First Right of Appropriation...offsetting debt against benefits RBS

[enaid]

Re: First Right of Appropriation...offsetting debt against benefits RBS

Brill Ame, let's see them get out of that question.

[Sapphire]

Re: First Right of Appropriation...offsetting debt against benefits RBS

I bet you won't get a direct answer to the question.

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

Well hopefully they can;t misunderstand the direct reference to FROA in that one. lol. We shall see.

Not sure but I think RBS may be aware i have that internal document, thus Stuart having troubles getting a proper response.

I am absolutely aware they have no reason TO reply to me - but really doesn't hurt to ask does it.

[Sapphire]

Re: First Right of Appropriation...offsetting debt against benefits RBS

Don;t hurst to ask hun, and it don't hurt to keep asking till they give you a proper reply lol.

[enaid]

Re: First Right of Appropriation...offsetting debt against benefits RBS

could do with a guinea pig, but it's a risky sort of project I suppose.

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

I thought that, but quite a few peeps have asked and been refused all over the forums, have put a note for cases up in the hardship section but if anyone finds any on their travels other than those used in the Lloyds letter originally (below) that would be of help too.

Sorry just a wee project which hopefully once we have lots of info we can do some kind of report/publicity to get this working for the most vulnerable people. Seems silly councils telling people to do it if the banks ignore it. So the councils are giving poor advice and that needs fixing too.

Examples:
Mr A -
''Lloyds staff told me if I enforced my first right of appropriation the bank would shortly after issue me with a 30 days notice of account closure.''

Mrs F -
''I was told as you've come in to the bank with this letter of appropriation we can do this only once and we need you to come in to the bank on Monday, to draw the money out and so that we can speak to you about your account, we need to cancel all your direct debits and then close your account. ''

Mr C -
'' LLOYDS TSB are insisting that I cannot use my first right of appropriation, even though I have had to use it to pay my priority bills on three occasions. Lloyds have been taking charges from my account and leaving me with nil funds. I have complained and argued with those fine people in the collections dept and have had success in the past, with refunds been made by the bank. The branch staff and management have been nothing but obstructive and on my production of the letter of appropriation at the branch it leads to confusion embarrassment and total non co-operation from them. Today’s visit to serve them with the letter of appropriation was again confrontational by them and upon instructions from the said collections dept I was informed that they will no longer conform to my right of first appropriation. ''

• • A client ran up an overdraft on her bank account. She is a lone parent in receipt of income support. The client was not allowed to withdraw any money from the account, and as her benefit was due to be paid into the bank she was concerned she would not be able to buy food or nappies. The CAB wrote a letter on the client’s behalf using the first right of appropriation for the client to withdraw £50 on the day her benefits were paid into her account. When the client took the letter to the bank she was told that she could take £20 out but she should get a job to pay her debt and pay a babysitter.
  
  

• • A client with a 3-year old child, living on income support, lost her purse and cheque book and had to apply for a crisis loan to cover the shortfall. Two cheques were due to go out of her account, and she asked the bank to put a stop on them. The bank refused and therefore the client’s crisis loan amount was taken out of her account to cover bank charges, leaving her with no money for food.
  
  

A pensioner found that their pension was being eaten up by the overdraft facility on the bank account. The bank rang the bureau to request an appointment for the client to discuss their financial situation. The bank’s representative was unaware of the right of appropriation, which the CAB adviser had to explain to them.

The cashier told me I was wrong, so I asked to speak to a spuervisor. The supervisor told me I was wrong, and that there was no way I was allowed to do that, so I asked to speak to the manager. After waiting around for about 15 minutes I was ushered into an office with the bank manager, who informed me I was wrong and he'd never heard of this, so I requested that he check with their legal department. After sitting around in his office while he made some phone calls he discovered that I was right (thankyou CAG). We made arrangement for me to come in and meet with him when the cheque had cleared to withdraw the money (which went ahead fine, I got the money). He also told me that it was company policy for them to now close my account. I asked him about the voluntary Banking Code, and he said that they followed the code closely. I was told that I would receive a letter giving me 30 days notice of account closure. I haven't received this letter, but the manager retained my card when I went to withdraw the money.

Anyway, I wrote a First Right of Appropriation letter to them telling them they were not to touch the money for these dubious fees. That was the beginning of January.
Two days ago I checked my account and saw they had gone against my wishes and taken the £110.

[enaid]

Re: First Right of Appropriation...offsetting debt against benefits RBS

So it's another case of the Banking code of practice and not an actual law then?

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

no FROA is common law. Its also in case law in aspects such as Tools posted above.

The Banking code part is treating people in hardship properly and taking circumstances into account, which if they arent allowing FROA they aren't doing either.

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

Nelly gave me this from Ipswich Credit Union.

Shows the difference in attitudes between banks and the credit unions rather doesnt it.

Local Housing Allowance (LHA) can be paid into tenant's Credit Union account instead of mixing it up with their other finances ISCU gets a “Right of Appropriation” from
the Tenant so that rent is always appropriated to pay the Landlord Eliminates impulsive decisions by tenants to mis-spend their LHA ISCU processes LHA to Landlord by BACS
E-mail alert to Landlord and text message to Tenant if LHA fails to arrive at credit
union on due date. Encourages tenants to use the credit union for budgeting and saving, as well as becoming eligible for loans if they save regularly

Banks may say ''Local Housing Allowance (LHA) can be paid into tenant's Bank account. We hope there are impulsive decisions by tenants to mis-spend their LHA so that we can take most of it in charges before they have a chance to forward it to their landlords. If they try to use the right of appropriation we shall ignore it and close their account''

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

Reply from FOS - as expected but at least they are aware of it.

Dear Sharon

Thank you for your recent email.

I am afraid we do not hold any figures specifically about "rights of first appropriation cases". However it is my view these are likely to be very small in number.

Our general stance in relation to this matter is that we will take complaints forward without initially commenting on their merits. We are aware of the concept of "rights of first appropriation and are also aware that the banking code contains provisions for cases of financial difficulty. Overall it will depend on what we find once we have looked at both sides of the arguments.

I hope this helps

Gary Lark
Technical Advice Desk
Direct Tel. 0207 093 5640
Direct Fax 0207 093 5641

[enaid]

Re: First Right of Appropriation...offsetting debt against benefits RBS

. Overall it will depend on what we find once we have looked at both sides of the arguments.

How can there be two sides to the argument, when it is the law?

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

FOS don't uphold the law, they handle dispute resolution. Theres a wonderful discussion over on CAG at the moment about just that actually.... Complaints about the FOS - The Consumer Forums some ace posts by Kraken and Suetonius, but 335 posts so you have to have a bit of time to plough through it all.

[Luminol]

Re: First Right of Appropriation...offsetting debt against benefits RBS

'A client with a 3-year old child, living on income support, lost her purse and cheque book and had to apply for a crisis loan to cover the shortfall. Two cheques were due to go out of her account, and she asked the bank to put a stop on them. The bank refused and therefore the client’s crisis loan amount was taken out of her account to cover bank charges, leaving her with no money for food.'

This makes me feel so sad, I can't believe they leave people in this state.

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

Reply from RBS

Dear Ms Amethyst
Thank you for your e-mail addressed to Mr Hester, also sent to other members of staff at RBS and please accept my apologies for the delay in replying.
I have read your comments with interest and thank you for your recognition of the work RBS Group has done/is doing to help customers suffering financial hardship although being a commercial company we leave ‘tackling poverty’ to the Government. We have a number of policies in place to provide appropriate support to customers and will always work with them, or their agents, to fully understand their individual financial situation. We always encourage customers in financial difficulty to contact us as soon as possible.
With regards to a specific policy surrounding the ‘First Right of Appropriation’ our approach, when this right is invoked by customers in financial difficulties, is governed by the Banking Code, to which we subscribe. The published guidance on our Code obligations sets out what is expected of us in ensuring that income paid into an account is used first to pay ‘priority debts’ before ‘non-priority debts’. However in discharging our Code obligations we are reliant on the cooperation of the customer to identify what payments are ‘priority debts’. We need to know how much is expected to be paid into the account and when the moneys will be paid. The priority debts with first claim on the moneys require to be identified – if paid by cheque we need to know payee and amount. Direct debits are identifiable by originator. A general instruction to pay only ‘living expenses’ for instance would not be considered sufficient.
Of course the moneys must be in the account to be appropriated in this way – if a priority debt cheque or direct debit is presented and funds are not there the items will not be paid and charges will be incurred.
All customers, and not just those in financial difficulty, have a first right to appropriate to specific cheques, direct debits or standing orders payments into the account but it should be unnecessary if the account is funded to pay all items as they are presented for payment.
Thank you for taking the time to raise this issue.
Yours sincerely

Mike Guest
Manager, Group Customer Relations

[Amethyst]

Re: First Right of Appropriation...offsetting debt against benefits RBS

Quite pleased with that response.

Think i will write back and ask about allowing people to withdraw cash to pay bills / buy food if they are within authorised overdraft or if in unauthorised overdraft where its mainly made up of charges, also what their policy on priority debt is - ie is a debt owed to RBS put before someones rent ? and possibly quote some bits out the document on the first post of this thread.

What do you think?