First Right of Appropriation
This page explains what the first right of appropriation means and how you can use this right to stay in control of your money.
Example - Your wages from your part-time job or a benefit/hardship/support payment from the council are due to be paid into your bank account and you need the money to cover your electricity and food bills. However, you have exceeded your agreed overdraft limit by a couple of hundred pounds and the bank wants to use any money coming in to reduce this.
What does First Right of Appropriation mean?
Put simply it means that when you pay money into your account, you have the right to tell the bank how you want that money to be used. Therefore you must inform them how you want the money to be used at the time of payment. If you don’t give your bank instructions at the time of payment then they may decide how the money should be used.
How can you use your Right?
It is best to send written instructions to your bank in case of any later dispute. It is also a good idea to request that the bank acknowledge your letter or you could send it via recorded delivery. An example of a letter is available below. You will need to add your name, address, the date and your account number. Please remember to keep a copy of the letter you send. If the bank does not write to you within one month to confirm they have received your letter, please contact them.
When is it not useful?
Although appropriation can be a useful tool in the short term, the bank is only likely to accept instructions for a short time before withdrawing banking facilities, so at some point you may need to open another bank account elsewhere.
Where you have a current account and a personal loan with the same bank, appropriation cannot be used to stop an internal transfer to the loan account.
What can I do if the bank won’t accept instructions?
Pay the money into another account if you can.
If the money has been paid in and the bank won’t return it, immediately start the bank’s complaints procedure.