Tweet
Re: HSBC right to set off
From the earlier link
From the earlier link
40/1
transfer from joint account to pay debt on sole loan account
Mr G, an elderly widower, needed help with his financial affairs. He decided to make his daughter, Mrs B, a joint account holder on his current account. In that way, she could pay bills for him. It would also be easier for her to tie up his affairs after he died.
Some time later, Mrs B took out a personal loan with the same firm. Her father was quite unaware that she had difficulties paying the monthly instalments, and that the firm eventually called in the loan. Because Mrs B was unable to repay the money, the firm transferred funds into her loan account from the joint account she held with her father.
When she discovered what had happened, Mrs B was extremely upset because it meant that she had to tell her father about her financial problems. This was not only an embarrassment for her – it became a serious worry for her father.
When she complained, the firm defended its actions, telling her that the terms and conditions of the joint account allowed it to transfer the funds from the joint account. Unhappy with this, Mrs B then brought her complaint to us.
complaint upheld
The edition of the terms and conditions that the firm referred to was the most recent version. It had been issued some years after Mr G had opened his current account – after Mrs B had become a joint account holder and after Mrs B had taken out the loan.
Mrs B did not recall seeing the leaflet containing the updated terms and conditions. However, she accepted that she might well have received a copy as part of a regular mailing from the firm – probably with her monthly statement.
We noted from the latest version of the terms and conditions that there was a term allowing the firm to take money from the joint account to pay debts owed solely by Mr G or by Mrs B, as well as to pay debts owed by them jointly. However, we thought that this was such a radical departure from the normal position that it was an "‘unusual" term. It was also an " onerous" term, because its effect was to make Mr G liable for Mrs B’s debts.
A firm can only rely on terms that are "unusual" and "onerous" if they have been brought fairly to the customer’s attention. The Banking Code says that customers must be given personal notice of any terms that are to their disadvantage. We did not think it enough for a firm simply to include the revised edition of the account terms when it sent out routine statements to its customers, which is what had happened here.
We also thought that the term was "unfair" within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999. This was because it created a significant imbalance in the parties’ rights and obligations, to the detriment of customers.
Specifically, it had the effect of making Mr G a guarantor of Mrs B’s debts – but without giving him the information that a guarantor should usually be given.
We told the firm to transfer the money back to the joint account – leaving it to find other ways of recovering the money that Mrs B still owed.
transfer from joint account to pay debt on sole loan account
Mr G, an elderly widower, needed help with his financial affairs. He decided to make his daughter, Mrs B, a joint account holder on his current account. In that way, she could pay bills for him. It would also be easier for her to tie up his affairs after he died.
Some time later, Mrs B took out a personal loan with the same firm. Her father was quite unaware that she had difficulties paying the monthly instalments, and that the firm eventually called in the loan. Because Mrs B was unable to repay the money, the firm transferred funds into her loan account from the joint account she held with her father.
When she discovered what had happened, Mrs B was extremely upset because it meant that she had to tell her father about her financial problems. This was not only an embarrassment for her – it became a serious worry for her father.
When she complained, the firm defended its actions, telling her that the terms and conditions of the joint account allowed it to transfer the funds from the joint account. Unhappy with this, Mrs B then brought her complaint to us.
complaint upheld
The edition of the terms and conditions that the firm referred to was the most recent version. It had been issued some years after Mr G had opened his current account – after Mrs B had become a joint account holder and after Mrs B had taken out the loan.
Mrs B did not recall seeing the leaflet containing the updated terms and conditions. However, she accepted that she might well have received a copy as part of a regular mailing from the firm – probably with her monthly statement.
We noted from the latest version of the terms and conditions that there was a term allowing the firm to take money from the joint account to pay debts owed solely by Mr G or by Mrs B, as well as to pay debts owed by them jointly. However, we thought that this was such a radical departure from the normal position that it was an "‘unusual" term. It was also an " onerous" term, because its effect was to make Mr G liable for Mrs B’s debts.
A firm can only rely on terms that are "unusual" and "onerous" if they have been brought fairly to the customer’s attention. The Banking Code says that customers must be given personal notice of any terms that are to their disadvantage. We did not think it enough for a firm simply to include the revised edition of the account terms when it sent out routine statements to its customers, which is what had happened here.
We also thought that the term was "unfair" within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999. This was because it created a significant imbalance in the parties’ rights and obligations, to the detriment of customers.
Specifically, it had the effect of making Mr G a guarantor of Mrs B’s debts – but without giving him the information that a guarantor should usually be given.
We told the firm to transfer the money back to the joint account – leaving it to find other ways of recovering the money that Mrs B still owed.
Comment