Terms & Conditions

[MissMoody]

Does anybody know how we take the one account into account for ctb.

My customer got a redundancy payment and with the money paid £42500.00 into her ‘mortgage/capital one account’. The one account has a facility of £68000 and now the customer has cleared the 42500.00 she has a balance of -£[5000.00 (approx). This means she has a mortgage outstanding of £5000. however this being a one account she can access that £42500.00 at any time as has not reduced her facility.

Any ideas, nothing in regs that i can find about one account in particular but only reasonable spending under deprevation of capital?

[Anonymous]

There have been a couple of discussions about this some time ago. If I remember correctly, I believe the DWP guidance on such accounts was that claimants should be treated as having no capital if there is a debit balance. Deprivation is not a consideration.

[MissMoody]

but thats cheating the system surely! thats so unfair to all those people who have genuine mortgage accounts. Somebody could have over £16000 in a savings account, but a normal mortgage account and not get benefit. but somebody else with over £16000 could have a one account and transfer thier davings into that, still keep the savings and use the money as normal but be entitled to every benefit there is!

thanks you, i will check the guidance.

[Anonymous]

We queried these types of accounts with the Adelphi about a year ago. This was their response:

“Following a recent enquiry about these accounts I consulted our legal branch for advice. The enquiry concerned two types of accounts and when we examined the related literature – one was a Virgin One account and the other was a Barclays offset account – the presentation was different. The Virgin One account amalgamates savings and income and all transactions take place through the one account so you could not identify any specific savings element. The Barclays account showed savings, currrent and mortgage accounts separately. We decided that where the account showed a separate savings element then that would be available capital. Where you cannot separate the accounts then you would only consider available capital if the customer actually withdrew a large amount, when he would have actual capital.

If someone started one of these accounts whilst in receipt of benefit you
may have to consider whether there was deliberate deprivation to get benefit but this would depend on the timing of the action etc. Any large amounts of capital withdrawn will need to be investigated to find out what the money has been used for.”

Hope this is of some use to you.

[Anonymous]

I used to have a One account myself, and I don’t think there was anything about it that was a “cheat”. It is an eminently sensible way to manage your money, and this lady is behaving in an equally sensible fashion by using her redundancy payment to reduce her mortgage interest payments. Unless you can show that one of her intentions (and a significant one at that) was to obtain or increase entitlement to benefit, she has done nothing wrong at all.

[Stalbansbenefits]

Although it certainly not ‘cheating’, I suspect if someone with a normal mortgage used the whole of a £45000 redundancy payment to reduce their mortgage and then claimed Job Seekers Allowance, the DWP would be considering deprivation. For my experience, the DWP frown upon anyone using capital to clear debts that they are not required to repay immediately.

I just take the view that, whether you consider it unfair or not, at least you will only ever be looking at CTB claims. Imagine how upset you would be if you were paying £300 per week Housing Benefit to someone who had just received £50000…

[Sam]

It does look rather flawed to me.

Especially the way in which they have said that 2 accounts that do the same thing but operate differently (One & Barclays) are treated differently. Ludicrous!

What is this world coming to. 🙄

[seanosul]

Why on earth would it be ludicrous for someone who is made redundant to pay off the mortgage?

[Mikeb2]

Its not ludicrous to pay of your mortgage… 😯

Its ludicrous that if the person had a Barclays account they’d get no benefit but because they chose a Virgin one they do(or might anyway…)

😕

[Kevin D]

Incredibly, I’m 99% behind Sean on this….. :).

Oh, what’s with the 1%, I hear someone ask? Only a qualification to the extent that I agree with Sean so long as there was not a “significant operative purpose” to obtain / increase HB/CTB.

Regards

[Anonymous]

But that’s the nature of the One account. For example, when I had one of these I had a “facility” of 90% of the value of my home at the time the account was opened. Say, for the sake of argument, that this was £90,000.

I then make a claim for CTB, at which point I actually owed Virgin, as the mortgage lender, £60,000. That is what my account shows – an [i:66565cb3f8]overdraft[/i:66565cb3f8] of £60k. At any point, I could spend up to another £30,000, taking my borrowings back up to £90,000, the limit of my facility. But that’s by borrowing against my equity in my house.

On the other hand, the Barclays account is not one account, it is three. With an amount clearly marked as being in a savings account, that’s capital, not equity.

[seanosul]

I am somewhat of the belief that most people choose the mortgage based on who is the cheapest / who wil give them one and not based on whether they can get an extra £12 + pw for ctb if things go pear shaped!

[MissMoody]

thank you everybody for your input. I have made the decision to take her redundancy payment into account as capital and therefore she has over the capital limit and fails to qualify.

She has found a new job now and earns more than most us put together i bet so i dont think she will loose any sleep about the “£12 pw in CTB”.

Being ex DWP i am of the opinion that when she paid made the decision to pay her money toward her mortgage or whatever ever it may be that this was an unnecessary repayment as this money did not need to be paid at that point as it had not been requested. She did not know what her circumstances would be over the next 6 months claiming JSA(c) and therefore had not accounted for this by exhausting the redundancy.

She can access £42000 redundancy at any time.

Thank you again all

[Anonymous]

[quote:a8acf86dfa]Being ex DWP[/quote:a8acf86dfa]

No disrespect, but what’s that got to do with the administration of HB/CTB? What does the fact that you don’t think “she will loose [sic] any sleep” got to do with reasonable decision making?

Personally (on the basis of the information you have given, and not speaking as a former DHSS employee) I think you have made an unsustainable decision, and I dare say there are one or two contributors to this site who would love to represent your claimant at Tribunal.

[seanosul]

Essentially you are disallowing her because she can get herself further into debt??

In Benefits we have absolutely no legal power whatsoever to declare something an unnecessary expense regardless of whether you are ex DWP or God doing a bit of contract work!

The LA can decide whether someone has deliberately deprived themselves of capital to obtain benefit entitlement. The fact that the Virgin One Account is a widely available commercial product designed to reduce the length of the average mortgage does not suggest that they have deliberately deprived themselves.

Your own justification for not paying appears to be more than sufficient justification for paying !

[quote:f174e63d18]She did not know what her circumstances would be over the next 6 months claiming JSA(c) [/quote:f174e63d18]

[Author]

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