MSE News: Bank charges fighting on: a new legal argument

pingchris

natweststaffmember wrote: »

The banks' contribution to the Exchequer prior to the crash was over 42 billion pounds in tax. The better the banks do the more money the Exchequer gets in cash Furthermore, where did the £250 billion pounds figure come from?

that would be a good argument however boom and bust is no good to anyone so the 42 billion they paid to the exchequer just got given back to them plus a few quid,the banks messed up,they didnt put the breaks on untill it was too late,now thats just wreckless driving in my book.

this case can be painted up as much as the government and banks like but the plaster underneath is still the same old cracking crumbling rubbish.

the banks should be following a proactive policy of returning cash to us for the charges they imposed,this case is like saying hey mr you gotta buy a car from us and we set the fuel prices too,the banking industry had a charge standard around £39.00 but some went below that to £35.00 etc,they all made good money from charges but had slightly different charge prices which in itself rings alarm bells,at the end of the day there policy of charges is the wrong way to do it but hey they make several billion a year from charges what do they care about right and wrong they are a law unto themselves which has been proven to be riddled with danger,this whole case has been carefully played out by the banks and in the final furlong the powers that be decided the time was right to try and kill it off,they are hoping that it goes away soon and it will be forgotten about.well not by me it wont.

Alpine_Star

natweststaffmember wrote: »

The banks' contribution to the Exchequer prior to the crash was over 42 billion pounds in tax.

The £42b figure was the the profit they made - not tax paid. Pre credit crunch Angela Knight was fond of telling anyone who'd listen that ''Banks contribute £50b to the UK economy'' but in fact much of that is extracted, not contributed because it ends up in the Cayman Islands.

For example tax paid on Barclays last accounts was just 18% (when corporation tax should be paid at a rate of 28%) and based on that level of tax avoidance UK banks would have contributed less than £8b to the Exchequer pre credit crunch.

edwace

It might make an interesting test case if a large group of customers decide to default on overdrafts to the same amount as their charges. By closing their accounts when in debit ,the banks would have to take them to court. I know of cases where people have individually used this tactic and left the bank in no doubt as why they have taken this action ,the usual result is after the usual threatening letters & calls from their in house debt collection agency. ,the bank have credited the account with the default amount and closed the account. It makes me think the banks are not to confident when going to court under these circumstances.

esmerellda

Might also end up with a lot of consumers with CCJ's and charging orders.

I'd certainly not recommend anyone defaults purposly on any overdraft - far better to arrange an affordable repayment plan, making clear you still consider the overdraft in dispute due to the charges, whilst the legalitys and issues are sorted out and at the very least until the OFT has made their announcement.

Chrysalis

Centium5000 wrote: »

Sorry Chrysalis but I don't think the point you're making is valid in this instance.

In the banking industry bonuses are a standard part of the pay package, even down to call centre workers.

If the ability of the part-nationalised banks to offer bonuses is restricted too much they won't be competitive with other firms (non state-owned) when recruiting staff.

You'd end up with all the best staff going elsewhere (why wouldn't they?) which would affect the quality and therefore competitiveness of the bank.

I believe this is (one of) the points natweststaffmember is making.

This may also be a step towards greater governement intervention in private affairs, worryingly so as salar15 notes. First bank bonuses, who next? Yours? Mine? Everyone's?

Your feelings are understandable and I sympathise but we don't want to cripple the banks we now (part) own.

it may be standard but thats not a valid reason why it cannot be changed. The argument for it seems to be it is what we used to, people fear change.

Chrysalis

Alpine_Star wrote: »

The £42b figure was the the profit they made - not tax paid. Pre credit crunch Angela Knight was fond of telling anyone who'd listen that ''Banks contribute £50b to the UK economy'' but in fact much of that is extracted, not contributed because it ends up in the Cayman Islands.

For example tax paid on Barclays last accounts was just 18% (when corporation tax should be paid at a rate of 28%) and based on that level of tax avoidance UK banks would have contributed less than £8b to the Exchequer pre credit crunch.

ahh yeah good old barclays, the bank who managed to get a court order about 2 in the morning to get some documents taken of a website showing how they evade paying tax as well as investing mostly overseas rather than the uk.

pingchris

this charges case is all getting insane,its one argument against another,one side(them) delve deep into contracts then the other side (us) delve deeper then they come back with there spaghetti answers etc etc etc, somehow i do not see banks ever admitting there wrong for there deception,is this case not just an infinate load of questions and answers,we ask a question and the banks just keep saying "why" every time, so ther is never an end just us banging our heads against a brick wall,have they tied this up so tight that theres only one key to unlock it,and the banks have that key tucked away in a vault, and the key for the vault has been melted down to a pulp

the bank telling the government what to do,what the hell is that,next we will have banks determining government policy,or does that already go on ?
this country is completely nuts

edwace

esmerellda wrote: »

Might also end up with a lot of consumers with CCJ's and charging orders.

I'd certainly not recommend anyone defaults purposly on any overdraft - far better to arrange an affordable repayment plan, making clear you still consider the overdraft in dispute due to the charges, whilst the legalitys and issues are sorted out and at the very least until the OFT has made their announcement.

[FONT=&quot]“I went to the bank and asked to borrow a cup of money. They said, "What for?" I said, "I'm going to buy some sugar."[/FONT]

Considering that some people on low incomes have found themselves in the situation where they are effectively in debt to the bank ,not through borrowing ,but because of excessive bank charges and those same peoples already low incomes are reduced by 10, 20, 30, 40,50% per month they have little to fear from a court order, which can be as little as 3% of their income. Generally courts will be far less sympathetic to the banks than they are to people who have been reduced to a hand to mouth existence by unfair charges. They can also offer the bank £1 a week in repayments after defaulting which is often enough to avoid a CCJ if taken to court.

You have to understand [FONT=&quot]Esmerellda [/FONT]that every day there are people who have reached the stage where the bank charges have crippled their finances to such a degree that every month they are either surviving on the overdraft and /or are caught in a downward spiral of recurring charges. The bank lets this carry on regardless.
I have one pensioner who was advised by a bank representative when the standing order for her rent was rejected, to pay the rent and buy shopping using a credit card, she was also told that she could not retire because she owed the bank money. When we examined her account for the last 6 years we found her debt had started due to charges.
They had mounted up until her income was unable to cover her outgoings, the bank (she thought kindly) gave her a loan to pay off the debt to them, resulting in interest payments and loan insurance payments she could not afford, resulting in further charges and later another loan and loan insurance resulting in ****** you get the picture. This is not an isolated case it is disgustingly common and people caught in this trap would be infinitely better off in the hands of a court.

Transferring her account balance on the day her money went in before any debits could be taken helped solve her problem.
However this and many other similar cases don’t get to court because banks do not want these practises exposed in an open court as they are certainly contraventions of the banking code and morally repugnant to the average person. (As is Mugging).
You may think it is these individuals own fault for not keeping track of their accounts, but some are from a generation that traditionally trust banks to look after them and others are financially naïve, Personally unlike the banks I am not in favour of exploiting peoples vulnerabilities to the point of their ruin nor should there be an enormous premium to pay for lack of fiscal acumen. .
There are times when people should be advised to ride out the debt storm and go to court and there is a valid case to collect these cases and present a case to a court for a ruling.

The exact nature of the case I am not qualified to say, but with some intensive research I think I could come up with something and so I’m sure a qualified law firm could come up with something solid.
However much banks would like you believe the opposite they do have regulations to prevent loan sharking customers.
Ps after some intervention the bank wiped the woman’s debt as they did for others in similar situations.


Bank of America, , says it has waived late fees, lowered interest charges and, in some cases, reduced loan balances for more than 700,000 credit card holders in 2008.
”
[FONT=&quot]Consumers have never been in a better position to negotiate a partial payment,” said Robert D. Manning, the author of “Credit Card Nation” and a long time critic of the credit card industry. “It’s like that old movie ‘Rosalie Goes Shopping.’ When it’s $100,000 of debt, it’s your problem. When it’s a million dollars of debt, it’s the bank’s problem[/FONT][FONT=&quot].”[/FONT]

Alpine_Star

edwace wrote: »

[FONT=&quot][/FONT] they have little to fear from a court order.........The exact nature of the case I am not qualified to say, but with some intensive research I think I could come up with something and so I’m sure a qualified law firm could come up with something solid.

esmerellda

edwace wrote: »

[FONT=&quot]“I went to the bank and asked to borrow a cup of money. They said, "What for?" I said, "I'm going to buy some sugar."[/FONT]

Considering that some people on low incomes have found themselves in the situation where they are effectively in debt to the bank ,not through borrowing ,but because of excessive bank charges and those same peoples already low incomes are reduced by 10, 20, 30, 40,50% per month they have little to fear from a court order, which can be as little as 3% of their income. Generally courts will be far less sympathetic to the banks than they are to people who have been reduced to a hand to mouth existence by unfair charges. They can also offer the bank £1 a week in repayments after defaulting which is often enough to avoid a CCJ if taken to court.

You have to understand [FONT=&quot]Esmerellda [/FONT]that every day there are people who have reached the stage where the bank charges have crippled their finances to such a degree that every month they are either surviving on the overdraft and /or are caught in a downward spiral of recurring charges. The bank lets this carry on regardless.
I have one pensioner who was advised by a bank representative when the standing order for her rent was rejected, to pay the rent and buy shopping using a credit card, she was also told that she could not retire because she owed the bank money. When we examined her account for the last 6 years we found her debt had started due to charges.
They had mounted up until her income was unable to cover her outgoings, the bank (she thought kindly) gave her a loan to pay off the debt to them, resulting in interest payments and loan insurance payments she could not afford, resulting in further charges and later another loan and loan insurance resulting in ****** you get the picture. This is not an isolated case it is disgustingly common and people caught in this trap would be infinitely better off in the hands of a court.

Thanks for that, yes I am aware of the pros and cons. In a few cases, yes it can be better to default and wait for the bank to take you to court because you can get the set payments. However a court will look kinder on people who have made attempts to make an arrangement to pay, ask the bank to be sympathetic (as they must be but often arent under what is now BCOBS) and stop interest and charges and allow them to repay the debt at a sensible rate. ONCE that has been done IF the bank won't accept it,(even if they do temporarily it will give people breathing space while the OFT sorts their house out) and they default - it won't go straight to court, you end up with months of debt collectors hassling you, phone calls etc before the horrible envelope of court papers lands on the doormat (and remember to most people this is pretty terrifying still, despite all the work we do trying to demystify the court system). Then is the point to say to the court, look this is made up of charges, I have tried to repay anything I may owe whilst the legalitys are sorted (and depending how that goes) stay my claim or accept a reasonable repayment plan (look I've been paying £15 a month for the last year) etc etc - you get the idea anyway. Plus don't forget that making payments now, however low, will help to stave off charging orders. Which many courts are still giving permission for on the first judgment without waiting for any installments to be missed. Yes people are okay if they have the help and support of people on these and other forums, but many don't, and I would hate to create a general attitude of 'ah well the debts made up of charges doesnt matter I'll just tell the judge that if they take me to court' - it just doesnt work like that in the real world. I'd also hate to see people who are managing the debt okay WITHOUT court at the moment reading this and thinking, ahh can save myself that bit each month and default as then I might get lower payments etc ending up with CCJs and CO's because of it.
Its down to the individual situation ALWAYS, but if you can manage an overdraft made up of charges without defaulting, in the present situation, then I would advise carry on managing it.

I assume the last couple paragraphs were aimed elsewhere and I assume from what you have said you are either in the debt advice industry or a CMC .