Barclays bank demanding settlement of overdraft even when they have a personal guarantee.

[William d-fens Foster]

Hi - This is my first post and as you can imagine I need some advice/help. I have been running my business now for 12 years and had various ups and downs have never made a huge amount of money but neither have I borrowed any or been in debt. My nature of business changed quite dramatically last year when my major supplier change his terms of business with me over night. This needed some fancy footwork and some help from Barclays with whom I have banked with for at least 11 years - I have had a overdraft facility with them for some time and had up until that point never used it - that facility was 25k. I have been open with the bank since the start of this change in my supply chain and told them I would need to use it for a period of time. My old Business Banking manager has been moved on to pastures new and i now have a new chap - I had a letter at when he took over telling me of the change - this i believe was a generic round robin send to all his new clients. Two weeks ago he demanded that we should have a meeting - fine!!! Thats what they should do!??
When I arrived at the bank i was greeted by a very strange fellow - he had read none of my notes i had set to him prior to the meeting (I had put together a letter telling him about the business and its past banking history and future projections). He did not even know what we did!!!!!!! He ad not read any of the notes GGGGGRRRR and was then given a hours lecture about running my business and how to do it properly. i have asked him to bare with me for six more months with the overdraft in place as i have completely changed my business and its future profitability - reduced cost improved my offering and the way it is sold with may suppliers rather than one major one. However he is demanding full payment of the overdraft by taking out a loan through the bank. I have shown him i will no longer need the overdraft by next summer - but he insists i take the business loan. Has this happened to anyone else - what should i do. Oh and buy the way he cannot tell me what the interest rate might be other than it will be high!!!!! I will not be allowed a overdraft after taking out the loan.

 

[Energise Accounting]

They can call in overdrafts at anytime. If you are confident of paying back the loan quickly a secured loan on a property would reduce interest.

 

[Mark T Jones]

In a nutshell your options are to take out the loan as required, look for an alternative bank who will offer an overdraft, take out a loan elsewhere or see if your bank will compromise on part loan part overdraft

Banks are very keen to limit their exposure to overdrafts as they don't score well on capital adequacy rules.

Also, from experience (and knowing nothing about your business) arrangements to reduce overdrafts swiftly often fail which could end up costing you a lot of money in fees.

 

[Energise Accounting]

I don't know if applies to your business i have seen this quite a lot when companies use factoring.

 

[Paul Kelly ICHYB]

Ask them t write to you to confirm they are withdrawing the overdraft, as it might be a tactic to move you to another product. If they send it to you, assuming you have a good banking history and the business is profitable, this should be achievable.

You could also look at taking a loan out with a lender offering better value (they will not be that competitive). This would also be cheaper than the overdraft have you compared the banks own rates?)

I would also complain to the Financial Ombudsman Service as they need to know about this mistreatment.

Not something I would normally recommend, but also let your MP know. They are always looking for ammunition to bash the banks with.

 

[Clinton]

I would also complain to the Financial Ombudsman Service ...

On what grounds?

 

[Paul Kelly ICHYB]

The FOS wants to hear from any business who believes it is being bullied or manipulated by their bank.

 

[Clinton]

I was not aware of this. I thought it was the like of vulnerable customers (rather than businesses).

I'd like to reaserch it; do you have any links?

Thanks.

 

[Paul Kelly ICHYB]

I met a few people from the FOS who told me this - if you have any grievance you can go to them, but it is limited to micro/nano businesses and SMEs (<£2m t/o) - this is a perfect example.

Have a look here:
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/108/108-smaller-business.html

 

[Clinton]

Thanks for the link. I've had a read.

As you say, they do invite small businesses to get in touch if they have a grievance. But I'm not so sure about "bullying" or if the OP has a case (where the bank is just following its own terms and conditions when terminating overdraft facilities).

In fact, the first real-life example the FOS quote on the page is of a bank wanting to convert an overdraft into a loan. This is very similar to the OP's case. The FOS doesn't see that as bullying and they decided in favour of the bank.

 

[Paul Kelly ICHYB]

But since then, banks have been using this tactic as a way to increase returns with loan set up fees and high interest rates.

Back to the OP, the should find third party funding for the OD or move to another bank who will service the OD.