First Right of Appropriation
If you have a bank or building society account that you have your benefits and wages paid into and it is overdrawn, the bank will usually use this money to reduce the level of your overdraft.
However, regardless of whether the account is overdrawn, you have the right to choose how the money paid into your account can be used. This is called the ‘first right of appropriation’. This is a temporary measure and it allows you to earmark essential bills that you need to be paid, such as your mortgage, rent, gas and electric.
What do I need to do to get my essential bills paid
You will need to contact your bank or building society and instruct them, in writing, that the payments being made into your account are to be earmarked to pay for specific items, which you will need to list.
You can exercise your first right or appropriation, even if the bank has already taken the money leaving you without enough money to cover your essential bills. You need to contact your bank or building society straight away to discuss your situation and to request a full or partial refund.
What do I need to write in my letter
When you write to your bank or building society, you will need to include your account details, name and address, the amount being deposited and on what date the money will be paid in.
You will need to formally request that you want to exercise your ‘first right of appropriation’ and to state what essential bills you need to cover, how much, on what date and for how long. It is advisable to write the bank or building society prior to the deposit being made and to keep a copy of your letter in case of any disputes.
What will my bank or building society do
When you make a request under the first right of appropriation, the bank or building society may decide to either freeze your account and / or remove your overdraft facility if you have one.
The first right of appropriation can be a useful action in the short term. However, the bank or building society are only likely to accept your instruction for a short time before withdrawing your banking facilities completely.
If you have a current accounts and any loans with the same bank or building society, then appropriation cannot be used to stop an internal transfer to pay for the loan.
Important points to remember:
- Make your request in writing
- Keep a copy for your records in case of any disputes
- The bank or building society must act on your request
- You have the right to make a complaint if they refuse
- Make sure you fully understand the implications to your banking facilities before making the request
- Remember this is a short term option only
- Discuss your situation with your bank or building society - they may be able to help you in other ways
- Seek advice from money advice services to help you get back on track financially