MSE News: Reaction to Halifax's changes

nlamont

I'm struggling to see what to do for my son. He has Aspergers and went through a severe depression last year during which he ran up a massive overdraft with HBOS. They tried to speak to him but he refused, and it was only after almost a year that we (his parents) found out the full extent of the problem and that he gave me authority to speak to the bank. I paid off half the overdraft, but he still had over a thousand caused by charges of £35 every time he went over his authorised limit. Since recovering a bit, he's kept within his authorised overdraft limit. He has a little cash income from a part time job and some monthly money from us. We've tried to claim hardship and reclaim the charges, but HBOS have refused to answer any correspondence (including a Data Protection Act request for the details of his charges - they cashed the £10 cheque but have ignored the request and followup letters; it's currently with the Information Commissioner). Anyway it now looks like we'll have to get him to move his account, perhaps leaving a little in it so that he's still a customer and can continue the reclaim attempt. I don't know what his credit record will look like - pretty bad I expect - and he has no monthly salary worth speaking of. and refuses to claim benefits. He's trying to set up self employment just now, but it will take time. Do you think it's worth trying to switch to the likes of A&L? Any advice would be welcome.

opinions4u

tomasfoley wrote: »

Its impact is not acciedental, it is totally designed to line Halifax's pockets, the timing of it also.

The whole charging structed was originally designed to be cost neutral. No extra income for the bank.

Whether that remains the case, I don't know, but the new structure of charges is exactly the same of the one I became aware of over 12 months ago.

It was what you choose when you signed upto the account.

Most overdraft rates with most banks are variable.

It was what you expected of the bank. The option for the bank to withdraw at any time an overdraft facility is irrelevant, because if you have managed your overdraft for the time you have had the facility, no removal is justified (except as a deliberate money maker) because you have shown no evidence of financial negligence and risk to the bank.

All overdrafts carry an inherent risk to a bank.

And there is absolutely no doubt it has been put together to make significant money for the banks.

But no more money than being made under a previous charging structure. Please will you explain how this new charging and reward structure will increase overall profitability for the bank.

Again however you explain offsetting, in this sector of its customer base they are engaging in fraud of their customers, because they force them into a position of paying them money, they at no point consented to do.

Interest has been replaced by fee. If current interest rate had been replaced by higher interest rate, what would those same customers have done?

Inactive

tomasfoley wrote: »

Sounds like you could do with a dose of "Trading Places" and I'll applaud you for the wonderful attitude that brings our country to this mess in the first place, the rich get richer while the poor get poorer :T

You seem to forget that the UK Banks offer free banking to those that manage their accounts properly, a rarity in Europe, and I believe the rest of the world.

My next door neighbour is one of the " poorer " that is always in to his overdraft, strange that he can afford to run 2 cars and have Sky TV etc.:rolleyes:

tomasfoley

Inactive wrote: »

You seem to forget that the UK Banks offer free banking to those that manage their accounts properly, a rarity in Europe, and I believe the rest of the world.

My next door neighbour is one of the " poorer " that is always in to his overdraft, strange that he can afford to run 2 cars and have Sky TV etc.:rolleyes:

Your next door neighbour has provided you a warped sense of what low-income means I'm afraid. Either that or your own definitions are warped, would you say the people posting RL impact examples are all loaded up with Sky TV and a double garage. Hardly I'm sure.

tomasfoley

opinions4u wrote: »

The whole charging structed was originally designed to be cost neutral. No extra income for the bank.

Whether that remains the case, I don't know, but the new structure of charges is exactly the same of the one I became aware of over 12 months ago.

Most overdraft rates with most banks are variable.

All overdrafts carry an inherent risk to a bank.

But no more money than being made under a previous charging structure. Please will you explain how this new charging and reward structure will increase overall profitability for the bank.

Interest has been replaced by fee. If current interest rate had been replaced by higher interest rate, what would those same customers have done?

Excuse me, see your post makes me laugh. A £100 overdraft is charged currently at around £1.30, the fee has altered that charge to £30-£31 per month. I've already said I'm not against a raise in-line with market conditions in interest payments, which by the way is the formula signed up to, but to make an increase of almost 3000%, there is a clear difference between the two types of increase.

You say all overdrafts carry an inherent risk to the bank. Then by charging even more in the way they have, they have increased the risk not reduced it. They clearly consider the benefits out weigh the risks for themselves. So yes its irrelevant.

And yes absolutely they will make a packet from that charging structure, to suggest otherwise clearly shows who you work for on the forums.

"Most overdraft rates with most banks are variable."
They are not 3000% variable

YorkshireBoy

@tomasfoley

The OFT has demanded that fees/charges are clearer (and these are very much clearer IMHO). What do you think would have been a better way forward for the banks, bearing in mind they clearly realise that there's a good chance of them 'losing' the test case?

In putting your proposals forward, please bear in mind that the revenue has to remain the same, or better, than before.

opinions4u

tomasfoley wrote: »

Excuse me, see your post makes me laugh. A £100 overdraft is charged currently at around £1.30, the fee has altered that charge to £30-£31 per month. I've already said I'm not against a raise in-line with market conditions in interest payments, which by the way is the formula signed up to, but to make an increase of almost 3000%, there is a clear difference between the two types of increase.

1) The vast majority of customers never go overdrawn.

2) Of those customers that do go overdrawn most are only overdrawn by a few days a month. This will often cost them less than the £5 Reward payment made.

You say all overdrafts carry an inherent risk to the bank. Then by charging even more in the way they have, they have increased the risk not reduced it. They clearly consider the benefits out weigh the risks for themselves. So yes its irrelevant.

The risk of loss reduces because (1) customers change behaviour and reduce the amount of time that they are overdrawn and (2) the charging structure reduces the losses that the bank will make.

You were the one who said overdrafts were risk free. That is nonsense.

And yes absolutely they will make a packet from that charging structure

I can only re-iterate what I have seen with my own eyes. A PowerPoint presentation showing the financials behind the orginial proposal. There was no expectation of the new charging structure increasing profit. You can choose not to believe me, but it was a document used at board level.

to suggest otherwise clearly shows who you work for on the forums.

My signature line states my background. I make no secret of my previous employment. How the hell do you think I can state, with confidence, that the original proposal was cost neutral?

I have made numerous posts advising people on how to reduce costs to themselves, as have several other posters. Where there isn't a satisfactory way of achieving this I have suggested that people take their business elsewhere.

Read in that what you will.

"Most overdraft rates with most banks are variable."
They are not 3000% variable

It's all well and good highlighting extremes. It is a complete overhaul in the way the bank accounts are paid for so there will, as I said before, be winners and losers.

Many people will better off because they will earn £5 a month instead of a few pence in interest.

Those who fail to manage their money will be better off because they will not pay £28/£35 fees. They will get a text message saying that they are in unauthorised overdraft the day that happens, being given every opportunity to pay no fee at all.

There's no hiding the fact that some in authorised overdraft will pay more. Most of those can make minor adjustments to their finances to reduce the number of days that they are overdrawn and thus mitigate the impact of the changes.

YorkshireBoy

tomasfoley wrote: »

You say all overdrafts carry an inherent risk to the bank. Then by charging even more in the way they have, they have increased the risk not reduced it.

No they haven't. Anyone who constantly lives in their overdraft only needs a major incident (ill-health, job loss, bereavement, etc) to tip them over the edge.

As such, they may perceive their 'capital' to be at stake. They're therefore maintaining the status quo by increasing their 'revenue' income.

And if the customer goes under later...well at least they've had their money back another way (harsh but true IMHO).

Of course many (I agree not all, at least not straight away) of the customers (those who previously lived in their overdrafts) could take the bull by the horns and manage themselves out of their overdrafts?

And no I don't work for a bank.

tomasfoley

opinions4u wrote: »

You were the one who said overdrafts were risk free.

It's all well and good highlighting extremes. It is a complete overhaul in the way the bank accounts are paid for so there will, as I said before, be winners and losers.

I never said an overdraft was risk free, you made the point there is inherent risk in overdrafts in response to my point that the suggestion of the right of the bank to cancel your overdraft at any time means that this change has the very same impact anyway. I just said that if your managing your overdraft, then they would not pull your overdraft anyway ans so there is the irrelevance of it having a bearing in this topic.

An extreme suggests it will be very unlikely a 3000% increase is occured ok since your a former bank manager lets look at it.

Overdrafts £1-£500 Currently charged 1.50% per month
Current rate: £1.50 - £7.50
Future Rate: £30 or £31

Overdrafts £501-£1000 Currently charged 1.50% per month
Current rate: £7.50 - £15.00
Future Rate: £30 or £31

It would take a very big overdraft to even break even. That hardly makes 3000% an extreme case.

It really does not matter how many people you quote as using an overdraft to the overall rights and wrongs of such an increase. Since when is penalising a minority justification, especially as you know the affected are in the low-income bracket.

And "cost neutral" again is absolutely no justification, you are speaking of taking from one group for the benefit of another. Besides I still am entirely convinced that the overall beneficiary is the bank.

Finally "Making charges clearer" is just rubbish, we are not stupid I know what a percentage is. I learnt measurements weights etc at school it does not take a genius to realise what your charges will be

tomasfoley

YorkshireBoy wrote: »

No they haven't. Anyone who constantly lives in their overdraft only needs a major incident (ill-health, job loss, bereavement, etc) to tip them over the edge.

As such, they may perceive their 'capital' to be at stake. They're therefore maintaining the status quo by increasing their 'revenue' income.

And if the customer goes under later...well at least they've had their money back another way (harsh but true IMHO).

Of course many (I agree not all, at least not straight away) of the customers (those who previously lived in their overdrafts) could take the bull by the horns and manage themselves out of their overdrafts?

And no I don't work for a bank.

See this is another interesting piece of advice, people plod along quite comfortably living in their overdraft, who needs ill health, bereavement to tip you over the edge when all that's really needed is the bank to throw you £30 of charges a month.

Overdrafts often come about through a crisis, those people slowly work towards bringing that back into credit, but what screws them up is the bank throwing more charges at them. And if they now cannot afford that £30PM, then what happens they default to unauthorised and wow arent we all blessed that now we wont be as bad off in a charging zone we should never have been at in the first place.

It is simply a crime to take what is not yours. To take £30 of a low income individual or family per month. And somehow because you tell them 30days before, it makes that ok??