterclaim and use the fact that criminal allegations we made in writing to the CEO have never been refuted.

It is absolutely not on and in his opinion the courts will take a very dim view of any actoion of this nature.

regards
Garlok

[Undercover Elsa]

Re: HSBC right to set off

Damn right. Even more so if they've taken it from a joint account for a sole debt. You should be able to get that reversed.

[Riz]

Re: HSBC right to set off

On right to set off, should they be able to use it when the debt is in a single name and the account is a joint one

1st example upheld complaint here

banking: firms' right of set off

[Never-In-Doubt]

Re: HSBC right to set off

No, they can take funds from a joint ac to repay a sole debt - so long as one of the debtors is named on that joint account it's fine but the accounts do need to be linked by dates etc as well.

The only stipulation is not to make you go into an unauthorised position that can result in charges. So if you're overdrawn by £100 and have a £5k OD limit then the bank WILL offset this.

Not saying its allowed I'm saying that's what they do!! The FOS will back the bank as well, the only way to beat them is if their setoff results in your exceeding any preagreed OD.

It stinks of a con

[garlok]

Re: HSBC right to set off

Yes mate they do DO IT but if you create a huge stink in a branch as we did in front of a crowd of people, they will suddenly eat humble pie and get the money returned.

It is this sort of unlawful practice that we need to constantly complain about and cause trouble about. They sign up to those guidelines as a condition of holding a credit licence and I see it as our right to kick up hell when they disobey their own committments.

regards
Garlok

[Never-In-Doubt]

Re: HSBC right to set off

Nooo mate you don't agree to these acts as part of getting licences.

You simply tick boxes confirming you're "bent" then you get the licence

[Undercover Elsa]

Re: HSBC right to set off

Your wife would need to demonstrate that she had not been made aware of the right of setoff from your loan...if indeed it is included in the T&C's. Also, even with a normal setoff, surely they should only take payments due to date, not advance payments to settle the full loan, if the ombudsman's ruling Rizzle linked above is anything to go by?

[Never-In-Doubt]

Re: HSBC right to set off

If you default then they can take payments to settle the other debt.

I'd not pay too much attention to the FOS thing as each decision is based on an adjudicators findings and my own HSBC case proves that mistakes can and do happen.