Child Tax Credit Applied To Authorised Overdraft - Advice Please!

[bcrabbe]

Hello all. This forum is so helpful. I'm hoping I can get some advice on my situation with HSBC.

Just a quick recap of my situation:

 

A few months ago, it was suggested to me that I apply for tax credits. I didn't think my husband and I would qualify, but I went ahead and put in an application anyway. Meanwhile, my husband wasn't making the commissions he used to at his job (blame the recession I guess), so we found we were struggling to pay the bills. Things got progressively worse and we entered into a DMP this past December. Included in that plan is a £1500 authorised overdraft with our HSBC account (which we used to be able to pay off in full each month). The people at CCCS, who set up our DMP, advised us to open another bank account and we did so. However, as I'm sure you can guess, I completely forgot about having applied for the tax credits and the bank information they have is of course, our HSBC account. So imagine my surprise and dismay when I received a letter at the end of January telling me that they have deposited £513 for the Child Tax Credit into my HSBC bank account. That money has now been swallowed up by our overdraft. (I have updated my info and now get tax credits deposited to my new account).

 

I have been very upset about this, and did some searching online and found this forum and others suggesting that banks don't have a right to your tax credits or benefits. I'm still not sure if this applies to authorised overdrafts though, but I went ahead and tried to get my money back anyway. First, I went into my branch and asked for the money and they told me that because it was a tax credit, they would not give it to me. They said had it been Child Benefit, they would've given it to me, but the tax credit was fair game. I didn't agree with this, but after speaking with the manager and someone at their credit department on the phone, I left the bank without my money. I went home and wrote a complaint letter, stating that my tax credits were inalienable, quoted the Social Security Admin. Act, as well as the Tax Credits Act, and said that I wished to exercise my right of appropriation to use the tax credit money to pay for food, formula, and apply some towards our gas/electric bill. I got a 4 page letter back on Friday where they basically tell me to p*ss off.

 

They state: "you have confused 'charges' in the sense of fees, to which the Act has no relevance and 'charges' in the sense of a proprietary right attaching to benefits to which the Act relates, but which the levying of fees on overdrafts does not create".

 

They go on to say that "bank charges are in the nature of an expense and that tax credits are payable in order to help customers meet their expenses." They say "the Act talks about charges in the context of encumbering or mortgaging the benefits - it is legal terminology and does not prevent a bank from applying charges to money once it is in the account. I acknowledge that the income into the account is derived from state benefits paid to yourself, however your account is governed by the bank's stipulated terms and conditions and by conducting your account as you have then charges have been deducted drom your account". Then they basically wish me well going to the FOS.

 

I disagree with this, because I believe tax credits are payable to meet "necessary" expenses like rent, food, heat, clothing, etc. and NOT bank charges. Am I right here? I need help deciding what to do next. I threatened to go to the FOS, and I intend to do just that, but I need help arming myself with the correct information. Should I go to the FOS now? Or send back a rebuttal to HSBC - and if so, what else can I say to get my point across that they do not have a right to this money? (if indeed they do not have a right).

 

Thanks in advance

 

Brigette

[cerberusalert]

Have a read of this; http://www.consumeractiongroup.co.uk/forum/showthread.php?125278-Your-bank-is-taking-your-benefits-in-charges

 

The main thing you need to do is open another a/c with an unrelated bank to have your monies paid in.