The past year has seen a marked rise in the number of banks 'setting off' debts against savings. This is the practice where a banks will use a consumers savings to offset any missed payments on their debts.
In April 2008, the Financial Ombudsman Service saw 50 cases of hardship, that were linked to the setting off process. In April 2009, that number had risen to 578. They have already received 1100 for June this year.
Some debt management customers have found that money has been taken from their accounts to civer missed payments, and has left some unable to pay their mortgage, bills, or even buy food. The FOS said that it is often small amounts that are being taken, with banks even taking money from state benefits.
The CCCS have reported a 45% rise in the last year, but give a warning that their advisers would probably report the problem under the banner of debt repayment or similar, leading to an underestimate.
The Banking Code Standards Board is due to publish a report on the banks using this process wrongly by the end of the summer.
If you feel as if you have been wrongly affected by setting off, then call MRA Debt Help on 01424 777156 to speak to one of our debt counsellors.
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