MoneyTimes - December 17, 2013

Posted by Jill Kerby on December 17 2013 @ 09:00




Shopping around for a new credit card, or an affordable current account isn’t exactly what most people have in mind at this time of year, but if you are a soon to be ex-Danske Bank customer, you may want to get a jump on the other 150,000 customers who will have to do just that in the coming months.

The first set of letters to customers with current accounts, savings accounts and credit cards, are dated December 5, but received in our household on December 11, have informed them that they either have two or three months with which to find an alternative service.

Current and savings accounts have two months from the date of their letter to find a new bank or deposit taker, after which their Danske Bank facility will end.  After that date, no cheques will be accepted or cashed; direct debits and standing orders will not be honoured. Overdrafts will also be withdrawn and any balance credits or savings returned.

In the case of credit card holders, the outstanding balance owed will have to be repaid to Danske within three months from the date the letter was received. As with repaying the overdraft on a current account, this could be very tricky for the person with a large, stubborn credit card balance off which they have only been paying the minimum monthly amount for a number of years, or who has a track record of missing payment dates.

In its letter, under ‘Customers in financial difficulty’ Danske Bank says, “We will continue to work with customers who are in financial difficulty in line with our existing policy and Central Bank of Ireland codes. We are fully committed to support any customer who is experiencing financial hardship.”  It then provides a telephone support line, 1890 866 866 for such customers.

Usually when a bank customer is in financial difficulty and unable to pay a personal loan or credit card balance, their bank suggests a meeting during which their personal finances are scrutinised and options emerge:  credit cards and even overdrafts with high interest rates are typically converted into lower cost, more affordable personal loans. Sometimes, some debt is written off.

Danske Bank would prefer that you find a new bank to sort out your financial difficulties, but clearly this will not be possible for everyone. Rather than force such customers into new Insolvency Service of Ireland arrangements like a three year Debt Relief Notice (DRN) or a five year Debt Settlement Arrangement (DRA) in which they will become just one of many creditors sharing a very small pot of money (over three or five years), they may very well resort to an informal credit arrangement themselves, which would most likely result in some debt write-off.

Such an informal arrangement is unlikely though if the customer has too many other debts or their circumstances are unlikely to improve. Whether Danske Bank likes it or not, that person may have no choice but to seek protection under the new insolvency legislation.

Another set of letters is also being sent out before the end of the year, a spokesperson said, and these are being sent to people with multiple accounts that include could personal loans, mortgages and other financial services.

All loan terms and conditions will continue to be honoured even after the bank ceases retail trading. Customers will continue to pay their loans as normal to Danske Bank, which will continue to have a business banking presence here. Other banks, like Bank of Scotland Ireland, turned over the administration of these loans to a financial outsourcing agency like Certus, when they stopped trading here, but there is no suggestion, at the moment anyway, that Danske Bank will farm out their loan administration.

A final tranche of letters will also go out to customers “with complex issues”, the spokesperson said.  These will probably involve cases that two readers have contacted me about in recent weeks: they are both holders of sophisticated ‘offset’ or current account mortgages in which their loan balance is offset by any credit in their current or savings accounts. Sliver by sliver, day by day the offsetting effect of this money over the years reduces the total capital that has to be repaid and on which interest would otherwise be charged.

Without a current or savings account, an offset mortgage, which is usually also a tracker loan, is redundant. These Danske Bank customers will be very interested to see what offer will be made to them.

With so many people looking for new banks and new credit facilities, anyone who gets a letter from Danske this month may want to move sooner than later.

The other banks – AIB, Bank of Ireland, Ulster and PTSB are providing switching packs for Danske Bank customers and say they are keen for their business. You will only know this when you ask them to take you…and your overdraft or credit card balance.

1 comment(s)

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