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sossij

Bank To Face Penalty Fees D-day

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http://news.bbc.co.uk/1/hi/business/6270998.stm

Yorkshire Bank has been told that it may have to outline the "true cost" of bank penalty charges it imposes.

Judge Iain Besford made the order at Hull County Court when hearing seven claims for refunds of bank charges.

Originally, 44 claims were to be heard but most were settled earlier, some just minutes before the court hearing.

The remaining seven cases will be dealt with as small claims, where the judge said the banks would have to explain their charging structure.

Excellent! Lets see the debt-peddlars wriggle on this hook :)

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OK, I'll give it a go.

Bank and customer agree overdraft facilities at small charge. Bank gives customer a list of charges, albeit in little writing, in the event of any additional overdraft.

Customer accepts charges by requesting and accepting money or means of payment beyond overdraft limit.

The offer of a contract was made by the bank in little tiny writing. The contract was accepted by the customer by requesting money beyond their overdraft agreement. The cost of such borrowing was made available to the customer before entering into such a contract.

I don't like banks, I think that they rip people off all over the place. But then, I don't like the fact that so many people are shirking responsibility for their own finances, and I dislike it more than the banks.

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I don't like banks, I think that they rip people off all over the place. But then, I don't like the fact that so many people are shirking responsibility for their own finances, and I dislike it more than the banks.

Well said there!

I think you've summed it up very well.

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OK, I'll give it a go.

Bank and customer agree overdraft facilities at small charge. Bank gives customer a list of charges, albeit in little writing, in the event of any additional overdraft.

Customer accepts charges by requesting and accepting money or means of payment beyond overdraft limit.

The offer of a contract was made by the bank in little tiny writing. The contract was accepted by the customer by requesting money beyond their overdraft agreement. The cost of such borrowing was made available to the customer before entering into such a contract.

I don't like banks, I think that they rip people off all over the place. But then, I don't like the fact that so many people are shirking responsibility for their own finances, and I dislike it more than the banks.

I disagree. as far as I am aware, no one who campaigns on the bank charge issue is defending people 'shirking responsibility for their own finances'.

The banks system is designed to tempt people into debt & then trap them into a spiral of debt with charges. For those that don't realise that, should do their homework.

What is needed is transparency & a fair charge, not smoke & mirrors, this is what the banks are fighting tooth & nail.

If you have ever been paid wages late, or made a mistake with your cashflow as you are on a low income, why should you be saddled with years of debt for a simple mistake /oversight/ matter outside your control.

There is so much narcissism on this subject from 'bank defenders' it makes me sick. Do they ever speak to people on low incomes? It seem not from what they are saying.

This is aided by the deception of 'free banking' which is another myth.

The banking cartel give customers little choice, they all stick together and charge extortinate & criminal fees for the slightest error or misdemenor.

I would happily support a bank that did not rip customers off, but after research, could only find the more ethical Trodos bank http://www.triodos.co.uk who charged £5 for a bounced cheque a few years ago, but believe this has gone up to £20 now (still cheaper than the rest).

Sorry if this sounds a bit of a rant, but the whole 'you signed the contract, so tough sh!t' thing winds me up as it's so naive.

What choice did I have but to sign the contract, as in the modern world you need a bank account.

Edited by Saving For a Space Ship

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The banks system is designed to tempt people into debt & then trap them into a spiral of debt with charges. For those that don't realise that, should do their homework.

What is needed is transparency & a fair charge, not smoke & mirrors, this is what the banks are fighting tooth & nail.

In that was true, what they'd be campaigning for is an end to the practice of overdrafts altogether. It would be illegal to let account balances go below zero, full stop. Any cheques issued, debit card transactions attempted or ATM withdrawals attempted would simply be rejected if there were not sufficient funds in an account to cover the transaction. The only form of lending which would be permitted by banks to individuals would be formally negotiated loans, administered through a totally separate account to the borrower's current account (in the same way that credit card accounts have limits).

But of course that's the very last thing they'd like to see, as it would mean an end to the 'consume now, think about how to pay it [or, in many cases, don't think about how to pay it] later' culture which they so enjoy.

There is so much narcissism on this subject from 'bank defenders' it makes me sick. Do they ever speak to people on low incomes? It seem not from what they are saying.

I spent the first three years of my economically active life as a postgraduate student with an income of around £7k pa. I think that qualifies as 'low'. I kept within my means by not eating out, not going on foreign holidays, not having children ... in other words, exercising the sort of self-discipline that keeps anyone who wants to out of trouble. Immediately I was earning a decent salary, my first priority was to save up an emergency fund to cover the scenarios you mention, not buy a flash new car or spend two weeks on the beach in Florida.

What the bank charge campaigners really want to happen is for all bank customers to have to subsidise their habit, through monthly current account and/or per transaction fees. That will hit the 'low income' consumers which the campaigners cite in their defence so rigourously. I'm sure your cleaning lady on the minimum wage who is careful to stay in the black would absolutely love the prospect of having to pay £10 a month for her current account, or £1 per debit card transaction. Interestingly, on the last bank charge thread, none of the anti-bank campaigners cared to address this point. I wonder why...

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I disagree. as far as I am aware, no one who campaigns on the bank charge issue is defending people 'shirking responsibility for their own finances'.

The banks system is designed to tempt people into debt & then trap them into a spiral of debt with charges. For those that don't realise that, should do their homework.

What is needed is transparency & a fair charge, not smoke & mirrors, this is what the banks are fighting tooth & nail.

If you have ever been paid wages late, or made a mistake with your cashflow as you are on a low income, why should you be saddled with years of debt for a simple mistake /oversight/ matter outside your control.

There is so much narcissism on this subject from 'bank defenders' it makes me sick. Do they ever speak to people on low incomes? It seem not from what they are saying.

This is aided by the deception of 'free banking' which is another myth.

The banking cartel give customers little choice, they all stick together and charge extortinate & criminal fees for the slightest error or misdemenor.

I would happily support a bank that did not rip customers off, but after research, could only find the more ethical Trodos bank http://www.triodos.co.uk who charged £5 for a bounced cheque a few years ago, but believe this has gone up to £20 now (still cheaper than the rest).

Sorry if this sounds a bit of a rant, but the whole 'you signed the contract, so tough sh!t' thing winds me up as it's so naive.

What choice did I have but to sign the contract, as in the modern world you need a bank account.

Nice post Saving... The mindset of those who would have their so called "free" banking subsidised by others is no different than a BTL landlord who wants their mortgage/pension subsidised by others.

This is whole campaign is not about shirking responsibility for one's debts... it is about fairness: the banks are only allowed to charge you what it costs them to return a cheque etc, anything above this considered an unfair penalty charge and (FFS how many times?!) penalty charges are illegal in law. Yes, I know that you sign a contract with the bank, this does not allow them to behave illegally if you break the terms and conditions of that contract.

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What the bank charge campaigners really want to happen is for all bank customers to have to subsidise their habit, through monthly current account and/or per transaction fees. That will hit the 'low income' consumers which the campaigners cite in their defence so rigourously. I'm sure your cleaning lady on the minimum wage who is careful to stay in the black would absolutely love the prospect of having to pay £10 a month for her current account, or £1 per debit card transaction. Interestingly, on the last bank charge thread, none of the anti-bank campaigners cared to address this point. I wonder why...

Probably because it consists of a fantasy scenario that you made up and then put forward as an argument.

Edited by sossij

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Sorry; rhetoric like that doesn't cut it. Bank spokesmen have repeatedly stated that if they are legally prevented from operating the current regime of penalty charging, they will impose account charges such as the ones I describe. Furthermore, such charges are the norm for retail banking in virtually every other developed country. In some countries, banks simply refuse to let low earners have current accounts. Try opening an account in the US if you earn under $20k pa, and you'll find that (i) only a few banks specialising in sub-prime customers will give you an account at all, and (ii) even if you stay in the black, you'll pay more in charges per year than under the British system and you incurred one or two penalty charges over the course of the year.

Edited by The Ayatollah Bugheri

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Sorry; rhetoric like that doesn't cut it. Bank spokesmen have repeatedly stated that if they are legally prevented from operating the current regime of penalty charging, they will impose account charges such as the ones I describe.

And you swallow everything these spokesmen say?

I take it you'd prefer the current situation where your "free" banking is subsidised by others?

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In that was true, what they'd be campaigning for is an end to the practice of overdrafts altogether. It would be illegal to let account balances go below zero, full stop. Any cheques issued, debit card transactions attempted or ATM withdrawals attempted would simply be rejected if there were not sufficient funds in an account to cover the transaction. The only form of lending which would be permitted by banks to individuals would be formally negotiated loans, administered through a totally separate account to the borrower's current account (in the same way that credit card accounts have limits).

Quoted in agreement.

What I'm really annoyed about is the assumption that banks have an obligation to provide you with money. They don't. You get paid your wages late, that's your employer's problem, not the bank's. If they lend you the money on an emergency basis, then it's only fair that you pay something for that. If you make a mistake, fine, everyone does it, but that's not the bank's fault. Why should they provide you with money for no charge?

Let me make it clear that I have no issue with fees being reclaimed for e.g. issuing a letter or returning a cheques as these are out of proportion to the cost of doing so. I do have a problem with fees being reclaimed for unauthorised borrowing, as

BTW, thanks Sossij. Thanks to your little bit of info about penalty charges being illegal, I will be changing my missed appointment fee from £60/hour to £200/hour. It seems that the fees have to be in line with costs, and £60/hour was a charge that I considered to be reasonable. However, since it is illegal, and my costs are approximately £200/hour, that is what I will be charging. Works both ways.

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BTW, thanks Sossij. Thanks to your little bit of info about penalty charges being illegal, I will be changing my missed appointment fee from £60/hour to £200/hour. It seems that the fees have to be in line with costs, and £60/hour was a charge that I considered to be reasonable. However, since it is illegal, and my costs are approximately £200/hour, that is what I will be charging. Works both ways.

Heh heh.. well I'm sure you could try that! :)

I think the point is that the law considers an unfair penalty charge one that is above your actual costs. Undercharging your customers what it actually costs you can hardly be termed an unfair penalty... except to yourself of course! :D

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The underlying point here is that what the campaigners are actually trying to achieve - though either they don't know it or they don't want us to know it - is the change from a system which, one could possibly argue, is unfair to a tiny minority of the banks' customers, to one which is clearly unfair to the overwhelming majority. If this method of earning revenue is policed out of existence, then the banks will simply raise that money in other ways. If the practices in other countries are any indication of what will happen here (and I know of no reason to suppose that they won't be), then these will take the form of monthly current account charges, per transaction charges and the refusal to let lower income people have accounts at all.

To paraphrase Jack Nicholson's line in 'Chinatown', the banks are not in business to be loved, but they are in business.

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The underlying point here is that what the campaigners are actually trying to achieve - though either they don't know it or they don't want us to know it - is the change from a system which, one could possibly argue, is unfair to a tiny minority of the banks' customers, to one which is clearly unfair to the overwhelming majority. If this method of earning revenue is policed out of existence, then the banks will simply raise that money in other ways. If the practices in other countries are any indication of what will happen here (and I know of no reason to suppose that they won't be), then these will take the form of monthly current account charges, per transaction charges and the refusal to let lower income people have accounts at all.

To paraphrase Jack Nicholson's line in 'Chinatown', the banks are not in business to be loved, but they are in business.

The banks are not short of money.

Your argument makes no sense. You state that a tiny majority are being treated unfairly, yet the banks will somehow have to make up the revenue that they will otherwise lose from this tiny majority by taking an equivalent amount of money shared between your "overwhelming majority". Shared between this "overwhelming majority" the amount of money per customer will be very very small. Otherwise we'd have accept that the tiny minority is getting absolutely cained in order to pay for the larger majority. In view of the huge profits that the banks make they will have a very hard time making anything other than a small charge across the board stick. If we accept your scenario that monthly charges will ensue from this campaign then the worst we can expect is for them to be very very small on a per head basis. If the banks try it on then change to someone who is cheaper or free - it's called competition. Remember the banks need us to pay our wages in every week/month.

I fear that you are letting them get to you with their threats to make charges across the board... and you are doing a very good job of making their case for them!

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Your argument makes no sense. You state that a tiny majority are being treated unfairly, yet the banks will somehow have to make up the revenue that they will otherwise lose from this tiny majority by taking an equivalent amount of money shared between your "overwhelming majority".

The 'tiny minority' I'm referring to are those who have (i) incurred penalty charges, and (ii) done so in a way which genuinely cannot be attributed mainly to their own negligence. Most of those who have incurred penalty charges have done so through their own misjudgments, and I have no problem with them subsidising those who have the self-discipline to stay in the black.

This article underscores what I've been saying:

Penalty charges underpin the UK's almost unique "free" current account system, which ensures customers in credit pay no fees on transactions, but the loss of clarity has also wrecked the relationship of trust between customers and banks.

She says: "It's about 'What's the real deal here - where's the real value for me?' " The upshot, she believes, will be a revolution - the biggest shake-up in UK banking since Midland introduced the free current account in 1984. "What this will cause is the industry to not do business in the same way it has done in the past," she adds.

If this campaign succeeds, there will be no long-term winners. In the short term, the campaigners will have their penalty charges written off and responsible bank customers will be hit with account charges. In the long term, what has happened in the US will happen here - a growth in financial exclusion for those on lower incomes.

Remember the banks need us to pay our wages in every week/month.

And remember that we need them in order to receive our wages every month (many employers will only pay by BACS these days).

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