Banks criticised for 'unauthorised transfers'

17/02/2009

Funds are being transferred from current accounts by banks without permission - playing havoc with some peoples' personal finances.

New analysis from Citizens Advice shows that cases of the unauthorised payments, which are levied by the banks to pay for credit card and loan debts, are on the rise.

A 25 per cent increase has been registered by the charity for each of the past two years, the BBC reports.

Speaking to the broadcaster, Citizens Advice said that they had come across cases where the transfers had left customers unable to pay for "priority debts" - such as mortgage and council tax payments.

It is also calling for the practice to be outlawed.

Responding, the British Bankers' Association expressed regret for the occasions on which banks took the money "inappropriately".

However, it defended the moves, saying that they were undertaken in compliance with the Banking Code.

Recently, an Office of Fair Trading report showed that 47 per cent of people had never considered switching the provider of their current account.

Just over one in twenty were found to have changed accounts in the past year.

Kevin Still, EuroDebt director, said: "One of our initial priorities as a Debt Manager when we are appointed by a new client is to look at the concentration of debt with the bank that the client's wages or salary are paid into for precisely this reason.

"We are able to set-up basic bank accounts for new clients or recommend the banks that are able to offer a basic banking service. Recent surveys have shown how seldom UK consumer switch banks, but in circumstances where your bank is paying other group companies ahead of your priority payments then this is the time to take action."

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle, Recent Graduate Debt,

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