My sister has had a business account with HSBC for 10 years and an HSBC business credit card since 2007. Having made some late payments on the card over the last two years but always having rectified this within 2-3 months, HSBC has, without warning, taken the balance out of her current business account (£2000) and also used the maximum overdraft facility on that account of £1000. She is now unable to pay her employees and is in trouble.
I have read that banks can exercise a right of set-off where they can take any funds in any accounts with that bank to settle arrears on another account. But can they use a customer's overdraft facility and thus create a further debt for the customer?
Other consumer forums seem to say that there is some confusion as to whether the right of set-off extends to using the overdraft facility. Even the FSA's guidance is supposed to be vague.
Does anyone have any information on this matter? I cannot find a reference to this precise question on the FSA site but only reference to banks taking credit balances.
Thanks alot
I have read that banks can exercise a right of set-off where they can take any funds in any accounts with that bank to settle arrears on another account. But can they use a customer's overdraft facility and thus create a further debt for the customer?
Other consumer forums seem to say that there is some confusion as to whether the right of set-off extends to using the overdraft facility. Even the FSA's guidance is supposed to be vague.
Does anyone have any information on this matter? I cannot find a reference to this precise question on the FSA site but only reference to banks taking credit balances.
Thanks alot
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