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23/16 debit card – implied request for overdraft
Mr M objected when the firm chased him to repay the overdraft
on his current account. The main reason for the overdraft was
that he had placed two bets with a bookmaker, using the debit
card for his current account. He said that the firm was responsible
for letting his overdraft arise, since it should not have made
the payments if there was not enough money in his account.
complaint
rejected
If a customer uses a debit card or a cheque when there is not
enough money in the account, the firm is entitled to treat this
as a request for an overdraft. It is a matter for the firm’s commercial
discretion whether to grant the overdraft. If the customer has
a good history with the firm, the firm may well agree to do so,
sparing the customer the embarrassment of having the payment ‘bounced’.
But it is not obliged to do this. We rejected Mr M’s complaint.
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23/17 cash machine – account-holding firm responsible
Mrs T had a bank account with firm A. She tried unsuccessfully
to withdraw £30 from this account, using a cash machine owned
by firm B, a member of the same cash machine network as firm A.
She later managed to withdraw the £30 from another machine.
However, firm A debited her account with the first (unsuccessful)
withdrawal as well as with the second one. Firm A said that was
not its responsibility and that Mrs T should pursue a complaint
against firm B.
complaint
upheld
Having examined the records for firm B’s cash machine, we were
satisfied that Mrs T had not received the first £30. Her complaint
was therefore not about firm B’s machine failing to issue the
money, as firm A had apparently suggested. It was about firm A
debiting her account with money she had not received. We required
firm A to credit Mrs T’s account, and to compensate her for the
inconvenience it had caused by trying to fob off her complaint.
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23/18 credit card – trader misled about available facilities
Mr Z set up a specialist travel agency with £12,000 of his own
money. In April 2001, he opened a business account with the firm
after meeting one of the firm’s business managers.
Mr Z expected to do most of his business by phone or through the
internet, so he wanted to have the facility to accept credit card
payments. The manager told him this would be possible after his
company had been trading for a probationary period of six months.
During this time, Mr Z invested more money in the business, including
a loan from the firm. However, at the end of the probationary
period, the firm would not enable him to accept credit card payments.
It said this was a matter of policy, since it considered this
type of travel agency too high-risk for such facilities.
Complaint upheld
There was nothing wrong with the firm having a policy of refusing
credit-card-acceptance facilities to types of business it considered
high-risk. But the firm’s business manager should have known that
this policy applied to this type of travel agency.
Mr Z would not have invested so much extra money in his business
if the manager had not led him to believe he would be able to
accept credit cards after a satisfactory probationary period.
We required the firm to write off the loan it had made, and to
pay Mr Z a further £2,500.
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23/19 personal loan – churned – insurance cover lost
In 1999, Mr C took out a £7,000 personal loan with the firm,
which included the cost of insurance to cover his repayments if
he lost his job. Two years later, in 2001, his employers reduced
his hours and he fell behind with his payments. The firm’s debt
management team advised him to take out a new £5,000 loan to cover
the balance of the old one.
In 2002, Mr C was made redundant. When he tried to claim on his
redundancy insurance, he discovered that the new loan had no insurance
cover.
complaint
upheld
We decided that Mr C would not knowingly have given up redundancy
insurance in 2001, when he was already working shorter hours.
The firm should not have advised him to take the new loan without
making it clear to him that the insurance cover would lapse and
that there was no redundancy cover on the new loan. We required
the firm to make up the insurance benefits Mr C had lost.
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23/20 personal loan – maladministration – financial difficulties
Mr Q took out a £3,000 personal loan, and kept up the payments
for three years. Then he took out a £6,000 loan. He agreed with
the firm that it would use part of this to pay off the balance
of the first loan. It would then credit the rest to his current
account, where he planned to use it to cover the costs of moving
house.
By
mistake, the firm credited all £6,000 of the second loan to Mr
Q’s current account and failed to pay off the first loan. So Mr
Q was making repayments from his current account for the original
loan, as well for the new one. It was only when his current account
became overdrawn a year later that he became aware of the problem.
complaint
upheld
The position was clear from Mr Q’s bank statements. But he convinced
us he had never looked at these – he had just checked his balance
from time to time. Under the Consumer Credit Act, the firm should
have documented both loans but it could not produce any evidence
that it had done so.
We required the firm to write-off the first loan and to pay Mr
Q £200 for inconvenience. We also required it to refund, with
interest, the payment protection insurance premium it had included
in the second loan. This was designed for people in employment
and Mr Q was retired.
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23/21 secured loan – not affected by bankruptcy discharge
In 1992, Mr D took out a second mortgage on his home to secure
his overdrawn business account.
Two years later, in 1994, he became bankrupt. The firm decided
not to repossess the house because at that time it was only worth
enough to pay off the first mortgage.
Mr D was discharged from bankruptcy in 1997. That year, and the
following year, the firm sent him statements showing the amount
he still owed it. Then in 2001 it told him that as the value of
the house had increased sufficiently to pay off both mortgages,
he would have to repay his debt or sell the house.
Mr D then queried the existence of the second mortgage and complained
about the firm’s delay in recovering its debt.
Complaint rejected
We were satisfied that the second mortgage existed. It had been
a legitimate exercise of the firm’s commercial judgement to wait
until the house had increased sufficiently in value to cover its
debt. The firm had continued to monitor the property’s value.
We thought the firm could have done more to keep Mr D informed.
But we did not think it appropriate to award any compensation
for this. Mr D had benefited from the firm’s delay. He had continued
to occupy part of the property and had obtained income from letting
the rest.
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from
the Financial Ombudsman Service