Banks' exploitation of obscure law could see rise in IVA needs

The revelation this week that banks have been taking money from customers' savings and current accounts without their knowledge, could lead to a rise in the number of individual voluntary agreements (IVA).

Under an obscure law, banks have been able to take money owed to them by customers from alternate accounts held by that customer, according to the Guardian.

Known as "setting off", this secretive practice by the banks could see people's savings plummet and result in them facing potentially serious financial difficulties.

According to the Guardian, the Financial Ombudsman Service (FOS) has huge increase in the quantity of referred cases linked to setting off.

In April 2008, the FOS received 50 cases; in April this year, that figure stood at 578.

This figure rose even further in June, with a spokesperson from the FOS claiming that over 1,100 cases had been received that month alone.

With the number of hardship cases linked to setting off increasing so severely, the effect of the banks' surge in action is clearly quite pronounced.

Depending on the significance of the debt problems people face, they should consider various forms of debt management advice or perhaps an IVA.

Source