Social Security Administration Act 1992-Section 187 - Benefits and overdraft charges

[Tom_Brennan]

I researched this topic some time ago, and my understanding of the application of this section is as follows:

Any assignment of your state benefits or pension is void and unenforceable. That is to say, no person or organisation can collect your state benefits/pension in your place as settlement of a debt (subject to certain exceptions involving state institutions). As a result, you could not instruct the DWP to pay your benefits to a 3rd party, and a 3rd party could not enforce any agreement that gives your state benefits to them. This was introduced at the end of the 1800s to stop the first state benefits (such as war pensions) being taken by unscrupulous 3rd parties, which happened an awful lot.

However, under current banking law, once your benefits (or indeed, any other income) is paid into your account, it is no longer classified as your benefits; it becomes part of a generic monetary debt owed to you (if your account is in credit) or owed by you (if your account is in debit). Think of your benefits as a glass of water, and your bank account as a water tank. S.187 effectively strikes down any agreement that stops your weekly glass of water going into your water tank and/or going to somebody else's water tank. That water is for you and you alone. However, once you have put it into your water tank, it is just becomes part of the whole collection of water that is in there, and can no longer be protected. The practical reason is that you couldn't identify which of those water molecules (your pennies) that came from your glass (benefits), and which were in there already.

The only way to protect your benefits is to have them paid into a separate account with a separate bank, which avoids any set-off (think of this as the bank linking up any water tanks that you have with them to get the overall amount of water you have stored with them or borrowed from them). A number of banks work with fast transfer payments, so you should be able to move your money from your benefits account with one bank to another account with another bank (such as your house or bills account) within two hours. This is the best way to protect your benefits from everyone and anything.

I hope this helps.

[Amethyst]

Re: Social Security Administration Act 1992-Section 187 - Benefits and overdraft char

This was the response from the online petition


"The purpose of the Social Security Administration Act 1992 Section 187 and section 45 of the Tax Credits Act 2002 is to prevent people’s benefit money being at risk by it being assigned over to a third party in settlement of a debt. It is not intended to prohibit the application of bank charges. Bank charges are in the nature of an expense, and are incurred by the holder of the account; tax credits and benefits are payable in order to help customers meet their expenses, and as such it is legitimate for banks to deduct charges from the balance of an account held in that bank, whether the money paid into the account comes from tax credits, benefits or other sources, such as earnings."

[Amethyst]

Re: Social Security Administration Act 1992-Section 187 - Benefits and overdraft char

http://www.gardencourtchambers.co.uk...d_rutledge.cfm

Ref Moneybox http://www.bbc.co.uk/programmes/b042z1fn from 16 mins 50

[Amethyst]

Re: Social Security Administration Act 1992-Section 187 - Benefits and overdraft char

If you do have overdraft charges due to be taken from your account and your income is benefits then you could use your first right of appropriation - see http://www.legalbeagles.info/forums/...riation-issues

However my advice is not to have benefits paid into a bank account. They do not have to be (despite what the DWP try and tell you)

The Post Office Card Account is a good alternative. You can only withdraw cash from it but you have complete control.

Another alternative is a BASIC BANK ACCOUNT where you CANNOT go overdrawn. Also I recommend you do not have direct debits or continuous payment authorities. Pay bills via online banking as they are due. Most basic accounts give you a debit card.

[Amethyst]

Re: Social Security Administration Act 1992-Section 187 - Benefits and overdraft char

Letter from RBS confirming use of First Right of Appropriation

Thank you for your further e-mail of 24 March and I will look to answer the further points you have raised.

My earlier e-mail did not state that the first right of appropriation can be used only when the account is not overdrawn. It can be used regardless of state of the account - the only criteria are that the debits to which the appropriated fund is to be applied must be identified and the appropriated fund must be in the account no later than when the debits are presented for payment. Our experience is consistent with your statement that this right is mainly used when the customer is experiencing financial difficulties.

As regards housing benefit/LHA the appropriation can only work if the rent is debited by direct debit or standing order to the account.

You mention the bank 'encashing benefits payments' - we do not cash these cheques or similar orders as they are invariably crossed meaning they must be paid into a bank account. When paying a benefit payment into the bank account the first right of appropriation can be exercised against identified future debits.

As to there being no general discretion to waive bank charges, the terms and conditions of an account do state that charges will be levied if sufficient funds are not available to meet a payment. Having said that, my earlier e-mail did say that our policies, developed with the Banking Code in mind, do look to provide support to our customers. Each case will be looked at sympathetically and individual circumstances taken into account. Consideration will be given to waiving fees to help the customer but we do need customers to be open and honest with us so that we have as full a picture as possible of their circumstances.

Yours sincerely



Mike Guest
Manager, Group Customer Relations

Lots of information, letters, responses from MP's and banks in our First Right of Appropriation forum -> http://www.legalbeagles.info/forums/...riation-issues

[Amethyst]

Re: Social Security Administration Act 1992-Section 187 - Benefits and overdraft char

And the Crossan Judgment (Scots case)