Jump to content
House Price Crash Forum
TheEmperorHasNoClothes

Crunch Time For Bank Charges Case

Recommended Posts

Crunch time for bank charges case

http://news.bbc.co.uk/1/hi/business/8112520.stm

The future of overdraft fees paid by millions of customers could be decided after an appeal in the House of Lords this week, starting on Tuesday.

Five Law Lords will hear an appeal by the UK's main banks against an earlier decision this year by the Appeal Court.

It upheld a ruling from last year that the Office of Fair Trading (OFT) had the power to decide if bank charges were fair or not.

About one million people are waiting to see if they can reclaim their charges.

"We certainly hope the House of Lords will uphold a very strongly worded judgement of the Court of Appeal," said Chris Warner, a lawyer with the consumers' association Which?.

At stake is £2.5bn of income each year for the banks, and overdraft charges as high as £40 each time someone goes overdrawn without permission, or has a cheque or direct payment bounced.

"I hope the House of Lords will make a very clear finding that the bank charge terms are subject to the Unfair Terms in Consumer Contracts rules," said Marc Gander of the Consumer Action Group (CAG).

I think the banks will lose the appeal, will have to pay back billions and lose billions in future revenue. Will we see another bank collapse though?

Share this post


Link to post
Share on other sites

The banks know they're going to lose, and have money ringfenced for the eventual, inevitable conclusion.

I have no sympathy for the banks. As with the the sub-prime crisis, the banks are the architects of their own downfall. Charging people 60 quid for bounced cheques was never going to stand up to legal scrutiny.

Share this post


Link to post
Share on other sites
The banks know they're going to lose, and have money ringfenced for the eventual, inevitable conclusion.

I have no sympathy for the banks. As with the the sub-prime crisis, the banks are the architects of their own downfall. Charging people 60 quid for bounced cheques was never going to stand up to legal scrutiny.

Yes and the argument that these charges are needed to avoid monthy current account charges is absurd. In other words they are admitting they get the poorest people to fund their business so the richer people can use it for free.

It's a similar business model to the companies who give you cashback when buying a mobile phone which is greater than the amount you pay for the entire contract ... they rely on people making mistakes (i.e. forgetting to claim, not sending the form by recorded delivery etc.) to make a profit.

The banks are relying on mistakes or misfortunes of customers to make a profit from their current accounts. Great plan eh!

No wonder the banks welcome fraud!

Share this post


Link to post
Share on other sites

Stimulus 2.0

What happens when you give hundreds, in some cases thousands of pounds back to feckless people who cant manage their money?

They piss it straight back up the wall.

Share this post


Link to post
Share on other sites
Stimulus 2.0

What happens when you give hundreds, in some cases thousands of pounds back to feckless people who cant manage their money?

They piss it straight back up the wall.

Are the "feckless people" you're talking about Fred Goodwin et al?

Share this post


Link to post
Share on other sites
Yes and the argument that these charges are needed to avoid monthy current account charges is absurd. In other words they are admitting they get the poorest people to fund their business so the richer people can use it for free.

It's a similar business model to the companies who give you cashback when buying a mobile phone which is greater than the amount you pay for the entire contract ... they rely on people making mistakes (i.e. forgetting to claim, not sending the form by recorded delivery etc.) to make a profit.

The banks are relying on mistakes or misfortunes of customers to make a profit from their current accounts. Great plan eh!

No wonder the banks welcome fraud!

I have paid for my current account for years, £17 pm.

Totally agree about the so-called "cash-back". The hoops you have to jump through mean hardly anyone bothers to claim it. :angry:

Share this post


Link to post
Share on other sites

I'd like to see bank charges stay for unauthorised use of overdraft...

If you can't manage a bank account then don't have one.

Oh hang on the govt wants everyone to have one so they can watch what you spend.

They allow short term lending by doorstep lenders to be at silly % (Isn't one at 600%?) so why can't the interest rate on the unauthorised overdraft (or stealing money from the bank as it should be known) be something similar?

Then it could be charge free.

Share this post


Link to post
Share on other sites

Why should you have to pay to allow the banks to use your money as collateral for financing their reckless behavior??

They need our money more than we need the bank account.

If they ever started charging for having a current account, then I for one would not use the bank, and go totally cash.

Share this post


Link to post
Share on other sites
I'd like to see bank charges stay for unauthorised use of overdraft...

If you can't manage a bank account then don't have one.

Be careful... bad circumstances can happen to anyone, even you Sarah!

Do you want banks to rake it in to pay big bonuses for their fat bosses, or would you rather your friends get their cash back that's rightfully theirs (I say friends, because obviously you have never been overdrawn).

As a matter of fact I have never had an unorth overdraft since being a student many years ago, but I still want to see these unfair charges scrapped.

Share this post


Link to post
Share on other sites
Yes and the argument that these charges are needed to avoid monthy current account charges is absurd. In other words they are admitting they get the poorest people to fund their business so the richer people can use it for free.

Wrong. They're getting the feckless to fund their business so that the responsible can use it for free.

In any case, if this judgment goes as expected, I predict two likely consequences.

1 - only the profitable current accounts (e.g. someone on an above average salary and relatively few, high amount transactions per month) will continue to be free. If you have a low income and make lots of relatively small payments, expect one of them to be your monthly account fee. Apparently the average current account costs the banks £150 or so a year to operate (according to Wake Up to Money on R5 this morning); that'll make your monthly account fee around £12.

2 - the end of the 'unauthorised overdraft'. As the banks will no longer be able to make a significant profit out of selling this service, you simply won't be able to complete a transaction that sends your account into the red unless the OD has been pre-authorised. The computer will simply say no. Cue benefit-subsistent single mothers on the BBC whining about the heartless banks forcing her onto the breadline when her Switch card was rejected after she tried to buy fags and booze...

Edited by The Ayatollah Bugheri

Share this post


Link to post
Share on other sites
Wrong. They're getting the feckless to fund their business so that the responsible can use it for free.

In any case, if this judgment goes as expected, I predict two likely consequences.

1 - only the profitable current accounts (e.g. someone on an above average salary and relatively few, high amount transactions per month) will continue to be free. If you have a low income and make lots of relatively small payments, expect one of them to be your monthly account fee. Apparently the average current account costs the banks £150 or so a year to operate (according to Wake Up to Money on R5 this morning); that'll make your monthly account fee around £12.

2 - the end of the 'unauthorised overdraft'. As the banks will no longer be able to make a significant profit out of selling this service, you simply won't be able to complete a transaction that sends your account into the red unless the OD has been pre-authorised. The computer will simply say no. Cue benefit-subsistent single mothers on the BBC whining about the heartless banks forcing her onto the breadline when her Switch card was rejected after she tried to buy fags and booze...

Don't get me wrong i'm not against fees - they just need to be in proportion to the "crime". £10 overdrawn = £30 fine. Work out the interest rate on that one. The "feckless" should be punished, but it shouldn't be at this level.

Would you like a £30 fine for a late return on a rented video? Or a £200 fine for parking 5 minutes over at a pay and display? Or perhaps lose your £1k damage deposit due to a scratch on the kitchen surface?

#1 seems reasonable to me and it would create a whole new way of thinking about money, with many people on lower incomes considering just using cash. The goverment may have to literally print more money! It would be a fairer system as you are paying for the service you are getting. Like joining a gym - you may choose a gym without a swimming pool because it is cheaper - fair play. You may choose a bank account without branches, or without a credit card etc. because the monthly fee is lower. This is a far more transparent system.

#2 - I don't see how this is a consequence? Surely a feature where you go into the red for a small fee + interest perhaps at a higher rate than a typical loan would be profitable for the bank, and would be reasonable for the consumer. 1%/mth interest is OK on a small amount over a few days. A fee of £1 / £2 would be annoying but not unreasonable, and some people may make a habit of it a few times a year meaning more profit for the bank.

Share this post


Link to post
Share on other sites
(I say friends, because obviously you have never been overdrawn).

I was first overdrawn when I was 16 and the midland bank had to work out how to stop me. ;-D

Regular offenders deserve no sympathy. They need to learn to manage their money and perhaps a bank account isn't for everyone.

Edited by SarahBell

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   285 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.