Mortgages Uncovered

Some UK banks are literally leaving some people unable to pay their mortgages by withdrawing money from their customers’ current accounts to cover their loan and credit card debts which seems a little easier to do now that more bank’s have merged a charity has claimed.

Banks are legally allowed to transfer money out of a person’s bank account without their permission to cover bad credit card debts and Citizens Advice is calling for this to be scrapped.

CAB says it has now seen a 25% increase in the amount of such cases during the past 2 years.
The British Bankers’ Association says that it is down to the customer to sort their problems out with the banks if they are in financial difficulty.

In the majority of cases though, companies are only able to force someone to pay a debt through the courts.

However, as set out in many banks terms and conditions the ‘Right of Set Off’ does give banks the legal right to transfer cash to pay a loan or credit card arrears without needing the permission of the account holder.

CAB says there are many cases recently of people having benefit payments taken out of their bank accounts which have left them unable to pay their “priority debts” like mortgages and council tax.

The British Bankers’ Association commented on this “inappropriate” activity as regrettable but supported banks by saying that they take their responsibilities under the banking code very seriously.