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Bank Charges Test Case!

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Putting aside the stupidity of people using unauthorised overdrafts and racking up charges, I hope the banks have to pay back every penny. Screw them.

I wish someone would now try to abolish the central bank system.

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CH4 now

And the graph begins from it's highest point ever.. LOL that's given us a clear insight into the history of interest rates! not. vested interests are going to look evermore pathetic, and i'm sure this site is going to have it's heyday as this dry-spell kicks in. No doubt they'll be some spin on how flooding has undermined house prices blah blah blah.. and it's climate change we have to blame for falling house prices!!! imo

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http://www.moneysavingexpert.com/reclaim/bank-charges

EMERGENCY STOP PRESS NOTE. 26 July 2007

OFT To Take Test Case. All reclaims put on hold. Why weren’t we told?

In a surprise announcement the Office of Fair Trading has announced it has agreed to a test case with seven major banks to decide the principles of reclaiming in the High Court.

At the same time the regulator the FSA has said banks no longer need deal with complaints; the Ombudsmen is likely to suspend dealing with them too, and a request will go to the Master of the Rolls that all courts suspend current cases until we’ve had a test case. See the Channel 4 News video

http://www.channel4.com/player/v2/player.jsp?showId=7966

in which I was interviewed as the news broke.

Why weren’t we told?

This was all agreed when the announcement broke this evening (a day before it was due to because of a leak). The documentation says consumer groups will be consulted; yet why was this fait accompli announced without any consultation?

Why weren’t we told?

Over a million people are reclaiming using this site, and hundreds of thousands through sites like Consumer Action Group, however as far as I am aware so far, none of the consumer groups were consulted before this was done. Why weren’t the people who’ve been driving this campaign asked for a view?

What should be done?

This has saved the banks an estimated £200 million in reclaims by the end of the year. After all the vast majority of people who tried got their cash. While I welcome a test case, the effective moratorium is a worry.

I hope the result of this is not “we get a decision that bank charges are illegal and they must pay out if asked” after all that’d be little better than the situation we’ve had until now; what we need to know is that if we win and bank charges are deemed unlawfully high, the banks will be told by the regulator “you took people’s money from their accounts without asking, something even the taxman can’t do, so you must give it back to everyone without being asked.” This isn’t chicken feed, it could cost the banks £10 billion.

What should you do if you’re reclaiming or planning to?

This shock announcement has left a confusing situation. What about people currently in the process? What about those who’ve been offered a payout (whether they’ve accepted or turned it down)? What about those for whom their claim was around 6 years ago and thus the statute of limitations means the delay will count their claim out?

Frankly, as yet I don’t have an answer. Yet I do intend to find out and will of course publish it in detail here. If you want those answers, please ensure you get the weekly MoneySaving e-mail where I will attempt to keep you updated.

Edited by Saving For a Space Ship

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A few years ago I got really stung on exit fees from a 10 year fix it was 10 times the monthly charge is this something I have a case to claim back, by the way the Bank Manager who talked me into it because I'd just had a child alledgedly ended up in jail for being a stranger to the truth.

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Time to put the champagne in the fridge, Sossij.

Hi Ayatollah :)

While I hope the banks are told to stop their regime of unfair charges and pay back their ill-gotten gains I fear it will still be a slightly hollow victory if the banks do lose. In this whole sorry affair everyone except the banks has been and most likely will be the loser. The banks could have saved everyone a huge amount of misery, time and money if they'd just come clean from the start. By remaining evasive on their real charging costs they've done no one a favour.

I'm also suspicious as to why they've "agreed" to go to court now with the OFT after consumer campaign groups have been trying to get them in court for at least a year. I smell a rat. A report in the FT this morning states that the banks have arranged with the OFT a waiver to suspend all currently disputed claims against them until after the verdict. Even banks who are not party to this particular case can apply to the court to be covered by the waiver, although this will mean that they will be bound by the court's decision on the future of these charges. On a happy note, anyone who has had a settlement agreed with their bank should still receive their money.

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Mind you, any ruling from the high court is likely to take a long time, if not years. In the meantime all customer claims (not yet settled) will be suspended until after the ruling. I wonder if the banks will also suspend making charges until the same time? Somehow I doubt it... clever, clever banks.

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Agreed on the fishy smell - the banks have spent the last two years trying to avoid a definitive court ruling, and now they appear to have agreed to one with very little argument. So why the change of tack? I can only think of two possible explanations.

1. The banks think they have a realistic chance of winning the case, or

2. They've thought 'Sod this - if we can make large profits in a way that is unambiguously legit by charging customers monthly fees for current accounts and/or to process individual transactions, then we'll do that instead', and intend to use the next few months to put the new charging structures in place.

I fear that 2 is the most likely explanation.

Edited by The Ayatollah Bugheri

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Agreed on the fishy smell - the banks have spent the last two years trying to avoid a definitive court ruling, and now they appear to have agreed to one with very little argument. So why the change of tack? I can only think of two possible explanations.

1. The banks think they have a realistic chance of winning the case, or

2. They've thought 'Sod this - if we can make large profits in a way that is unambiguously legit by charging customers monthly fees for current accounts and/or to process individual transactions, then we'll do that instead', and intend to use the next few months to put the new charging structures in place.

I fear that 2 is the most likely explanation.

Either way, the banks always win... :(

Also note that while there has been a suspension of all customer claims against the banks until the high court decision, they in turn have been allowed to carry on charging customers unfairly. What we now have is a situation that will save the banks paying out a further £200M this year and allow them to continue profiteering! At the very least the FSA/OFT/FOS should have stopped both the banks making these charges and the claims against them. And should the banks lose, they'll only appeal and keep their gravy train goping for years. How is this supposed to be in the consumers' interest? The whole thing is a great big mess.

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My guess is that they've stalled the process while they do the back end restructuring work needed to bring in widespread current account charges and transaction fees. When this happens and there's the inevitable firestorm of protest from (literally) tens of millions of bank customers who stay in the black and therefore currently don't have to pay up front for banking services, the banks' PR machine will be able to point out the following, and will have a cast iron, legally watertight case for doing so:

1. The law does not allow them to subsidise some services (i.e. 'free' retail banking) with the revenue from others (unauthorised overdraft penalty fees).

2. The law only allows them to make a charge based on the cost of providing individual services.

3. Therefore, that'll be £20 a month for your current account, £2 per debit card transaction, 10% (of the value of the cash withdrawn) ATM charges, your debit card valid in your bank's ATMs only and £10 per cheque processed, please. Though if you're a high earner with at least £2k a month going into your current account, some banks will probably offer you a better deal.

4. Don't like it? Tough. The penalty charge protesters should have thought of that before they pushed the issue to court.

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Putting aside the stupidity of people using unauthorised overdrafts and racking up charges, I hope the banks have to pay back every penny. Screw them.

I wish someone would now try to abolish the central bank system.

"Screw them".....yeah so you and I subsidise them just like the Nulabour Government..!.... <_<

What is this 'Central Bank System' ....you mention ....?...I fail to understand the connection with the Bank of England ..the UK's Central Bank......Banks are regulated by Nulabours FSA...... <_<<_<

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My guess is that they've stalled the process while they do the back end restructuring work needed to bring in widespread current account charges and transaction fees. When this happens and there's the inevitable firestorm of protest from (literally) tens of millions of bank customers who stay in the black and therefore currently don't have to pay up front for banking services, the banks' PR machine will be able to point out the following, and will have a cast iron, legally watertight case for doing so:

1. The law does not allow them to subsidise some services (i.e. 'free' retail banking) with the revenue from others (unauthorised overdraft penalty fees).

2. The law only allows them to make a charge based on the cost of providing individual services.

3. Therefore, that'll be £20 a month for your current account, £2 per debit card transaction, 10% (of the value of the cash withdrawn) ATM charges, your debit card valid in your bank's ATMs only and £10 per cheque processed, please. Though if you're a high earner with at least £2k a month going into your current account, some banks will probably offer you a better deal.

4. Don't like it? Tough. The penalty charge protesters should have thought of that before they pushed the issue to court.

With respect, I think you are going a bit OTT there, or do have a link for a quote on those theoretical charges?

Presumably charges like that are impossible, because if the banks lose they will not be able to charge more than it reasonably costs them, plus a small profit.

There has been a lot of talk of the financial market being so competitive these days, that there will be no charges as Martin Lewis (arguably a mild VI, given his mse campaigns) believes, or probably small charges.

The Gov hav forced the disabled & unemployed to have bank accounts, as the 'cash the giro at the PO' is not so easy an option these days, so IMO, the banks cannot be that heavy on the low incomers.

The gov already virtually forces banks to give somone on a low income a very basic account if they do not have one. Anecdotally, I was told this by a Nationwide salesperson.

If only there was more support for local credit unions & more paypal (I know there are downsides) type online options .

What interests me that if the charges are proved unlawful (as I beieve they are) what happens

to all the 10's of £billions that the banks made for years unlawfully, going back more than 6 yrs.

I complained to the serious fraud office about this & was referred the the current FSA investigation, while being told that the FSA had the authority to refer the case to the SFO if it so wished. SO presumably 6 months ago there was no SFO involvement / interest.

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So how long do we think this will take to push through the courts?

Three months to be listed. Three weeks in court. Another 6-9 months for all appeals. Whole thing should be done and dusted by this time next year, which co-incidentally is when fee-based banking will be re-introduced.

Barclays and the rest of the big 4 will push for charging at Link machines again, cheques (which the banks have always hated) will be an extra-chargeable item. And you'll find that provided you keep a deposit of £500+ as well as pay-in £1000+ per month you'll pay minimum. You'll also be offered staggerringly untempting offers on insurance, health insurance, travel insurance, pet insurance, and car insurance - all 'worth' £500 per annum (which co-incidentally exactly matches your minimum fee). Branch-based banking will also be chargeable - payable on swipe-entry.

They'll also loads of 'deals' with Virgin Mobile, Virgin TV, Virgin Personal Hygiene Products, Virgin Water Bowsers, and Virgin Sewage Works, all conditional on that grinning idiot Branson getting on TV crossing the Atlantic in an inflated condom and being able to secrete more money away in a tax haven in his wife's/children's/pet budgie's names.

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This is how personal banking works in the UK.

Banks make 80% of their income from 20% of customers (well off customers with plenty of cash, big mortgages, multiple products, use credit cards loads and so on)

The challenge for banks is to make the other 80% of customers profitable. Its a sliding scale and at the end of the scale are people who have a low account turnover (i.e. don't earn a lot). These cost banks money. However, they tend to be the ones who use unauthorised overdrafts so the charges make this customer grouping profitable.

If the banks cannot make this money from this group they will just bring in monthly current account charges. One of the previous posters is correct in that people with a certain account turnover will be exempt from the fees (i.e. the people who the banks make money off) and people below that cut off point will pay a monthly fee. Banks will be delighted - its a simpler system, fewer rows with customers and they can get away with something they've been wanting to do for years.

I havn't worked in banking for a few years but around 1997 the bank I worked for reakoned accounts with a turnover of less than 12k were unprofitable.

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If the banks do lose, I hope they counter-claim money from all the f@ckwits accounts to the sum of Total bank charges refunded minus that which has been deemed legal. i.e. say £990 of £30 charges so 33 multiplied by say £11 would equal £363 back into the banks hands now for all the muppets that this push's back into the red and incurs further charges hahaha they might one day learn. Although I would be willing to bet they won't. I hope they enjoyed that holiday or new whatever they bought though!

Like I have argued all along I can't afford bank charges my family and I are on the edge of poverty and because of this we do not spend beyond our means OR gamble with other peoples money. When I have made mistakes in the past I spoke to my bank who sorted things out to everyones advantage... To think I might have to start paying for fools who can't don't bother to manage their finances properly makes my blood boil :ph34r:

Another thing - anyone who wants 'their' charges back should be made to damn well prove they couldn't avoid the situation, and made every effort to arrange alternatives with the bank, although I suspect I would have to drink lots of red wine and mature cheese to see that scenario!

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From

http://www.consumeractiongroup.co.uk/forum...?f=84&a=107

OFT Questions and answers for OFT test case announcement 26 July 2007

http://www.oft.gov.uk/advice_and_resources...udies/personal2

...and also .....

http://www.mailonsunday.co.uk/pages/dmstan...oney.co.uk/news

Exposed: How Lloyds blocks charges claims

High Street giant Lloyds TSB, which has been accused of overcharging customers £300m a year, has issued staff with guidelines on how to deal with complaints.

In a 16-page training pack it instructs workers to:

• Reject first-time claims, even if they are legitimate.

• Offer a maximum payout of £750.

• Offer immediate settlements only to those who are 'very ill' - or dying.

• Not refund or waive interest.

Banks and building societies make an estimated £1.7bn a year from levying charges of up to £39 each time a customer goes overdrawn or bounces a cheque.

Since Financial Mail on Sunday and consumer groups began highlighting these 'unfair' profits and campaigning for a fairer system, ms of customers have asked their banks for a refund of the charges.

Lloyds TSB has been so inundated with claims for refunds that it has set up a special Recovery Centre at its offices in Andover, Hampshire - and has had to draft in agency workers to help its hundreds of 'customer care' staff.

The training booklet is the first concrete written evidence of the banks' seeming determination to cheat their clients out of reclaiming the fees.

One complaint handler for the bank, who contacted the Mail on Sunday, said: 'Cynical does not even begin to describe it.

'I was placed by a recruitment agency, working from 5pm until 1am for about £200 a day to work in this nondescript building on the outskirts of Andover. I was one of about 50 people just dealing with complaints about service charges - we were told the bank was receiving more than 500 a day.

'This training pack was given to me on my first morning and I was told I had to adhere to it as this was the company policy - no deviating. The booklet was telling us to reject customers asking for refunds, then to palm the more persistent ones off with nuisance money.'

He added: 'It did not matter if the charges had been unfair or if the records showed the applicant was owed thousands of pounds in refunds.

Edited by Saving For a Space Ship

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If the banks do lose, I hope they counter-claim money from all the f@ckwits accounts to the sum of Total bank charges refunded minus that which has been deemed legal. i.e. say £990 of £30 charges so 33 multiplied by say £11 would equal £363 back into the banks hands now for all the muppets that this push's back into the red and incurs further charges hahaha they might one day learn. Although I would be willing to bet they won't. I hope they enjoyed that holiday or new whatever they bought though!

Like I have argued all along I can't afford bank charges my family and I are on the edge of poverty and because of this we do not spend beyond our means OR gamble with other peoples money. When I have made mistakes in the past I spoke to my bank who sorted things out to everyones advantage... To think I might have to start paying for fools who can't don't bother to manage their finances properly makes my blood boil :ph34r:

Another thing - anyone who wants 'their' charges back should be made to damn well prove they couldn't avoid the situation, and made every effort to arrange alternatives with the bank, although I suspect I would have to drink lots of red wine and mature cheese to see that scenario!

.....many good points....!..it seems the people who run the banks now are dimwits......if people start breaking all the rules and start claiming back the penalties.....where is the grit to argue the case ?.... <_< ...and protect those customers abiding by the rules........Banks look at the people who are your executives ......!....are they up to it......?...I don't think so...!....... :angry: :angry:

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If the banks do lose, I hope they counter-claim money from all the f@ckwits accounts to the sum of Total bank charges refunded minus that which has been deemed legal. i.e. say £990 of £30 charges so 33 multiplied by say £11 would equal £363 back into the banks hands now for all the muppets that this push's back into the red and incurs further charges hahaha they might one day learn. Although I would be willing to bet they won't. I hope they enjoyed that holiday or new whatever they bought though!

Like I have argued all along I can't afford bank charges my family and I are on the edge of poverty and because of this we do not spend beyond our means OR gamble with other peoples money. When I have made mistakes in the past I spoke to my bank who sorted things out to everyones advantage... To think I might have to start paying for fools who can't don't bother to manage their finances properly makes my blood boil :ph34r:

Another thing - anyone who wants 'their' charges back should be made to damn well prove they couldn't avoid the situation, and made every effort to arrange alternatives with the bank, although I suspect I would have to drink lots of red wine and mature cheese to see that scenario!

A more subtle and closely argued case I've yet to encounter. Have you thought of appearing for the Banks - with you on board how could they fail to win.

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With respect, I think you are going a bit OTT there, or do have a link for a quote on those theoretical charges?

ATM charges = these are about what most European and US bank customers pay. In most cases using your own bank's ATM is free or you only pay a few pence, but using another bank's ATM attracts a serious charge ($5 minimum is around the US average that I've experienced). On another bank charge thread on this site, there was a link to a newspaper article quoting an Italian customer who was charged the equivalent of £10 to issue a cheque.

Presumably charges like that are impossible, because if the banks lose they will not be able to charge more than it reasonably costs them, plus a small profit.

But I think they could reasonably argue that these are their costs. Up until now, they've been subsidising most retail banking operations with interest income from the balances of affluent customers, plus penalty charges. With that subsidy legally closed off, they could probably make an argument that (for example), the cost of installing, stocking and maintaining an ATM really is equivalent to £1-2 per transaction plus a small profit. They could even make a case for charging higher branch and ATM fees in poorer areas with a higher risk of crime, vandalism etc.

The Gov hav forced the disabled & unemployed to have bank accounts, as the 'cash the giro at the PO' is not so easy an option these days, so IMO, the banks cannot be that heavy on the low incomers.

They can, and I fear that they will. You're right - the government have forced very low income and/or vulnerable citizens to use retail banking, and the result of that is that the banks have got the government between a rock and a hard place. Benefit payment by BACS wasn't seen as particularly controversial (the die hard luddites of Age Concern etc. didn't like it, but that was about it) while retail banking was free for customers who stayed in the black. But when these people realise that overnight, a significant proportion of their income will go straight away in bank charges, there'll be an outcry. And when the rest of us discover that it's our taxes that are going in bank charges in this way, there'll be an even bigger outcry. But the banks will just say: 'Tough - the courts have ruled that we have to link our pricing structure directly to the up-front cost of providing retail banking services. So all those customers whose current accounts turn over less than £12k a year and who, up until now, have been subsidised by richer customers and unauthorised overdraft customers will, from now on, have to pay the full cost of their banking.'

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