Right to Offset

Can banks take your money from your account?
If you have debts with a bank or building society, in some exceptional cases they can take money paid into your current account to cover missed payments on other accounts you have with them.

This is called the ‘ right of set off’. It can also be called the ‘right of offset’ or ‘combination of accounts’.

Should I take money out of my bank if I have debts with them?
If you’re behind with payments to any loans, credit cards or overdrafts with a bank or building society, any money you pay into that bank could be at risk of being taken – although this rarely happens. To avoid any chance of this happening, we’d recommend you talk to your bank and explain that you’re struggling to keep up with payments.

Your lender may offer to:
· Separate any overdraft from your existing account
· Set up a new ‘clean’ basic bank account for you
· Help you to continue banking with them while you pay off debts you owe them

If your bank isn’t able to help, or you’d prefer not to stay with your current provider, we recommend setting up a new basic bank account with a provider that isn’t connected to any of your outstanding debts.

Can banks take your money without your permission?
A bank can’t take money from your account without your permission using right of offset unless the following conditions are all met:
1. The current account and the debt are both in your name. The position is a bit more
complicated with joint debts and joint accounts
2. The current account and debt are both with the same lender. A bank can’t take money from your account for a debt with a different company
3. The debt they’re taking money for is in arrears. They can’t take money by right of set-off if the debt repayments are up to date
4. They’ve warned you clearly in advance that they may use right of set-off if you don’t contact them or pay back your arrears
5. They’ve taken your individual circumstances into account and whether taking the money might cause you hardship

In practice it’s very rare for banks to exercise this right. However, if your bank has used right of set-off they must contact you to explain how you can avoid it happening again in future.

If you’ve been contacted by your bank to say they may use right of set-off, this is a sign that you’re in financial difficulties and you should get advice.

Don’t Struggle With Debt Alone