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

pingchris

anyone know if there is a breakdown of costs to the banks when a direct debit is missed,and for them to send a letter,are these charges of £39.00 supposed to be a none profit charge and only reflect the true financial cost to the bank

Chrysalis

pingchris wrote: »

anyone know if there is a breakdown of costs to the banks when a direct debit is missed,and for them to send a letter,are these charges of £39.00 supposed to be a none profit charge and only reflect the true financial cost to the bank

this no longer needs to be the case as now they classed as a service and as such can be profitable.

oscar52

edwace wrote: »

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]

This is from an American site, bears no relation to the UK and only applies to US customers.

pingchris

Chrysalis wrote: »

this no longer needs to be the case as now they classed as a service and as such can be profitable.

who classed them as a service,the supreme court ?

does it say in my agreement that charges of £39.00 are a service ?

thats the first time ive heard of a service that allows a charge also,oh lovely im getting a service ,the banks say you can take the service they provide but if you dont take it then they,ll charge you £39.00 for it anyway,it gets odder and odder,is it coming that they will be charging us entry to the bank via a swipe card,better not put ideas into ther heads.

oops they already do that,well sort of, way ahead of me there.

natweststaffmember

pingchris wrote: »

who classed them as a service,the supreme court ?

does it say in my agreement that charges of £39.00 are a service ?

thats the first time ive heard of a service that allows a charge also,oh lovely im getting a service ,the banks say you can take the service they provide but if you dont take it then they,ll charge you £39.00 for it anyway,it gets odder and odder,is it coming that they will be charging us entry to the bank via a swipe card,better not put ideas into ther heads.

oops they already do that,well sort of, way ahead of me there.

Consideration of a request is the service. It is in the documents available to read

mramra

mesotrons wrote: »

Yes, what a good idea. All of those people that have time to keep an eye on their accounts can sponge off the busy people who may have slipped up due to always being busy. Why should the people who avoid going into arrears pay their own way, let's pretend it costs nothing to run a bank account and continue to let the busy people pay our bank charges for us!!!! There is such a thing as a free lunch you know! Yes, let's all live in cloud cuckooland like mramra.:whistle:

It's because you were busy. Of course it is. :rotfl:

That is the lamest excuse for poor personal finance management I have heard so far. You win the prize.

LizzieS_2

I'm struggling with the new legal argument as I just don't see it as viable.

From the report 20% of the accounts are in debit and 80% in credit. The former pay 30% of costs while the latter pay 50% indirectly by having none or lower interest rates.

Obviously you need the banks actual profits, average credit balances and average debit balances to do the actual sums, but using an even £1000 average for each, it does add up in a way; 20 people would pay £1.50 for every £100 the bank makes and 80 people would pay 62p. 20 people paying £1.50 would effectively be paying for the difference in interest lost for both the £1000 negative balance and £1000 credit balance that isn't there (62p each), that leaves 26p for the additional services taken.

It also says throughout that the banks are allowed to cross subsidise as they see fit.

Centium5000

But the difference in interest lost on the negative balance is compensated by the cost of the negative balance i.e. the overdraft rates, and they can be 30% or more. So most of the £1.50 charge (or £15 / £39) is allocated to the service aspect, that's why it's so profitable.

I do agree that the argument is lame in respect of the UTCCR - cross-subsidy isn't related to an individual's contract with their bank - but it may be grounds to show price discrimination against vulnerable people under the Competition Act.

The OFT are going to be looking long and hard at this and deciding whether to refer to the Competition Commission or continue their own action.

edwace

oscar52 wrote: »

This is from an American site, bears no relation to the UK and only applies to US customers.

No I`m afraid your mistaken ,the principle is equally applicable to UK Banks and credit Card companys ,banks world wide are all in the same boat.

Alpine_Star

edwace wrote: »

No I`m afraid your mistaken ,the principle is equally applicable to UK Banks and credit Card companys ,banks world wide are all in the same boat.

In short, you are stupid. And you think we are too.