Can the bank offset my debts against other accounts?

[Nattie]

banking: firms' right of 'set off'

Yes they can do it and this document explains it. So if they pay money into what is classed as a closed account, can they do it? YES
Can they take money from other accounts to pay off your debts on another account? YES
Can it be used to pay off loans outstanding? YES

[Celestine]

This question comes up so frequently that I think we should incorporate this info into the FAQs somehow. For the time being I'll sticky it in here.

[Nattie]

i found it through another site today although i had been looking for the info for some time.
I think by now Celestine, you can tell i have an eye for interesting info that will help claimants or will answer major questions that they have.

[Nattie]

These are the rules that NatWest have for the right of Set Off.
The rules for this are set out below however the overriding policy is as follows:

- Set off should only be undertaken after default/ overdraft enforcement notices have expired and remain unrectified, and before the case is transferred to Credit Management Services.
- The only exception to this is when we transfer funds to bring a loan account up to date, which can be done at anytime in the Collections process.
- If a credit balance is transferred to a debtor account, thus leaving a credit account with a nil balance, the credit account should be closed(however an account can be left open to allow a customer to make BACS and BGC payment(either MTA or deposit).
- Where these are sufficient funds in the credit account to clear the debtor account, the Collections Centre should take the final balance including charges which have accrued but not yet passed to the account.
- Collection Centre;s should only set off balances where the accounts are unsecured- where a customer holds security then set off will be carried out by CMS.

THE RULES

Set Off is allowable when the account are in the Same Name and the Same Right.

SAME NAME

This means exactly what is says, balance must be owed to and by the same customer.
The exception to this comes from the operation of common law, where one "legal" person is automatically liable for the obligations of another "legal" person.
EG where an individual has a sole account in credit and a joint account in debit, for which he is jointly and severally liable, then it is allowable to set off the credit balance against the joint debtor account(provided accounts are in Same Right).

SAME RIGHT

- In the eyes of the law the accounts must be beneficially owned by the same customer- thus excluding trust account for example- and have the same repayment term, this normally means that balances on the accounts are repayable by or to the customer on demand.
- Cash ISA and TESSA accounts are excluded as would be any deposit account where the customer needs to give us notice to withdraw funds, e.g. the balance isn;t payable to the customer on demand.

[Paule]

- If a credit balance is transferred to a debtor account, thus leaving a credit account with a nil balance, the credit account should be closed(however an account can be left open to allow a customer to make BACS and BGC payment(either MTA or deposit).
.

It might be me, but this sounds confusing.
I take it that you mean
If an account, that is in credit, has funds transfered to an account, that is owing/overdrawn, which then makes the owing/overdrawn account a zero balance then the owing/overdrawn account will them be closed.

Natwest statement sounds like they will close the account they have taken the money from, if it leaves that account with a zero balance after the transfer of money.

Paul

[thephoenix]

Re: Can the bank offset my debts against other accounts?

These are the rules that NatWest have for the right of Set Off.
The rules for this are set out below however the overriding policy is as follows:


SAME RIGHT

- In the eyes of the law the accounts must be beneficially owned by the same customer- thus excluding trust account for example- and have the same repayment term, this normally means that balances on the accounts are repayable by or to the customer on demand.
- Cash ISA and TESSA accounts are excluded as would be any deposit account where the customer needs to give us notice to withdraw funds, e.g. the balance isn;t payable to the customer on demand.

ahhhh think this is the bit that interests me. excluding trust accounts. At NW would this be actual TRUST ACCOUNTS or just accounts held in trust for a minor BY a parent??? if you know what I mean