Does NatWest have the legal right to apportion the money I give it as it likes?

Q I have a debt with NatWest - an overdraft on what was my current account and a personal loan. I've been making payments to both (among other debts) via the CCCS for about three years. It has now transpired that the bank has been putting both monthly payments against the overdraft (16.9%) alone so this has gone down and will be gone in around 4 more payments, but the loan (18.9%) has in effect doubled from the original amount taken out in 1998.

The CCCS says it divides payments amongst creditors according to the original monthly payment on loans (regardless of interest rate etc) so even though another loan I owe has decreased a bit during this last year, the NatWest increase has meant I have paid little off in total.

It seems that nothing can be done as to how CCCS divides my payments and I'm not allowed to put any extra money of my own into the NatWest loan to try to decrease it (the bank won't drop the interest rate) or I'll be thrown off the charity's debt management plan. I wish NatWest would take me to court as it would surely be cheaper in the long run.

Does NatWest have the legal right to apportion the money I give it as it likes (even when one payment is meant to be a loan payment, however small)?

RK

A Alan Cape of the CCCS says it is difficult to comment on individual cases without having all the information to hand. He says: 'The bank will have a legal right to set off monies received against any monies owing. Normally loans etc are passed from the branch to the Debt Recovery Unit and interest stopped or reduced.'