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Bank charges: UK banks increasingly use 'legal theft' to pay off debts

UK banks are taking funds from consumer's bank accounts to pay off their credit card debts and loans, according to new figures.

Citizens Advice has revealed that it has received 80 per cent more complaints about British firms using the 'set off' law in the past year.

The practice, which has been branded as legal theft, allows banks to drain cash from an in-credit account to cover any outstanding debts owed by a customer.

In 2006-2007, Citizens Advice received 387 inquiries about the issue, but this figure rose to 713 in 2009-2010.
A spokeswoman for Citizens Advice said: "Banks swoop in when current accounts are in credit, often leaving customers with no money to pay their mortgage and bills.

"This can lead to extortionate unauthorised overdraft charges, which mean the customer spirals further into debt."

The FSA confirmed the 'set off' rule was legal although it wants to ensure banks are "treating customers fairly".

Posted by Jennifer Haines

Jennifer's speciality knowledge is credit card changes and balance transfers.ADNFCR-2776-ID-800073066-ADNFCR

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