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Law lets banks pay your rates arrears

A quick guide has been put together to help those who complain about their bank paying off their council rates arrears.

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The Banking Ombudsman Scheme receives complaints every year from property owners with a mortgage who find the bank paid their rates arrears and took the money from their account.

The Scheme’s quick guide explains the law permits local authorities to demand a bank pay its customer’s rates debt.

Under the customer’s contract with the bank, the bank is able to deduct the amount from the customer’s account.

Banking Ombudsman Deborah Battell said the issue affected a small number of people but sometimes those who contacted them were already under financial pressure.

"Seeing their account debited for rates arrears can be a shock,” Ms Battell said.

“Our investigations into these complaints consider whether bank communication and information is adequate. It is usual bank practice to inform customers about the debit. We are not generally able to overturn payments but if we find the bank has done something wrong we will consider whether compensation for distress or inconvenience is warranted.”

The Banking Ombudsman Scheme investigates and resolves disputes between customers and their banking service providers.

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