MSE News: Bank charges: banks win test case appeal

gordothegopher

I think the whole issue is being looked at from the wrong angle. Are charges by banks for unauthorised borrowing (i.e. going over your authorised overdraft limit) fair? Yes!

I think the issue that needs to be looked at is proportion. My bank charges £28 for an unauthorised overdraft plus £35 for each 'item' that is charged. I once went 92p over my authorised overdraft limit and was charged £63 total (i.e. an eye-watering 6847% of the original sum borrowed without pre-approval - not even the most unscrupulous of loan sharks charge that kind of interest!). Thankfully I phoned to query and as a 'goodwill gesture' the charge was cancelled by a fairly sympathetic operator... and I've been much more careful since. Unfortunately that story isn't the same anywhere.

I could have easily went £100 over the authorised limit and still have been charged £63. This is disporportionate. What I haven't seen anyone suggest is a more proportioned charging structure. Rather than the flat rate of £X each time you go into unauthorised borrowing, why not charge a percentage of the unauthorised sum. For example, set at 20% and you'd pay a 20p charge on a £1 overdrawl, but £20 on a £100 unauthorised overdraft.

Wouldn't this cover the 'fairness' and 'proporition' issues??

Myrrdin

The banks run the country, not the politicians. That's why ultimately they get what they want.

I still think there may be mileage for reclaimers, if you read the small print in today's judgement. It may just take a while to put the legal argument together. And of course there is a political solution. All three main party leaders have put on record that they think the current charging structure is wrong.

If you want to really understand how the banking system works, read Promise to Pay: An Inquiry into the Modern Magic Called High Finance by R. McNair Wilson - written in the 1930s but still highly relevant!

"The few who understand the system will either be so interested from it's profits or so dependent on it's favors that there will be no opposition from that class." -- Rothschild Brothers of London, 1863

You will understand many banking practices after reading this.
A copy can be downloaded FREE but you will need to google it as I can't post links to sites yet!

Northwinds

I have to say that following a serious accident 3 years ago, my bank/building society the Abbey National actually closed my account as a result of charges mounting up when I was incapacitated.
I therefore was forced to open a Post Office account to receive payment of benefits during what ended up being a protracted 10 operations to save my leg.
I tried to appeal to the Abbey National but they weren't interested and just turned the "unauthorised overdraft" over to debt collection.

Today's ruling is only in favour of the Banks and ridicules the rights of the individuals.
It seems obvious that this should have happened with the government bailing out the banks with taxpayers' money, so to allow the individuals to benefit while the bank took another hit would just need reparation from the tax payer again.

It has also been stated that the revenue generated by the banks each year from these extortionate charges makes up a large percentage of their running costs.

My advice? If you are on low income or benefits, open a Post Office account and close any bank account you have - don't let the banks take your money.

Sol00

This is appalling! The banks and the courts have ripped off the British people again!

It's so infuriating to see a pompous, posh man, who looks and sounds as if he's no idea about what it's like to live on low or middle incomes, deliver the result. He also said exactly the point that unfair charges were based on - that these charges fund the banking system in order to keep the banking free!

Personally, I don't think that we would see an end to free banking as the charges for accounts would be transparent, unlike the current charges that you only see at the time of opening your account. This would force the banks to be competitive and thus, it's likely accounts would remain free.

Can this be appealed, considering we won twice before?

moggylover

yellowlawn wrote: »

Surely most offshore accounts are owned by our High Street banks? What is the real alternative to using Banks & Building Societies?

The mattress:D

Bnzee

What a shame. That would have been one way to get the economy moving again!

ALIBOBSY

I have had a skim over the decision and been reading alot over on CAG forum.

As far as I (and many others) can see, no binding decision has been made on whether the charges are fair or not.
The first decision made was that they are not penalties-decided in the lower court and this current decision is the OFT can't regulate charges on the basis of fairness. That isn't the same as saying that the charges are fair.The judgement specifically points out that the decision does not look at the level of the bank charges.
Paragraph 64 last line states "No attackhas yet been made, however,on the level of the Banks’ charges overall.’
Basically its a cop out. The vast majority will either chicken out or never bother to put a claim in as they are under the impression (via sloppy reporting from BBC et al and bank missinformation) that this means everything is all over.
This avoids a mass repaying of charges by the banks, but still leaves the way open for cases on the level of charges to be looked at in individual court cases. Basically putting things roughly where they were 2 years ago. It has given the banks 2 years grace over the pending claims as well. Badly done overall.

To those who moan about charges reclaiming heres an analogy from another forum, what is as in the case of charges 28% of people paid most of the electric cost so 72% could have cheap or free electric.
IE those on low incomes struggling along pay £2000 a year, but the greedy banker in his posh house down the road gets it for free, subsidised by the poor. Its immoral and wrong. It also assumes that everyone is intelligent enough and has the skills to budget and avoid charges. But then the nimby types don't care who suffers as long as it doesn't effect them

For the record I had my LBM a few years ago and worked hard to clear loans etc and have not had an overdraft (authorised or not) for many years, but I still think the charges were and are unfair.

ali x

Drunkstar

philatio wrote: »

99% of the people fighting these charges are paid a decent wage.. spend it all on beer, fags, DVDs and clubbing and then expect to be able to spend money they don't have.. for free.. until the next pay day.

Have you polled everyone? I'm on benefits, and before that I had a low paid job, I dont smoke, drink very little, dont buy DVDs or go out other than to my brothers as I am a full time carer.
Does that make me a bad person for fighting these charges?

Harry_Powell wrote: »

If you are sailing close to the wind financially, then only essentials should be on direct debit. The rest should be paid via debit card, cheque or cash.

And then you have to pay more for paying by cash/debit card. Either way the poorer people are being screwed.

ironmancole

As I understand it fairness only applies when you are in credit but goes out the window if you are not? In theory then what is there in legislation to stop the banks from charging anyone £1,000,000 for an unauthorised overdraft? Is it because that wouldn't be fair?

Heck no, fair by law doesn't come into it according to the supreme court. Firstly why on earth were the banks given special dispensation to even take their whinging to the supreme court when they had already lost twice I believe? Had it been any other industry in the world this request would have been flatly denied. So, the banks once more get to do what they want.

Secondly, why has the supreme court barred the OFT/us from appealing to the European courts when that would have been an option open to the banks had they lost once more today? Completely unfair use of the law in favour of the financial 'elite' and the big finger for all of us. Heaven help us if the tories get in and look after the bankers even more. Still, we'll all take it I suppose and continue to give the banks our money whilst quietly moaning about it. When did us brits lose our backbone and become the walk overs we all seem to be? Let's hope the legal team have other avenues, I believe they will have options but too early to formulate at the minute. Questions need to be asked.

Ansu

It is worth noting that just about every bank/building society out there has procedures in place for people in financial hardship to avoid being charged. The charges are, and always have been mostly avoidable; manage your account correctly, if this is not possible get in touch with the CCCS et al, and get a proper arrangement in place as soon as possible to avoid the debt spiralling.

I'm glad this went the way it did, not just to avoid the compensation culture that is growing in this country, but because I believe free banking should stay the way it is. I have experienced life on both sides of this arguement, and it's not nice being in financial difficulty, but the charges that go with it are avoidable. Having worked with people in this situation as well, the people that fall into the situation through no fault of their own (reduncancy, divorce, death etc) are in the minority, the majority are the one who refuse to give up their £49pm Sky TV, £100 mobile phone contracts etc.