MSE News: PM wants swift bank charges compensation

esmerellda

Regarding

We get many 1,000s emails every week asking "when will I get my money - I need it now" - when I walk down the street its the one question people ask me. I have absolutely no doubt that the huge majority of people would prefer to get a payout asap rather than wait further for a court settlement.

There are systems in place which we have worked very hard on for people who are truely in desperate need of some form of refund or assistance now, the hardship/financial difficulty exemption to the waiver.

This should be an area which is looked at and people helped to strengthen their complaints on this basis. You will know we are very active on here assisting people in the bank claims forum and there are successes and the guide does work, however it could do with strengthening and the differential explained between complaining under hardship and reclaiming charges. So that is an area where you could make an immediate difference by concentrating on.

esmerellda

So we have a choice either be shouting on the periphery or be engaged in a process. I prefer the latter.

being engaged in the process naturally - we (Legalbeagles) responded at length to the Personal Current Account Market study and held meetings with the OFT over the subjects raised. I presume MSE did similar. Should be interesting when the details of the recommendations off the back of that report are released mid October.

BigBudgie

Thank your responding Martin.

Quite frankly I do find your position on this a little frustrating.

I can understand the desire from the politicians, the OFT the FSA, the Courts and to a certain extent the banks in having a speedy, negotiated solution to the matter once the Supreme Court judgment has been delivered in the first stage of the test case. The reasons behind that desire may be more related to financial stability, workload, forthcoming elections and the economy in general rather than some romantic idea that it needs to be resolved quickly to help out the general populus. The banks, for certain, will no doubt welcome the possibility of a negotiated settlement but will look at it purely from a financial viewpoint.

What I still have great difficulty in understanding is why YOU went ahead in the same news article to propose a set of negotiation terms that dramatically favour the banks position!

1) There is no recent evidence to support your proposal that a £2.50 charge is either fair or reasonable. I am sure you are aware that a report from South Africa, which has a similar population size and banking set up to the UK, shows that the actual cost, to the SA banks, for processing a failed direct debit instruction is something like £0.35. Knowing that that figure is likely to be correct then why would anyone wish to suggest, even allowing for a reasonable profit margin on this for the banks, that a figure of £2.50 was reasonable?

2) You propose a compensatory interest calculation based on 8% statutory ( simple ). It is clear from my own experience and that of many thousands of claimants that the Courts have discretion to apply compound interest at a rate similar to that which the banks charge in the normal course of their business. So why do you blatantly disregard this from a negotiation point of view?
3) You also refer to a date of July 2001, from which charges should be repaid. Why do you propose this date? The Limitation Act 1980 makes matters quite clear and there is a case to be made for charge refunds dating back to the inception of UTCCR1999 and maybe even earlier.
I, like many millions of others would like to have a speedy solution to this matter, it would be nice to see my own money, which was taken from me unlawfully, back in my pocket. But, I suspect those same people, like me, also wish to see the banks fully bought to task for their actions.
I am sure that the first thing people will ask you is “when are they likely to see their money back”. But I also strongly believe that people in this Country are fed up with cover ups, backhanders, exorbitant expenses claims etc etc. Most of the banks only exist in their present form because of assistance from the public purse.
Why oh why, should we negotiate with these organisations that have to date blindly continued to proceed upon a legal path that they knew from the outset would merely act to delay the inevitable.

PS : By the way these are my own opinions. I am not posting here as a representative of Legal Beagles.

MSE_Martin

BigBudgie wrote: »

Thank your responding Martin.

Quite frankly I do find your position on this a little frustrating.

I can understand the desire from the politicians, the OFT the FSA, the Courts and to a certain extent the banks in having a speedy, negotiated solution to the matter once the Supreme Court judgment has been delivered in the first stage of the test case. The reasons behind that desire may be more related to financial stability, workload, forthcoming elections and the economy in general rather than some romantic idea that it needs to be resolved quickly to help out the general populus. The banks, for certain, will no doubt welcome the possibility of a negotiated settlement but will look at it purely from a financial viewpoint.

What I still have great difficulty in understanding is why YOU went ahead in the same news article to propose a set of negotiation terms that dramatically favour the banks position!

1) There is no recent evidence to support your proposal that a £2.50 charge is either fair or reasonable. I am sure you are aware that a report from South Africa, which has a similar population size and banking set up to the UK, shows that the actual cost, to the SA banks, for processing a failed direct debit instruction is something like £0.35. Knowing that that figure is likely to be correct then why would anyone wish to suggest, even allowing for a reasonable profit margin on this for the banks, that a figure of £2.50 was reasonable?

2) You propose a compensatory interest calculation based on 8% statutory ( simple ). It is clear from my own experience and that of many thousands of claimants that the Courts have discretion to apply compound interest at a rate similar to that which the banks charge in the normal course of their business. So why do you blatantly disregard this from a negotiation point of view?
3) You also refer to a date of July 2001, from which charges should be repaid. Why do you propose this date? The Limitation Act 1980 makes matters quite clear and there is a case to be made for charge refunds dating back to the inception of UTCCR1999 and maybe even earlier.
I, like many millions of others would like to have a speedy solution to this matter, it would be nice to see my own money, which was taken from me unlawfully, back in my pocket. But, I suspect those same people, like me, also wish to see the banks fully bought to task for their actions.
I am sure that the first thing people will ask you is “when are they likely to see their money back”. But I also strongly believe that people in this Country are fed up with cover ups, backhanders, exorbitant expenses claims etc etc. Most of the banks only exist in their present form because of assistance from the public purse.
Why oh why, should we negotiate with these organisations that have to date blindly continued to proceed upon a legal path that they knew from the outset would merely act to delay the inevitable.

PS : By the way these are my own opinions. I am not posting here as a representative of Legal Beagles.

We need to be careful here, this is exactly what I worry about, I am trying NOT to engage in a flick flack discussion of what should or shouldn't be asked for. This is a public forum being read by all parties.

Sadly throug out the bank charges debate some of the small campaign groups have had nasty internecine fighting, as we all know, at least three groups won't talk to each other. I read with sinking heart the name calling in earlier posts.

Doing that, and doing it publically, risks effectively being shoved out of the process and plays directly into the bank hands. I don't want that to happen and I'm not going to let MSE be drawn into it - nor into getting involved in a public argument.

We must all try and work together and listen. There is nothing frustrating about my perspective, you have read into what I've said that I am unbending and not willing to listen when actually what Im trying to explain is the exact opposite.

I very specifically set out my thoughts and stated them to be provisional, then immediately noted that we needed to aim for a campaigners consensus.

Im not sure how you read that as being that these are firm proposals, I'm not wedded to those proposals, they're my opening thoughts - and Im more than happy to listen to other opinions and move if they're the right ones.

We need to try and draw everyone together, to find that common ground and a simple bipartisan chat here isnt the right way to do it. When the time is right and we find a format I'm happy to try and organise that.

Martin

esmerellda

To be honest Martin, you have asked for opinion and invited the groups to be involved saying

''Yet it's important all campaign groups, including as Consumer Action Group, Which?, Penalty Charges and Legal Beagles work together to nail down a consensus''

I have emailed you regarding this and to set up a meeting between all groups mentioned in your article, off site to discuss the negotiation possibilities.

Such a big article is going to instill some reactions from people who are passionate about the issues and who are on the ground level helping people directly one to one. However, 'Nailing down a consensus' requires discussion. This thread discussion is between individuals not any sites or campaign groups, that is what I have emailed you about.

People posting here are individuals with their own opinions and not on behalf of any group and I do not feel your comments about Beagles are fair.

BigBudgie

Thank you.

I am actually a member of many sites as are most active campaigners. I haven't been directly involved in any internecine fighting although like others I have been wrongly accused of such.

My reference in an earlier post to another Campaigner is a personal viewpoint, posted in the heat of the moment, which I continue to maintain, am perfectly able to justify if called upon, but am quite happy to remove if others find it offensive.

I have been reasonably active in the campaign, with my own claims and have also attended and reported on many of the test case hearings. I have been involved in meetings with the OFT and in preparation of formal responses and documents. I consider myself to be an active campaigner but like many others and owing to the pressures of every day life do not really have as much time as I would like to dedicate to the cause.

I do actually appreciate what you have said with regards to the need to be careful which is to a certain extent the reason why I originally posted in response. I felt that by suggesting ( even though you state it is provisional and which you now say you are flexible) a set of negotiation criteria which you stated "seems fair" I believed that you risked damaging the campaign. Mainly because I feel there is a risk that people's expectations of what they may be entitled to receive would be lowered and this would obviously be benfiicial to and act as an encouragement to the banks.

Has anything that I or others have posted actually encouraged you to re-evaluate what you now consider to now be a fair settlement ?

I agree that there is a need and an urgency for all campaign groups to work closely together, especially in the critical stages which approach and it would be great if you could somehow act as the medium for organising this.

Budgie

MSE_Martin wrote: »

We need to be careful here, this is exactly what I worry about, I am trying NOT to engage in a flick flack discussion of what should or shouldn't be asked for. This is a public forum being read by all parties.

Sadly throug out the bank charges debate some of the small campaign groups have had nasty internecine fighting, as we all know, at least three groups won't talk to each other. I read with sinking heart the name calling in earlier posts.

Doing that, and doing it publically, risks effectively being shoved out of the process and plays directly into the bank hands. I don't want that to happen and I'm not going to let MSE be drawn into it - nor into getting involved in a public argument.

We must all try and work together and listen. There is nothing frustrating about my perspective, you have read into what I've said that I am unbending and not willing to listen when actually what Im trying to explain is the exact opposite.

I very specifically set out my thoughts and stated them to be provisional, then immediately noted that we needed to aim for a campaigners consensus.

Im not sure how you read that as being that these are firm proposals, I'm not wedded to those proposals, they're my opening thoughts - and Im more than happy to listen to other opinions and move if they're the right ones.

We need to try and draw everyone together, to find that common ground and a simple bipartisan chat here isnt the right way to do it. When the time is right and we find a format I'm happy to try and organise that.

Martin

Rafter

As a layperson and an accountant rather than a lawyer I am fully supportive of Martins stance as being in the best interests of the members of this site, the general public at large and those who have suffered hardship as a result of the way bank charges have evolved over many years.

The banks are being spanked. Hard.

But sucessive governments and regulators have also been found wanting by not resolving this earlier and from letting sharp business practices and the fallacy of 'free banking' lead us to a position where the least able and competent are subsidising other banking services or that banks were not charging enough for lending and/or overdrafts to reflect the risk or generate the capital required to ensure financial stability.

We have to be careful about the law of unintended consequences here. By insisting on charges being refunded in full for up to 20 years with penalties, most of our banks would need to be nationalised. Thousands more branches would be closed and staff losing their jobs. An immediate European style model of charges for accounts and transactions would probably be introduced fairly quickly and we could end up paying more, not less on average for our banking services.

Where I agree with the Beagles is that in individual cases where hardship can be demonstrated directly as a result of charges, with the compound effect of charges over many years, then consumers individually and with the support of the ombudsman should be able to claim larger refunds - a negotiated settlement should not be a barrier to reasonable further claims for those who wish to pursue them. Totally agree with Martin though that denying thousands of people a faster and more efficient negotiated settlement because some of those who might be entitled to more might not pursue further action is not a sensible course of action.

For the majority I expect a £2.50 charge seems totally reasonable and is well below the £5 being 'sold in' by the state owned banks as the new level. It is certainly a fraction of what they have been charge and a better outcome than the £12 level established in the credit card market 4 years ago.

Presumably the OFT will impose a similar ruling as it did on credit card charges that it cannot forsee how a charge of more than £x as being reasonable as a penalty, but leaving the avenue open for legal challenge and bringing the full weight of the UTCCR to bear against future profiteering on clearly unfair contract terms.

Where I think the OFT and legal arguement does need to focus is on creative charging such as unauthorised overdraft fees for 'services' the customer has not opted into. It would be in the long term interests of consumers to have to manage their finances within their authorised facilities rather than to rely on banks to offer them an expensive quick fix of credit. Again - law of unintended consequences though if such a ruling means borrowers end up taking pay day loans and using doorstep lending.

Brave new world.

R.

natweststaffmember

I have kinda followed the saga to and fro and watched from the sidelines dying to respond but not sure of my response. I guess to be honest, my first thought was what has Gordon Brown said that was not in the White Paper on better bank regulation. What is the arguments being said and how is a negotiated settlement going to work?

I think the main question to answer is "When am I going to get my money back?"
I think if we had explained the OFT test case and how it worked properly rather than jumping up and down with headlines all over the shop people would understand that it is a two step process. Unfortunately, Rome wasn't built in day.
My next question is really one with regards to one bank, Barclays. At the moment if the OFT test case rules the charges are unfair then Barclays Reserve Useage Fees are outside the scope of stage 1 litigation but would be within stage 2 litigation process. They could easily say, that their negotiation is paying back up to August 2008 and that is it since people can opt out of the reserve and that their charges are £8.00. RBS Group could state that going up to October 2009 since their fees dropped.
The more and more I think about this the more I am favouring the legal approach. Interim payouts perhaps? Well, no, since we do not have the terms that are unfair and only the ability to assess them for fairness.

With respect to MSE, CAG, LB et al you aren't designated consumer groups so you would not be consulted.

I am a member of Legal Beagles as well as was since it was born on the scene, but I don't necessarily agree with Big Budge or Marc Gander from CAG(who's views are remarkably similar on the final outlook). My view is FSA Waiver one ie July 2001 but I feel that only a court can decide a fair charge.

To answer RAFTER above, the credit card report OFT842 clearly states on paragraph
1.14
"It must be stressed that this is a statement of our position and reflects the exercise of our discretion as an enforcement agency. Only a court can decide finally whether a term is unfair, or at what level default charges should be set to meet the requirements of the UTCCRs. It should be kept in mind that other enforcers may apply for injunctions under the UTCCRs and that the UTCCRs may be relied upon by consumers in private claims."

My view is precisely the same. If that means further litigation then the process has already been set in place ready to go.

I guess some questions must be: Who negotiates?
Who agrees the terms?
How long will the negotiations take?
What makes it legally binding across the board?

BigBudgie

Good Morning Martin,

Just re-emphasising my question from yesterday's post

"Has anything that I or others have posted actually encouraged you to re-evaluate what you now consider to now be a fair settlement ?"

I.E. After reading the various posts concerning this matter on this and other websites are you inclined to modify your original PROVISIONAL assessment of what you consider to be a fair settlement?

HTML200

I'm living on £400 a month in benefits. I nearly went bankrupt, and my debt counselor advised me to take out a DRO, but I am worried about what that will do to my credit rating in future, so it's a last resort for me.

This website was very useful to me at the time, and the information here helped me set up an IA with the bank. Without that IA, I would be forced into bankruptcy, no doubt about it. I was surprised the bank agreed to it so easily, but their letter of agreement made in clear they could cancel any time they felt like it.

At the same time, I asked my credit card company to do the same. I also sent in a DPA request for all my statements. With the statements, came the answer to the IA - No. My debt to them is now spiraling out of control.

This means I'm deadlocked on claiming charges. I can't risk making any further move to claim, or else I seem to risk being ruined.

The money I would receive from a settled and automatic payout would make a huge difference to me - I could almost wipe out my credit card debt with the money owed. It would probably make a big difference to the economy in general (and then maybe I could get a job again...)

I doubt I'm the only one in this situation.

So, I find myself agreeing with Martin's approach of looking at what is best for everyone, rather than pushing for what is, I admit, the most just result.

Also, the wish to 'punish' the banks is understandable. But who would you be punishing? I doubt the people who actually make the decisions and set the fees would be touched by it. If the banks lose money as a result of this, they will do what every company does in that situation - they will clamp down on the wages of their counter staff, and their cleaners and generally make life difficult for the little people at the bottom of the pile while the people at the top will barely notice.