Bank Charges - illegal?

dchurch24

virgin_moneysaver wrote:

my other thoughts on this are, & it's not just banking but any application form that we sign, if we don't intend to abide by the T & C that we are signing for to say that 'I have read & understood the terms & conditions' does this mean that even if we sign on the dotted line our signature is no longer worth the paper its written on?

If there is an unfair or illegal term in a contract it cannot be enforced.

If I had a contract with you (and I was a business not an individual) whereby I was providing you with a service each month for a monthly fee, but in my t&c there was a clause that said you had to rob from 2 old grannies each month or you would not receive the service, then that term is illegal and therefore cannot be enforced. Such is one of the legalities facing the bank charges issue.

bargainhunt_3

I have an account with a bank in Luxembourg, in theory it can be free but there are charges for every day transactions even using web banking. However for £5 I get a limited number of free transactions across the EU (if in Euros), including cash withdrawls, telegraphic transfers and similar items. I was also suprised at how the whole system seemed to operate on trust. In this case the fee is good value, as I've nearly saved it already as they give discounts on various services from other companies. Here they copied my work contract, passport and a couple of other documents. Then within days had an overdraft, I doubt they even did a credit check. When I tried for an account with HBOS years ago it was like you were a criminal.

You maz have guessed that I can't stand HBOS, in fact I for one would throw a party if they ended up in court and having to refund all the charges.

Having shared an apartment with a lawyer a number of years ago I was surprised to find that there is a 'fair contract' clause which exists by default in all the various parts of UK law (but may vary between Scotland and England). This in effect means that even if you sign a contract and if the judge deems it to be outwith the spirit of what the contract intended or is plainly stupid then it is null and void this can have the effect of annuling the entire agreement! This can have series effects for both parties, for example a small business may accidentally effect something which is unreasonable and end up not being able to collect monies owed to it, or a bank can end up in effect breaking the law. However this is civil law, and not criminal law so sadly we cant jail any of the bank executives.

Another intersting thing you can do is when you sign a credit agreement go through it very subtly before any bank staff sign it and score out any lines which indicate you may be liable for charges. If the bank sign this afterwards and dont notice then apparently they are breaking their own contract. This happened a few times in the past and apparently customers got a away without having to pay. However I gather many of the banks got wise to it (this was back in the 90's).

I am no lawyer, but I am told UK law is open to a lot of interpretation and is often written to be 'in the spirit of something' however I am told US law is much more literal. In the UK, case law can be used to set many precedents (which may be why the banks dont want things to go to court), it is similar US too but I gather more often than not its based around technicalities than how the law was intended to be applied. But I could be wrong!

Following on from my previous post, I don't think we can start a movement for free banking for all, however I do think we need a reasonable debate on what constitutes 'fair banking' in the UK. It may be that we start paying 5p or 10p every time we use a cash point or for a direct debit. But in turn that may avoid penalising the poorest in our society. At present the banks could be accused of behaving like loan sharks. Although I am not in the poorest group of society a recent charge by IF had the effect of making me pay around 4,300% per annum (or if you use a fairer caluculation based on something like an APR it probably only be about 2,000%+ ish - quite cheap really), I dont think that is a fair charge!

I would suggest that if the law is on everyones side that we all file court actions against the banks. If they all receive several hundred thousand court actions then I doubt their lawyers could cope and given that around half of all UK bank profits allegedly come from charges then the cost of the lawyers combined with the refunds could scare them into stopping this stupid system. Also many people may end up with a nice refund.

We could all be kind and offer to pay something towards the costs incurred for the charges, for example £1 each time we went over our limit. Its still a lot cheaper than £30!

Caped_Avenger

dchurch24 wrote:

Caped_Avenger wrote:

2) Why exactly should those of us who can operate our accounts as we agreed to when we signed the T&Cs be punished for those who are incapable of doing so, or simply choose not to?

How are you being punished? If you mean that if charges are removed (and I think they will be within a year) then the banks will start charging a fee, then I wouldn't see that as a punishment - I would see that as a fair price (I would imagine that competition would see the banks having a price 'war')

That's exactly how we would be punished. Since i moved over to my current bank, i haven't paid a penny in debit interest, an overlimit fee or a returned item fee, and i intend to keep it that way. We all know banks will make money one way or another. If they can't take overlimit/returned item fees from customers who are unable to control their finances, they'll have to charge all of us. That is how i believe i will be punished. It's down to the classic 'punishing the population for the bad behaviour of the minority'. Just out of interest, what does your Sociology degree say about that sort of heavy-handed punishment?

M_Thomson wrote:

The majority of banks will not allow you to do this. They will decline a transaction at the ATM so you have to go into a branch to get money out.
I agree with your post above regarding bank charges 100%.

I'm sorry i posted that then, that was my understanding of how banks worked, and i know for a fact that some do operate like that. Sorry again.

dchurch24 wrote:

To virgin_moneysaver, what choice did I have when my employer didn't pay on time? I don't have psychic abilities. I could not foreseen that money wasn't going to be in my account when it should have been. When it was on time, it was rarely the correct amount - leaving not enough in the account to pay for things.

One of the bedrock principles of economics is that one should anticipate debits, but should not anticipate credits. I.e. until you see your salary cleared in your account, do not attempt to use it.

dchurch24 wrote:

For that, I apologise.

Thank you. Sorry, i was in a bit of an antagonistic mood last night.

richiethekid

Look at the profit figures posted by major high street banks in the last few years. That's all I have to say.

May

Thanks everyone for all your input.

Today I written a letter to the Halifax who, incidently have now informed me that they will be applying yet another charge to my account at the end of the month as the outstanding charges have not been cleared yet.

Watch this space!!

westernpromise

dchurch24 wrote:

Not at all, we had a situation where my employer didn't pay up on time for 3 months on the trot, and also didn't pay the correct amount...thus each account incurred these illegal charges, the first month over £600, which of course meant that there was not enough money the following month.

This is more or less exactly what happened to me in my first job out of university. I was a salesman working from home. To get my expenses paid, I had to post the form to my area manager at his home, and he then had to approve them and post them on to head office. If either he or the post happened to be slow that week, the submission deadline would be missed and I wouldn't get paid.

Inevitably, there came a month when my expenses were in late. The Midland, as it was then, duly bounced a direct debit for the rates, and I got two letters costing a total of 40 pounds from them telling me this. The following month, because of the 40 pounds of their charges, I went into overdraft by 30 pounds and so of course they bounced the rates debit again and sent me two more of their letters.

This went on for about a year and they took around 500 pounds off me in charges. Worse, the bounced debits put me into a position where the council demanded full settlement of the rates bill. I actually had a bailiff at the door, wanting 440 pounds plus a load of further charges imposed by the council. That of course I had to pay, and as a result, for about 3 months I couldn't even afford buildings insurance. I estimate the whole thing probably cost me about 1,000 pounds. This was in 1986 money, when I earned perhaps 500 a month after tax.

It was a very instructive experience in how poverty can be a self-perpetuating condition. The late payment of about 150 pounds wound up costing me 500 or so more in charges. In addition, my rates went up (because I had to pay the whole lot on demand plus penalties), my phone bill went up (because I paid that late, and got disconnected and had to pay extra to be reconnected), and my credit card bills went up (because I couldn't afford to pay those off and pay the bank's charges too, so I got hit with 25% interest on the outstandings).

The main reason I do stoozing is for belated revenge (I am a Scorpio, so I harbour grudges literally for decades). I am pleased to say I have stoozed 6,000 pounds of HSBC's money, and intend to do so again at the very earliest opportunity. They are the successor to Midland so they are Enemy One.

With all the above said, though, it seems obvious to me that if these sort of charges get outlawed, the banks will simply refuse to provide services to the kind of people who appear most likely to incur them. They're not a social service and you can't force them to serve customers they don't want unless they can decide the price at which they do so (as with car insurance).

I am very wary of attempts to force banks to do uncommercial things, because we can be quite sure that for everyone such conjectural laws may protect, someone else will abuse them to escape the consequences of their own feckless behaviour. This already appears to be happening in the case of bankruptcy. The profile of the typical bankrupt used to be someone who had suffered economic misfortune leading to loss of income: loss of their job, an illness which prevented them working, and so on. Increasingly, though, bankrupts are people who have a job and a steady income. They've just irresponsibly spent vastly more than they earn, then walked away. The loss, of course, is then passed on to everyone else, in the form of lower interest, higher charges, and lower dividends to shareholders - and let's not forget that most shares are owned by pension funds.

We had some guy on here a few months ago who was on 50 grand a year at 26 years old and who owed 40 grand on plastic, accumulated through gambling. He was looking for advice on how to welsh on paying the money back. He could perfectly well afford to pay it back. He just didn't want to.

If he succeeds, the loss is ultimately to the banks who have to write off the money and therefore do not pay it out as shareholder dividends. Loosening the bankruptcy laws for the benefit of people like him indirectly and ultimately impoverishes pensioners instead.

I question whether it is morally right to let off spendthrifts at the cost of the elderly. If it is, then perhaps the government should do the thing properly and introduce a bankruptcy and debtors' protection scheme, funded wholly through a levy on the state pension paid to OAPs. I doubt very much they'd have the cojones to do so, but ordering banks to make a loss, or making it easier to default on debts, amounts essentially to the same thing.

psymonj

While I cannot claim to be the best at managing my money, I have been trying like crazy to catch up with finances, I got married a few months ago and want to apply for a mortgage.

I currently use the services of the Woolwich, until I started earning a proper, full-time, wage, there was no problem.

Without boring you all with the full-history; At a point, I was overdrawn and as such had to pay a fee. The first thing that irritated me was the fact that the Woolich will not allow me to have an overdraft of any limit, nor can I access funds (I cannot withdraw £10 if I have £9.89 in my account).
Recently, I have had a lot of expenses to cover - motor repairs, crimbo presents and moving house - all while paying off a loan, rent, credit card - the usual.

It is irritating enough to have no money available, it is insulting that the Woolwich should charge me £30 for being £1 overdrawn.
Today has taken the biscuit! Already £120 overdrawn (4 bounces), they allowed a DD to go through for £2.81 (delayed Paypal payment), and there is an £85 unauthorised overdraft fee bolted on. Last month, due to illness, I was short on my wages and as such had 10 payments bounce (crimbo shopping - Ebay), while i recognise I need to pay more attention to finances, I find £300 to say 'no' extortionate.

Why, when I have NO overdraft facility, do/can my account do this?
I am not up on this sort of thing, I am just tired of constantly doing everything on a shoestring just to make my account float.

If anyone can shed some light - I would be most grateful. I doubt very much that I could reclaim any of these fee's as primarily it is my poor management that leads to them, but I am being punished harder these days and it is making it harder to get on top. All the while, I am paying for the girl behind the counter to sit there and chat!

Thanks in advance!

dchurch24

I doubt very much that I could reclaim any of these fee's as primarily it is my poor management that leads to them, but I am being punished harder these days and it is making it harder to get on top. All the while, I am paying for the girl behind the counter to sit there and chat!

You most certainly do have a leg to stand on - you breached the terms and conditions, and the (case) law states that you cannot be punished for a breach of contract, either party can only be refunded legitimate costs for a breach - in this case, the cost of an automated letter to you and to whom your DD/SO/Cheque was sent to.

I almost guarantee that you could get your money back. PM me for more info, I'm fed up with being drawn into arguments about the rights/wrongs of 'spending money you don't have' by people who don't know the law in the forums. I know I'm party to blame for rising to it, but it's just easier to PM me. Incidently, I am the press officer for the campaign group 'Bank Charges Hell' and so far, I know of about 50 cases where people have taken the bank to court for recovery of these charges (including myself 3 times). I do not know of anyone that, so far, has not gotten their money back.

dchurch24

With all the above said, though, it seems obvious to me that if these sort of charges get outlawed, the banks will simply refuse to provide services to the kind of people who appear most likely to incur them. They're not a social service and you can't force them to serve customers they don't want unless they can decide the price at which they do so (as with car insurance).

That's a fair point. If this happens, and I hope it does in a way, then the Govt. should provide a basic bank account. Either that, or change the law back to a situation where we (as employees) can choose how we get paid by our employer. We'd no longer be forced into using private banks.

I, for one, would choose cash and keep it in a shoebox under my bed - I'd rather take my chances with 'honest' theives.

bargainhunt_3

You are basically calling for the return of National Girobank...

From what I can see a lot of other EU countries provide a postal bank service which anyone can access (at least I think so). However I cannot see that happening in the UK. True there is National Savings but thats about as far as it goes and if the UK Govermnent did attempt to set up a rival bank I am sure the plan would disappear after much pressure from the high street banks. Many of whom lend vast amounts of cash to the various political parties.

I for one cant see Labour or the Tories cutting their overdrafts just before an election in order to keep the people happy :-)

I suspect it is for this reason that the government has so far refused to do anything about bank charges.