Questions Of Cash: Co-op Bank slashed credit limit after I was fraud victim


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Q. Someone used my old address to obtain a T-Mobile phone account. I found out because the postman for my old address tipped me off, so I contacted T-Mobile and stopped the account. Then I got a letter from a debt collection agency demanding £400 for cancelling the account.

I again phoned T-Mobile, which cancelled the bill and the debt collection action. It also apologised. But then I had a letter from the Co-operative Bank, reducing my credit card limit from £7,700 to £1,200. I asked why and was told there was an adverse credit reference, relating to the £400 debt.

The Co-operative Bank then agreed to reinstate my credit limit, subject to me contacting the credit reference agency to have the adverse reference deleted. Yet T-Mobile says it has removed this already. For 20 years, I have always paid my credit card bill on time. I don't see why I have to correct the errors of other people when I have been the victim of fraud. CW, London.

A. T-Mobile insists that it closed the fraudulent account and removed the adverse entry on your credit reference as soon as you made it aware of the fraud.

A spokeswoman says: "For people who believe they have had an account set up fraudulently in their name, we have a dedicated team who will investigate and close it quickly if it is found to be fraudulent. They will also prevent any further billing within a matter of days."

Despite this, some weeks later the adverse entry was still showing on your credit reference file, according to the Co-operative Bank. It confirms that the reduction to your permitted credit limit was the result of the adverse entry lodged by T-Mobile.

The bank adds: "As the default marker was placed on to [the reader's] credit file by T-Mobile there is a chance that the next time we, or any other of [the reader's] financial account providers, make an assessment, that his credit limits may be affected as the marker is still active ... we do not have the authority to remove the marker from his file held with [credit reference agency] Experian as it was not put there by us. Only T-Mobile can remove the marker." Where this is not done properly, the bank advises consumers to complain to the Information Commissioner.

The three UK credit reference agencies have established a shared process to support victims with credit reference problems relating to frauds. This can be accessed through the agencies – in the case of Experian, by emailing Experian insists that the responsibility for the accuracy of data provided to it lies with the company supplying it– in your case T-Mobile.

None of this explains why the Co-operative Bank told us that when it checked your credit reference in7 January the adverse marker was still showing, yet T-Mobile told us on5 January that it had removed this when notified of the fraud in December. We are assured that the adverse entry has now been removed.

Q. When I retire I will move from our family home in Kent to Norfolk. If I let my son and his wife live in the home without charging them rent, but on the basis that they pay the mortgage, does this create a formal landlord and tenant relationship? I am concerned about the implications for home insurance and my tax liabilities. JM, Kent.

A. Fiona Duff, solicitor advocate with the Butcher Andrews law firm in Norfolk, says: "Provided no rent is paid, that your son and his wife pay the monthly mortgage interest charges direct to your mortgagor and it's not intended that the payments towards the mortgage charges are in exchange for your son and daughter-in-law living at the property (which could be construed as rent), a landlord and tenant relationship would not arise. The arrangement would be construed as a licence.

"Payments towards a mortgage may result in having the unintended consequence of your son and daughter-in-law creating for themselves a beneficial interest in your property in Kent – although this argument isn't terribly strong if the payments only clear the monthly interest on the mortgage, as opposed to reducing capital.

"There are, however, practical issues to consider. What happens in the following scenarios: The mortgage interest payments can no longer be paid; You need to go back to live at the house in Kent; You need to go into care?

"It would be better to formalise the relationship by visiting a solicitor and providing formal instructions so that a written licence may be created setting out clear outcomes should certain events occur and to negate the possibility of any potential future disagreements between you all concerning whether or not your son and daughter-in-law were tenants, licensees or had a beneficial interest in your house.

"Another reason to formalise the relationship would be to clearly document the payments and their purpose so as not to run the risk of the Inland Revenue construing them as income payments for tax purposes and to [provide] evidence to your mortgage company that you are not letting out your property.

"There are other issues, such as notifying your insurance and mortgage companies that you will no longer be at the property and instead your son and daughter-in-law will be residing there, to avoid falling foul of your insurance terms or the conditions of the mortgage. You should also check with your accountant whether there are any other tax implications."

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