MSE News: Bank charges: banks win test case appeal

Alpine_Star

alexjohnson wrote: »

Anyway perhaps you will furnish the killer quote but it does seem bizarre to me that it would be seriously suggested that banks would have a business model where (lets say) 70% of their customers were essentially free-riding. Perhaps that really was it - and other people have rightly pointed out that many of these banks haven't exactly proven themselves to be the canny operators that I assume them to be! But, it seems an unnecessarily complicated answer to me to look to a large cross-subsidy model when for years we were told that the current account was a loss-leader. For those 70% it still is, no?

No and if you took the time to read the study you'll find that the PCA business model is a much more complex malaise of cross sudsidy than you imagine it is. For instance the single biggest source of revenue generated by PCAs is Net Interest Income (foregone interest) and you could argue that those account holders who on average have high credit balances subsidise those who do not. Kind of a Robin Hood in reverse, in reverse.

Chrysalis

Yes people with large balances (5 figures+) and people paying these fees are probably both subsidising those with modest balances 3 to 4 figures not paying these fees.

But also remember its entirely possible to have a healthy balance for a long time, hit some unexpected hardship and then in a very short space of time be hit with these fees, so you go for a long period of time giving the bank free money to play with (so they profit from it) and then making them money again by paying these fees. Many people assume here that those been hit with charges will have always had small balances.

unkle

natweststaffmember wrote: »

Should they be allowed to 'grab' so much money when it doesn't cost that amount to deal with. My answer would be yes if thats what was agreed in the T&C's that both parties signed up to.
Which could create an imbalance in the contract to render it unfair as per UTCCR 1999 reg5(1).

I've always been confused by that one, potentially it could be used in so many (non bank charges) circumstances. But i'll bow to your (clearly) greater knowledge than me on that one!

I do hate these Statutes, they are neevr clear really;

" 5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer."

It uses the word significant which is clearly open to debate!

Smasher

unkle wrote: »

I do hate these Statutes, they are neevr clear really;

" 5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer."

It uses the word significant which is clearly open to debate!

Maybe, but in these cases, the bank has all the bargaining power and the consumer has no bargaining power. That's about as significant as it could get..

unkle

Smasher wrote: »

Maybe, but in these cases, the bank has all the bargaining power and the consumer has no bargaining power. That's about as significant as it could get..

Hard to disagree on that one! But then how far does this statute go (excuse my ignorance).

I have a sharedealing account, everyone pays the same amount per trade......

British gas charge the same amount to everyone (although think they do a NCB) for 'boiler breakdown'

So do the AA, so do thames water and so the list goes on and on!

natweststaffmember

unkle wrote: »

Hard to disagree on that one! But then how far does this statute go (excuse my ignorance).

I have a sharedealing account, everyone pays the same amount per trade......

British gas charge the same amount to everyone (although think they do a NCB) for 'boiler breakdown'

So do the AA, so do thames water and so the list goes on and on!

Am I right in saying that boiler breakdown is a service and that you as a consumer can opt out of it. With Charges you do not get to opt out of them because you are automatically opted into them.

wherediditallgothen

alexjohnson wrote: »

No, you open the account and sign the forms. No one forces you to do this. From time to time the bank sends new forms (often with your replacement debit card) which give you the right to opt out, by changing the type of account or closing it.

You do have the right to vote with your feet, but only AFTER paying their charges to settle the account. With boiler repairs, you can get several quotes before you pay anything.

natweststaffmember

alexjohnson wrote: »

No, you open the account and sign the forms.
What I originally agree to may change over time.
No one forces you to do this. From time to time the bank sends new forms (often with your replacement debit card) which give you the right to opt out, by changing the type of account or closing it.

I might not be in a position to negotiate that contract. What if I want to see a reciprocal clause in my contract that I can fine the bank the same way that they fine me if they make a mistake? Is that something viable?
Furthermore, when I speak with the bank advisor he may say "sign here and here" and not explain fully the terms(much in the way he might have told me that my loan was fully protected without the right of declining it).
What if I am heavily into my overdraft and my income has gone down not allowing me the opportunity of being able to close the account?

wherediditallgothen

alexjohnson wrote: »

You're moving the goalposts of your own argument.

If you've called out the engineer for your boiler and it is in pieces in the kitchen then your ability to negotiate the contract is going to be compromised, isn't it? The time to think about it was before you picked up the phone.

As with opening a bank account.

Not really, you've agreed the call-out charge but you can still go somewhere else to get the work done

natweststaffmember

alexjohnson wrote: »

You're moving the goalposts of your own argument.

If you've called out the engineer for your boiler and it is in pieces in the kitchen then your ability to negotiate the contract is going to be compromised, isn't it? The time to think about it was before you picked up the phone.

As with opening a bank account.

That is unfortunately something that the banks and myself have in common.
Their first argument was that it was the charges were to cost of administration, which changed to the charges were to cross subsidise the whole of the current account market.