Answering bank charges skeptics: pls help....

MarkyMarkD

Good points, many of you.

The one about not understanding that you need money in your account the day before the DDs go out is quite astonishing. I cannot believe that someone phoned up, time after time, and was told "the charges stand" without asking - "what did I do wrong"?

If someone is that wet with their bank, (or any service provider), they really should try a bit harder.

It is established in many banks' terms and conditions that you have to have the money there the night before. I don't know how the bank are meant to be psychic and look forward two hours to see if money is going to be paid in - and that's why they don't. If the money isn't there when the pay/decline decision is made, the payment is declined and the charge is incurred.

And as Graham_Devon says, there is a difference between the cash withdrawal scenario and the DD scenario. A cash withdrawal is you hoping that you have enough money to make the withdrawal. A DD is an instruction to the bank to pay money to a third party - meeting an obligation you have to that third party.


The points about cross-subsidy are fair enough. I don't know why the banks have been so obsessive in defending that charge. Anyone who isn't blind can tell that those who pay charges are cross-subsidising those who don't. But, that doesn't make charges immoral or illegal or unlawful per se. It might mean that the charges involve a high contribution to fixed overheads - which is what most of the costs of running current accounts are. And that isn't unlawful or immoral or illegal per se.

Most business relationships involve cross-subsidy. Supermarkets lose money on special offers and make it up on other staples, for example. Mortgage lenders lose money on short-term incentives and make it up on those who stay on SVR for 20 years.

Why should current accounts be different?

natweststaffmember

JamieD wrote: »

There's a few thing I'd take issue with here.

For example - "If I walked up to someone in the street, told them I was going to punch them, then punched them – the fact I’d prewarned doesn’t make my actions any more legal" - compares a legal act (charging a fee) with an illegal on (assault) and also ignores any wrongdoing on the consumer's part. People will use poor analogies to tear an argument to shreds and ignore any valid points being made.

"If anything sees off ‘free banking’, it’ll be SHAMBOLIC management decisions that cost hundreds of billions of pounds (much to the taxpayer) and caused record losses"

Juxtaposing bank charges and the government bail out is a bit of a cheap bait-and-switch, to try to raise ire with the banks as a whole. It was not the retail section of RBS that caused its share price to plummet and necessitate the rescue, it was the global markets division.

"I got involved in the campaign to reclaim bank charges after meeting a single mum, a carer for her autistic son. She NEVER overspent, but a benefits office glitch meant it paid out late, so five direct debits bounced, meaning nearly £200 of charges."

This story does come off as a blatant plea for sympathy for the single mother. Why not the deadbeat delinquent who NEVER overspent on her booze and fags, but the benefits office glitch meant that all her storecard direct debits bounced. Surely she too is entitled to "financial justice" but somehow, she's not quite the saintly heroine.

I got involved in the bank charges campaign for a slightly different reason. I BELIEVED that our charges were correct. I BELIEVED that our charges were fair. Then on letter quoting UTCCR 1999 and penalty charges(that argument is no longer vaild) and we REFUNDED charges. To me, that was not right. And it continued on, until we had a duel refunding process. The branch said no and customer relations said have some money.
Then we had the OFT test case and reclaiming went on hold.
I chose a route which eventually cost me a job I had had for 11 years more or less because I worked on the inside and knew from the inside that things were wrong. You are right that retail banking did not lead to massive losses and I would say RBS Group acquiring ABN AMRO was a huge mistake in hindsight.
Do you think bank charges are fair?
Do you think the interplay of charges is fair?
Do you think the bank charges campaign is saying that the bank CANNOT charge for returning an item unpaid?
On the last point, the campaign is not about the right of a bank to charge but of the bank to charge something that is fair and not an uneven contract.

Orford

MarkyMarkD wrote: »

The points about cross-subsidy are fair enough. I don't know why the banks have been so obsessive in defending that charge. Anyone who isn't blind can tell that those who pay charges are cross-subsidising those who don't. But, that doesn't make charges immoral or illegal or unlawful per se. It might mean that the charges involve a high contribution to fixed overheads - which is what most of the costs of running current accounts are. And that isn't unlawful or immoral or illegal per se. No, but they are unfair and the majority of these unfair charges are borne by the 25% of customers who can least afford it

Most business relationships involve cross-subsidy. Supermarkets lose money on special offers and make it up on other staples, for example.

Why should current accounts be different?

The difference is that there is a choice of supermarkets and special offers are available to all.

A correct analogy to banks would be if supermarkets only allowed 75% of their customers to buy special offers and said to the other 25% 'You have to buy non-offer items as that's the only way we can afford the specials for the 75%'

esmerellda

If it helps, probably not, I believe in bank charges too, I don't however believe in blanket charging charges on charges on charges. Individual circumstances should be looked at, there should be triggers to sort something out with customers long before it gets to a stage where half someones income is going out in charges.

In our PCA response we asked people what they would like to see happen with PCAs and I think this shows that charges are agreed with in principle, however in practise they do not work; (and I know MarkyMark doesn't agree with some of these points)

4. Consumers' use and awareness of their current accounts
4.1. As part of our response to the OFT market study, we asked our members what
facilities and options they would like to see within their PCA, and what aspects would
make their “perfect bank account”.
4.2. The responses have been summarised below:
• Charges to be proportional and fair;
• Higher interest rate on unauthorised borrowing limited to just the unauthorised
amount, not the entire overdraft (this issue currently affects Abbey customers);
• Better customer service and consumer redress, with a less sales-driven approach to
consumer contact;
• Any overdraft limit should be a limit not a guide – if a DD or SO takes the account over the prescribed limit then the item should not be paid; (my comment....contentious and I think Barclays Reserve STARTS heading in the right direction however it has been very poorly administered so far)
• Documentation to be entirely in Plain Intelligible Language and to be easily
accessible, both within branches and online;
• Independent regulation with consultation from a consumer panel;
• Trigger limits or flags, i.e. if a set number or percentage of DD's, SO's, etc are not getting met over a time period, then contact and assistance is offered by the bank;
• Alternative or flexible charging dates to coincide with salary or income into the account, namely set days within the month, such as the last Friday of the month;
• Banking code regulated and properly adhered to by the bank, with regulatory
sanctions and/or fines where there have been repeated breaches;
• Parent/Sister companies should be made clearer on any documentation – so as to
allow better assessment of offers provided by banks and the offsetting of any risks;
• Annual financial “health checks” to identify problems or concerns;
• Enable DD's to be held rather than cancelled with the need to be set up again;
• Allow monthly repayment plan of overdrafts prior to a default situation;
• Simpler opening procedures;
• Being able to contact your branch directly, with the ability of branches being able to process requests or resolve situations without the need to refer the customer to a call centre;
• Call centre’s should be UK based;
• Standardised regulation for all default charging aspects. The maximum level and frequency or total of charges that any bank applies should be set, amended, monitored, and controlled by the relevant regulatory body. Each bank should be forced to adopt and use identical terms and conditions in respect of default charging aspects, with the relevant terms and conditions being drafted, amended, issued, and administered by this regulatory body. Therefore allowing a proper comparison in respect of the remaining elements of the facilities and prices offered.
18
• Monthly account fees are acceptable at a sensible rate, although they should not be
automatically linked to additional services such as insurance, travel money, etc.
• Financial hardship criteria should be standardised for all banks, with greater detail being set out within the regulatory code or the Banking Code.
• Text alerts for issues relating to your account, such as a notification that your
account has dropped below a certain level as a pre warning.
4.2. We appreciate that some of these “wish list” facilities and options would have a
commercial impact on the operation of PCAs, and could give rise to additional cost to
the consumer. We also appreciate that not all of these items could be standardised
without compromising competition between the banks. They do, however, reflect
what our members would like to see offered as part of their PCA.
4.3. We also note that there was a consistent and strong response on the need for
independent regulation for the setting of insufficient fund charges, amendments to
those charges, and monitoring of those charges. This underlines the lack of consumer
confidence in historic and current self-regulation by the banks, and is a strong
indicator of the fact that consumers generally do not trust the banks to act in a fair
manner in respect of these charges.

I agree with there being a blatant sympathy vote in the article, however thats how you get publicity and thats fine by me if it is by the claimant. The charges should have been reclaimed from the benefits agency as is the consumers right and as MarkyMark mentioned earlier. The bank however should have looked at her case more sympathetically as soon as the problem was explained to them. Too often we see a ''can;t feed your kids due to our charges this week, thats your problem'', type response.....an individuals First Right of Appropriation also needs much more publicity to force the banks to respond in an emergency situation .

Graham_Devon

natweststaffmember wrote: »

........Explain?

You are kind of proving my point here.

I take it you work for a bank, are totally against charges, but I have to explain the point of a direct debit and what you are signing up to when you agree to pay via that method?

Nathan_Spleen

MarkyMarkD wrote: »

And as Graham_Devon says, there is a difference between the cash withdrawal scenario and the DD scenario. A cash withdrawal is you hoping that you have enough money to make the withdrawal. A DD is an instruction to the bank to pay money to a third party - meeting an obligation you have to that third party.

This is nonsense.

Of course an attempted cash withdrawl is a payment instruction and like any payment instruction made without sufficient funds it then becomes an 'implicit request for an overdraft'. This was established very clearly during the test case hearings when the court asked why an attempted cash withdrawl didn't generate a charge when other forms of payment request did. The banks response was simply that they had complete discretion not to charge in circumstances of their choosing. And as such you cannot rely on logic to justify any perceived difference.

The fact that you are ''hoping that you have enough money'' to cover a withdrawl equally applies to an instructiion to pay a third party and does nothing to change status of the instruction/overdraft request.

Also you are wrong to assume that cross subsidy is necessarily not ''immoral or illegal or unlawful per se'' as much of the test case will turn on whether the UTCCR exemption ''to the adequacy of the price or remuneration, as against the goods or services supplied in exchange'' applies. The issue is whether this means the services provided to that particular customer or to those who are subsidised by the charges.

natweststaffmember

Graham_Devon wrote: »

You are kind of proving my point here.

I take it you work for a bank, are totally against charges, but I have to explain the point of a direct debit and what you are signing up to when you agree to pay via that method?

I take you definitely don't read signatures

If I sign up to an unequal contract then it is covered under UTCCR 1998 and if I litigate the term can be found to be null and void and therefore unenforceable.

MarkyMarkD

More interesting points.

Nathan, I don't understand your point re adequacy of the price or remuneration. UTCCR is saying, is it not, that clauses relating to price-setting are not subject to UTCCR. Surely that is the logical defence of charges being at their present level, and the undermining of the whole "the charges are too high so they are unfair" thought process?

It's "withdrawal" not "withdrawl" too.

Regarding the difference between ATM requests and other payments, you are still intentionally missing my point. If you attempt to withdraw money yourself and are declined, nobody has lost out. You have simply not been able to mis-use your bank account and the bank has not charged you. If you pre-authorise British Gas (or whoever) to debit your account with £25 a month, and fail to have any money in the account on the due date, you have defaulted on your obligation to British Gas. BG are entitled to expect payment, and your bank have been authorised by you to pay it. If they pay it - and levy a paid item fee - then they are simply following your instructions. If they do not pay it - and levy a rejected item fee - then they are following your instructions to the extent that their assessment of your creditworthiness allows - i.e not to pay, in this case.

Regarding

LB_PCA_response wrote:

4. Consumers' use and awareness of their current accounts
4.1. As part of our response to the OFT market study, we asked our members what
facilities and options they would like to see within their PCA, and what aspects would
make their “perfect bank account”.
4.2. The responses have been summarised below:
• Charges to be proportional and fair;
• Higher interest rate on unauthorised borrowing limited to just the unauthorised
amount, not the entire overdraft (this issue currently affects Abbey customers);
• Better customer service and consumer redress, with a less sales-driven approach to
consumer contact;
• Any overdraft limit should be a limit not a guide – if a DD or SO takes the account over the prescribed limit then the item should not be paid; (my comment....contentious and I think Barclays Reserve STARTS heading in the right direction however it has been very poorly administered so far)
• Documentation to be entirely in Plain Intelligible Language and to be easily
accessible, both within branches and online;
• Independent regulation with consultation from a consumer panel;
• Trigger limits or flags, i.e. if a set number or percentage of DD's, SO's, etc are not getting met over a time period, then contact and assistance is offered by the bank;
• Alternative or flexible charging dates to coincide with salary or income into the account, namely set days within the month, such as the last Friday of the month;
• Banking code regulated and properly adhered to by the bank, with regulatory
sanctions and/or fines where there have been repeated breaches;
• Parent/Sister companies should be made clearer on any documentation – so as to
allow better assessment of offers provided by banks and the offsetting of any risks;
• Annual financial “health checks” to identify problems or concerns;
• Enable DD's to be held rather than cancelled with the need to be set up again;
• Allow monthly repayment plan of overdrafts prior to a default situation;
• Simpler opening procedures;
• Being able to contact your branch directly, with the ability of branches being able to process requests or resolve situations without the need to refer the customer to a call centre;
• Call centre’s should be UK based;
• Standardised regulation for all default charging aspects. The maximum level and frequency or total of charges that any bank applies should be set, amended, monitored, and controlled by the relevant regulatory body. Each bank should be forced to adopt and use identical terms and conditions in respect of default charging aspects, with the relevant terms and conditions being drafted, amended, issued, and administered by this regulatory body. Therefore allowing a proper comparison in respect of the remaining elements of the facilities and prices offered.
18
• Monthly account fees are acceptable at a sensible rate, although they should not be
automatically linked to additional services such as insurance, travel money, etc.
• Financial hardship criteria should be standardised for all banks, with greater detail being set out within the regulatory code or the Banking Code.
• Text alerts for issues relating to your account, such as a notification that your
account has dropped below a certain level as a pre warning.
4.2. We appreciate that some of these “wish list” facilities and options would have a
commercial impact on the operation of PCAs, and could give rise to additional cost to
the consumer. We also appreciate that not all of these items could be standardised
without compromising competition between the banks. They do, however, reflect
what our members would like to see offered as part of their PCA.
4.3. We also note that there was a consistent and strong response on the need for
independent regulation for the setting of insufficient fund charges, amendments to
those charges, and monitoring of those charges. This underlines the lack of consumer
confidence in historic and current self-regulation by the banks, and is a strong
indicator of the fact that consumers generally do not trust the banks to act in a fair
manner in respect of these charges.

Esmerellda (LNTS!) is right that I certainly don't agree with everything there.

Primarily because the premise of asking disaffected bank customers what they want from their banking arrangements is scarcely a sensible one ... not surprisingly, they want the moon on a stick and not to pay anything for it.

esmerellda

pmsl nice analogy - well if you don't ask you don't get The point I think I was making is to answer the skeptics that we're not completely against bank charges and don't want everything for nothing (oops failed) but that is the way the charges are administered currently that is the issue.... anyway I'm crap at arguing lol

Nathan_Spleen

MarkyMarkD wrote: »

More interesting points.

Nathan, I don't understand your point re adequacy of the price or remuneration. UTCCR is saying, is it not, that clauses relating to price-setting are not subject to UTCCR. Surely that is the logical defence of charges being at their present level, and the undermining of the whole "the charges are too high so they are unfair" thought process?

It's "withdrawal" not "withdrawl" too.

Regarding the difference between ATM requests and other payments, you are still intentionally missing my point. If you attempt to withdraw money yourself and are declined, nobody has lost out. You have simply not been able to mis-use your bank account and the bank has not charged you. If you pre-authorise British Gas (or whoever) to debit your account with £25 a month, and fail to have any money in the account on the due date, you have defaulted on your obligation to British Gas. BG are entitled to expect payment, and your bank have been authorised by you to pay it. If they pay it - and levy a paid item fee - then they are simply following your instructions. If they do not pay it - and levy a rejected item fee - then they are following your instructions to the extent that their assessment of your creditworthiness allows - i.e not to pay, in this case.

Regarding Esmerellda (LNTS!) is right that I certainly don't agree with everything there.

Primarily because the premise of asking disaffected bank customers what they want from their banking arrangements is scarcely a sensible one ... not surprisingly, they want the moon on a stick and not to pay anything for it.

My point isn't about the adequacy of the price but the exchange for services - the bit I underlined.

To use an analogy the exemption to the regulations means that a supplier is at liberty to charge you £1000 for a tin of beans but only if you get your tin of beans in exchange. In the case of bank charges the banks have pleaded in court that most of the charge is actually for the provision of banking services to those in credit and therefore you don't get most of the beans - someone else does - and as such the charge is not ''for the goods or services provided in exchange'' to which the charge relates.

I would suggest that rather than correcting spelling errors your time would be better spent concentrating on the substance of posts and in particular who made them, before incorrectly saying that I am ''still intentionally '' missing your point, when in fact I hadn't raised it before. Keep up! If you can't be bothered to distinguish who said what to you, I can't be bothered to respond to your point.

I will take issue with this: ''Primarily because the premise of asking disaffected bank customers what they want from their banking arrangements is scarcely a sensible one ... not surprisingly, they want the moon on a stick and not to pay anything for it.''

In a properly functioning free market it is the customer who is supposed to drive the competition in a retail market - not the supplier. And so to exclude any customer - especially the ones that pay for your own banking services as well as their own - from at least making suggestions - goes against the very principles of freedom and competition and is not the kind of society I want to live in.