MSE News: Bank charges: banks win test case appeal

The_White_Horse

smothy wrote: »

RBS will and do allow this type of account to go overdrawn. They then charge you £38 for it.

well don't go overdrawn!!! its easy.

1. you check what is in the account, lets say it is 50 quid.

2. you then go to Tesco. If the basket comes to 55 quid, you will go overdrawn and if it is below 50 quid, you are safe.

3. remember what DD you may have coming out the following day and take that into account! ie you have 50 quid but gas and elec are coming out at 40 quid - that means you can spend 10 quid. Easy.

4. easy. the problem is, you spend what you like at tesco with no regard to (a) what is in the account and (b) what is due to come out - and then you moan when charged.

Mr_Rossi

Quoted from the 1st part of the judgement this morning:

LORD WALKER
The limited nature of the issue
1. The members of the Court are well aware of the limited nature of the issue which
we have to decide in this appeal. But many of the general public (who are understandably
taking a close interest in the matter) are not so well aware of its limited scope. It is
therefore appropriate to spell out at the outset that the Court does not have the task of
deciding whether the system of charging personal current account customers adopted by
United Kingdom banks is fair. The appellants are seven of the largest banks in the United
Kingdom and one building society (but I shall for convenience refer to them all as “the
banks”). The appellants accept that the system of “free if in credit” banking prevalent in
this country involves a significant cross-subsidy (amounting to about 30 per cent of the
banks’ total revenue stream from current account customers) provided by those customers
who regularly incur charges for unauthorised overdrafts (a cohort, we were told, of the
order of twelve million people) to those customers (a cohort of about 42 million people)
who are in the fortunate position of never (or very rarely) incurring such charges. Banks
in other European countries adopt different forms of cross-subsidy; French banks for
instance, concentrate their charges on processing standing orders and debit card

transactions.


My two-pence worth...

The "free if in credit" part works for the 70% of current account users, but they are obviously taking advantage of the 30% who receive charges (fair or not). The 70% are therefore subsidised by the often financially disadvantaged minority.
The part about how other European banks operate and subsidise the current accounts shows the stark difference between just one way we are different to Europe.
Of course, any one with money will favour the UK method....as it relies on a minority of customers being charged.
If the 30% who do currently get charged did stay charge free then we may then have a more fairer system, with fees spread over 100% of the 54 million current account users.

PadiP

The_Hallowed_Way wrote: »

No I don't pay an annual fee, that's what 'free of charge' means. Do I pay more for what I buy? Well I pay the same whether I pay cash or pay with a card so I'd say not.

Which probably means that the credit card charges are 'pooled' so those of us who pay by cash are subsidising those who pay by credit card.

Vigornian

The first thing I arranged when I opened my current account was an authorised overdraft of £100 to cover any unforeseen debits. Is this really so difficult?

The_White_Horse

euronorris wrote: »

You're assuming that he would be able to get to work using public transport. This isn't always possible. And no job means no income, thus increasing the debt.

The bank and CC companies may decline any further debt facilities.

And, the garage may be accomodating, then again, it may not.

What then?

You don't get it repaired and use public transport. you can get anywhere on public transport - it may require many changes and walking, but it can be done. Life isn't easy. and it would be temporary.

surely he could borrow a bike from someone???

its funny how these people always live in the most inaccessable areas and have zero friends that can help out!!

Charlie94

The_White_Horse wrote: »

exactly - he could have also:

phoned the bank in advance and got an authorised overdraft;

not used the car for a couple of months (there are buses and trains - yes its inconvenient, but plenty of families have no car) and saved up the 250GBP that you were short;

Sorted a deal with the garage, so you could make two payments;

Put it on a credit card with 0% for a month or two;

put it on a credit card with a very high interest rate for two months (still cheaper than the fees - about 19GBP per month on a card with 25% interest rate)

The problem is, people don't think and then they get themselves trapped. It all stems down to bad financial planning. If you want to own a car, you have to factor in petrol, insurance, breakdown cover, servicing, MOT and repairs. If you can't afford it, don'[t have a car. You are NOT entitled to a car!! The trouble these days is the entitlement attitude. My grandfather never had a car (and he had a licence from the army). Why? He couldn't afford it. and he raised a family with no car. How did he manage???

It has absoloutely nothing to do with the entitlement attitude! This court judgment was on an issue of fairness. Even before the decision went to court the banks judging from thier payouts agreed that their charges were not fair.

In the past you could not withdraw money if you hit your overdraft. The banks however realised that they could make money out of people who mistakenly went over their limit. Bank overdraft charges have been a huge success for banks allowing them to capitlise on thier customers mistakes or hardship. Its as if they want to tempt you with the money and then slap your hand when you take it. If they were so worried about people going over their overdraft why not say when you hit your limit that is it, you can't have any more. The reason they don't is there a huge amount of money to be made from this.

The_White_Horse

Vigornian wrote: »

The first thing I arranged when I opened my current account was an authorised overdraft of £100 to cover any unforeseen debits. Is this really so difficult?

yeah, because they get the 100 overdraft and spend it on nonsense. then it is gone.

jamespir

Vigornian wrote: »

The first thing I arranged when I opened my current account was an authorised overdraft of £100 to cover any unforeseen debits. Is this really so difficult?

yes but thtas not availale to all

smothy

It seems that the holier than thou brigade on here are deaf. As I understand it, I certainly fall into this category, I am NOT against banks charging me for being overdrawn. I AM against paying £38 for a letter from them stating I am overdrawn. a fiver yes, just keep it real you parasites.

Oh, and as one of those on here who is '!!!!less'...isn't the reason that the country is in the bin because those institutions you admire so much were even more !!!!less? They are also continuing to be so by paying big bonus' to the morons who almost destroyed those fine, upstanding institutions.

Also, don't forget that pride comes before a fall.

danm

ouija wrote: »

Click the link??

it doesn't link properly. i assume you mean the one by Euronorris.

Actually a fair point. The question i would ask it what 'incentive; would there be for people to manage there accounts properly. If they can;t do this with a £35 fee as a deterant......what does it take?