MSE News: Bank charges: banks win test case appeal

LizzieS_2

DotNetter wrote: »

I can see your point and I understand where you're coming from but I think you need to consider how people get into these situations.

For my own part, I have heavy debts which I have built up over the years and I'm not expecting anyone to get me out of that - I am happy to pay it back...however....

A few months back the cambelt went on our family car (our only car). we ended up having to weigh up either spending £900 to have it repaired or trying to buy another family car for £900 - we opted to have it repaired as it's better the devil you know.

Because of our financial situation something had to give and as a result we went over our overdraft by £250 - I was charged £150 for doing this so in total was £400 over my agreed limit.

The knock-on effect of that is that the next month I was against £400 over my agreed overdraft and I was charged £200 this time - so now I'm £600 over my agreed overdraft...I think you can see where this is going.

I rang the bank and explained the situation but they would not waive the fees. They suggested a flexible loan which would be cheaper and not incur charges; great I thought. We went through the application process and I was turned down on affordability grounds?!

So, just be clear - the bank are month-on-month making my financial situation worse but won't help me out because I can't afford it; but apparently I can afford £200 in charges each month?

There are many reasons why people get into debt and have to incur charges and I don't think it's to do with managing finances so much - some people just have no other options.

Regards,


Wayne

You had more than 2 options:
~ use alternative transport or walk until you could afford to replace the car without paying fees
~ hire a car
~ buy a cheaper car so you did not end up paying fees (seems you had access to only £650 but chose to spend £900)
~ Ask the bank in advance what the charges would be for your decision, so you could then weigh up if this was going to be cheaper than say the higher charging loan companies

tiddler66

Whether you are overdrawn or in credit BE VERY AFRAID! The banks have just been given the green light to rip off their customers. If you beleave that the banks will stick to free banking just because you are in credit at the cost of customers who are overdrawn you are very misguided. The banks are now victorious and will now screw us all with no interference from government or watchdogs.

Felicity101

JimpsEd wrote: »

As sad as that is, it doesn't mean the banks should provide that debt for free or at a very low cost.

That's just the point we're all trying to made. The banks DON'T provide debit for free or at a very low cost. It's 35 pounds a go! This attracts interest and it's all a downward spiral from then on.

ALIBOBSY

gordothegopher wrote: »

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??

I believe this is the sort of way things will end up going. Behind closed doors the banks/government and OFT will be negotiating. This decision stops the mass claims for them and they will deal with any further claims as they did before, but they know they have to revise the current system.

Another addition could be a warning rather than a cash penalty, say the one warning after a month you went overdrawn, 2 after 2 following months, and 3 means the account is converted to a basic account and or they withdraw you DD debit facility.

The government should also ban companies charging less for payment by direct debit, which is effectively a penalty on those who don't wish to or can't pay that way. For many on benefits it would be easier to budget on a weekly pay bills by cash basis than trying to remember to cover direct debits, and stop then going overdrawn.

ali x

LizzieS_2

gumbi wrote: »

The problem is a lack of choice. If you have a job then you need a bank account to pay wages into and no matter which you choose they all have the same terms, let's face where is their incentive not to charge? !

Yes the banks do have the incentive to make charges, but you do have a choice whether to put yourself into the position of incurring charges - after all if you were paid in cash and had no account, you couldn't spend more than you actually had.

andychurchill

Does this judgement affect the reclaiming of credit charges?

MillaJoJo

"We be asking" ?

Anyway, the banks can say what they like, the Court didn't rule on fairness. Whether or not the charges are lawful in their current state has not been decided. This will be a sound argument against any action Lloyds tries to subect the claiming consumers to.

marcharrison1979

mick_sturbs wrote: »

Whilst i think that the bank charges are a bit high sometimes, i am delighted they have won their case.The prospect of having to pay for each transaction was not one i was looking forward to.
I am not overdrawn and the idea that i would have to subsidise people who can't manage their money did not appeal.

That was just scare mongering by the banks and i'm so surprised how many people have been daft enough to fall for it.

Northwinds

Completely agree with you - well done!

ironmancole wrote: »

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.

berkshirelady

Ansu wrote: »

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.

Nice in theory, if the banks will communicate with CCCS et al, and put in place these procedures. 12 months down the line and I'm still waiting...