Overdraft default date - fair or not? Statute barred?

[puffinbilly]

Hoist 2 is claiming that I have a defaulted Lloyd’s current account overdraft - last paid into in 2007 (when I thought I paid the entire amount off), and then a default notice recorded on my credit reference Oct 2013 (no letter received warning me of this). I have never recognised the debt, but have been going back and forth with the debt collectors for a long time, and now I'm just trying to close this chapter of my life. Your advice would be greatly appreciated.

So, accepting that the date of default is key to both the Statute Barred timeline, and the amount of time the account remains on your credit file - the focus of my argument is on this date.

Hoist 2 Claim the overdraft maxed out mid 2013 (due to interest accruing since 2007 in an unused account) and this prompted the default being recorded in Oct 2013, and therefore this is (according to Hoist 2) when the SB time starts.

Step Change however are quite clear on the requirements: "The start date of the limitation period is whichever of the following happened most recently"

1. The last time you wrote to the creditor acknowledging that you owed the debt
2. The last time you made a payment to the debt.
3. The earliest date the creditor could have started court action to recover the debt


I would argue that the bank could (should?) of raised concerns of this steadily increasing yet unused account well before Oct 13, and this would therefore be the date that activity should have started, therefore the default date should be earlier (effecting credit ref and SB timeline).

So perhaps the answer lies somewhere within the banks Terms and Conditions? Or perhaps with a governing body etc that sets out what is fair/required of banks in looking after their customers and managing accounts etc?

Hopefully I haven't waffled too much, I'd really appreciate your advice as I've been trying to deal with this for a long time now and don't seem to be getting anywhere.


Thanks very much for anything you can help with

[charitynjw]

Re: Overdraft default date - fair or not? Statute barred?

Hi puffinbilly & welcome to LB.

Imho, if the overdraft stayed within agreed limits until Oct 2013, & was then terminated, Hoist are possibly arguing a BMW Financial v Hart position regarding the right of termination.
That's just my take; others may disagree.

[puffinbilly]

Re: Overdraft default date - fair or not? Statute barred?

Thanks very much for that. I can see the parallels, but I think there is one key difference. In the BMW Financial V Hart case there is about 2 months between between the final acknowledgement of the debt (by payment) and then the second default, and therefore the date the clock started. However in my case, there is nearly six years.

Clearly there is an argument that as long as you are within your overdraft limit, you are not breaching the agreement. But the counter (I believe) is that the bank has a responsibility to monitor accounts and look after the interests of its customers. So if someone has an account which is unused in all respects, for 6 years, with a steadily growing overdraft then they should make some effort to prevent this - it's either been forgotten, or being ignored, either way it shouldn't be allowed to continue.

I've asked for the original terms and conditions of the account (I don't hold much hope of getting them though) but I think there must be something in there which supports my argument. Lloyds 2017 T&Cs for example:

There are limited circumstances where we can close a Basic Account. We may decide to close your account if we become aware that you have:

• not used your account for more than 24 consecutive months;

pg 20, "We will review your Planned Overdraft at least once every 12 months."

Pg 26:

2. Suspending a service or benefit
22.1 We may suspend a benefit, account or service if we think you don’t want it any more because you have not used it for 12 months...


There maybe more in the Banking Conduct of Business Sourcebook, or perhaps FCA or BBA perhaps also. Will read through when I get the chance.

Grateful for your thoughts, am I talking non-sense, or do you think there is something reasonable behind my points?

[charitynjw]

Re: Overdraft default date - fair or not? Statute barred?

Just some musings to kick around.

First, BMW v Hart.
Although it was an HP agreement, because of the value & when it was signed, it was outside the (then) limit for CCA-regulated agreements; it was therefore decided on contract law & T&C's of that particular agreement.
& it was decided (pretty much) that the creditor did not have to accept the breach of contract until/unless they wanted to do so.

ie Lord Justice Moore-Bick at 25

1. In my view, the judge was wrong to think that that decision applied to the present case. In this case, the right to recover the sum set out in clause 12 did not arise unless and until the hirer gave notice to terminate the contract. That was a right that he could choose to exercise or not, but unless he elected to do so, the contract continued in existence and instalments of hire would have fallen due at the stipulated intervals. Under section 5 of the Limitation Act 1980 time in a case of this kind runs from the date when the cause of action accrues. In this case, the cause of action to recover the amounts claimed under clause 12 did not accrue on the customer's default alone, but only upon the election of the hirer to terminate the contract*.

*My emphasis.

I have read some articles which suggest that, on the back of this judgement & with careful planning, creditors could 'extend' the 6 year limitation period by quite a considerable margin.

Even those 2017 T&C's which you've quoted above are clearly at the discretion of the creditor/lender.

Were you given regular statements?
If so, that may be proof that you were aware of the status of the account & that you affirmed the arrangement.

I don't know enough about BCOBS to comment, but it might be an idea to have a chat with the FCA.

[puffinbilly]

Re: Overdraft default date - fair or not? Statute barred?

Yeah, i read that as well, lots of 'may' included. So i understand that it is at the banks discretion, but still, they state they will look at the account at last once every year, and yet on at least 6 different occasions a bank manager has not deemed there to be an issue with the account. I really need to understand what a the obligations are of a responsible bank I think, I'll give the FCA a call tomorrow as you advise. Thanks.

I certainly didn't get any statements, whether they were sending them out to an address I didn't live at is another matter. I doubt it though as I have tended to only use one address (my parents) for things like bank accounts as I have always moved around a lot and it takes a lot of time and effort to keep updating addresses with anyone who might send me things.

What's happened doesn't feel morally fair, but then then morally correct and legally correct are two very different things!

Thanks very much for your time and consideration of this. It hangs over me but without any expertise in the area, going up against people who do this day in day out is quite tricky.

Thanks again,

[Kati]

Re: Overdraft default date - fair or not? Statute barred?

[MENTION=48934]Debt Camel[/MENTION] might know something?? I've tagged her xx

[Diana M]

Re: Overdraft default date - fair or not? Statute barred?

Hoist 2 is claiming that I have a defaulted Lloyd’s current account overdraft - last paid into in 2007 (when I thought I paid the entire amount off), and then a default notice recorded on my credit reference Oct 2013 (no letter received warning me of this). I have never recognised the debt

Have you received a court claim from Hoist?

They (Hoist) don't enter into conversation with the debtor so is this debate you've been having between you and Robinson Way or their solicitors Howard Cohen?

Di

[charitynjw]

Re: Overdraft default date - fair or not? Statute barred?

It may also be a wise move to SAR Lloyds for all data held.
Hoist & it's minions probably only have scant details, & all they're concerned with is getting their 'pound of flesh' (having paid for roughly the equivalent of an ounce or so!).
I think I'm safe on this......I haven't seen anything about the Merchant of Venice being done for using avoirdupois. Yet!

[Diana M]

Re: Overdraft default date - fair or not? Statute barred?

all they're concerned with is getting their 'pound of flesh' (having paid for roughly the equivalent of an ounce or so!).
I think I'm safe on this......I haven't seen anything about the Merchant of Venice being done for using avoirdupois. Yet!

If Shakespeare were still alive I expect an over-zealous Trading Standards officer would attempt to prosecute him

Di

[charitynjw]

Re: Overdraft default date - fair or not? Statute barred?

If Shakespeare were still alive I expect an over-zealous Trading Standards officer would attempt to prosecute him

Di

They would have to be 'bananas'!

:lol:

[Debt Camel]

Re: Overdraft default date - fair or not? Statute barred?

As there isn't a simple answer to the question "when does an overdaft become statute barred" it makes sense to look at the specifics of [MENTION=97572]puffinbilly[/MENTION]'s situation.

You say you thought you cleared the overdraft - do you mean you thought you got it back to zero and then ignored it? Or you actually told the bank to close the account?

What did the account stand at when you stopped using it in 2007?

Did you used to get bank statements for this account? Nowadays the idea seems a little quaint, but back in 2007 most people would have been sent monthly or quarterly statements. If so, how long after that were you at that address?

Did you have any other accounts with Lloyds after this? What is interesting here is whether they knew how to contact you in 2013.

[puffinbilly]

Re: Overdraft default date - fair or not? Statute barred?

Thanks very much for all of your responses. In answer of your questions:

Basically I paid a lump sum off, and then forgot about the remaining balance and indeed the account all together. So I guess that's ignoring it, though I didn't mean to.

No, they have not started court action, and I have been told (as I have been a few times before) that their action is on hold until they have responded.

I have asked (again) for my statements showing the detail (4 Nov 16) but received a letter saying they were still working on it mid Jan 17. I rang them a few days ago and the girl said something along the lines of: Oh we knew it was statute barred so that was why Hoist hadn't responded yet. She has now said she will get someone to send a response, including statements and T&C for the account.

The account was just over £400 in 2007, my last action was to pay in just over £500.

So I have typically used my parents address for things like this as I have aways moved around too much, and the administration of changing addresses frequently is something that my 19 year old self wouldn't of paid a high enough priority to, and my slightly older self was forever being sent abroad by work, so they could monitor my post. So any statements would of gone to their house for me, and when they moved (once since 2001, I need to find out when that was though) they would of had the Royal Mail forwarding service for a period. That said, I don't have the statements. It might also be important to note, that I have always been formally registered at their address, with only the one house move.

I haven't had any more accounts with Lloyds. Plenty with other banks though. In 2013 - oh yes - the letters started informing I had defaulted and the sum was now over £1600 but they had kindly come up with a payment plan for me. My responses for detail and to the advise template letters (statute barred etc) have been met with long waits and then half answers. Obviously lots of letters very similar to the first one, but without any reference or answers to my letters.

I shouldn't have let it go on for so long, but I've found it hard to find the way to get independent advice on the matter, combined with work sending me to places I couldn't keep following up on the matter. So I am very grateful to stumble across this forum and you all for your help.

Thanks again.

[charitynjw]

Re: Overdraft default date - fair or not? Statute barred?

......and the girl said something along the lines of: Oh we knew it was statute barred so that was why Hoist hadn't responded yet.

While helping a friend a couple of years ago, I had a similar conversation, not with Hoist, but with one of the other well-known debt purchase companies.
The girl said "Now that you have actually told us it is statute-barred, we will remove you from our list".
As I had already obtained her name & from which dept. she was based, I followed it up via email.
That seems to have knocked it on the head

[puffinbilly]

Re: Overdraft default date - fair or not? Statute barred?

Ahh, in my rush to respond before work this morning I made a mistake. The girl actually said 'wasn't' statute barred as they knew the date was oct 13. But she couldn't explain why it was that date, nor why it couldn't have been earlier. Not much about anything to be honest. My point being that according to step changes' website, the SB timeline starts at the earliest point a creditor 'could' have started recovery action. (Or last acknowledgement or payment, which never is the most recent)

I would argue that this could have been at any time over the preceeding six years when my account was monitored/reviewed (by loyds) and would have been clearly dormant.

[puffinbilly]

Re: Overdraft default date - fair or not? Statute barred?

So, sorry to pull up such an old post, but I thought it might be nice to follow up after all the advice you gave me in February.

This year, (and for a long time before) I have traded letters and phone calls, and pleased to say I have finally won! They are buying the debt back from Hoist, cancelling the debt, removing the default from my account and both LLoyds and Robinson way are paying me compensation!

A great result, but question now is to try and work out if the compensation they are offering satisfies the amount of hardship and worry I have had to endure fighting this, not least to compensate me for the impact of having a default rating etched on my credit file for so long.

For all those fighting it....make sure you are happy you are in the correct, and then don’t give up! Don’t let them get away with making statements seem like fact. Remember they are biased (as you are) and their job is that get money from you. Your job is to make sure someone impartial resolves it...complain to them, and then complain to the ombudsman. Their complaints team will he forced to answer fairly, their customer services sales people can fob you off.