MSE News: CONFIRMED - OFT gives up bank charges battle

Chrysalis

oldwiring wrote: »

No, you still do not have an approved overdraft facility. It's more like a recognition that to bounce an item may be of substantial embarrassment to the customer.

how do you work that out? the bank has made a decision to approve a payment.

the only way I can see a overdraft been able to be classed as unauthorised is in the event a debit card payment is cleared offline or if cheques are cleared due to been under a cheque garuantuee.

In terms of direct debits and standing orders its the bank's decision to clear them or not and as such any overdraft that happens as a result is authorised.

The correct term would be it is not a pre agreed overdraft. Rather one that has been made on short notice.

A few days ago I decided to check my bank's site to see these so called improved charges as many people on this have claimed although oft lost the case it resulted in better fees.

The truth is at least for my bank the fees are worse, they only appear better to the gullible as its daily charges quoted. Also my bank doesnt agree with the above posted I replied to, they class the overdrafts as 'unplanned' not 'unauthorised' I assume for the reasons I stated.

So old fees were £35 for bounced direct debit or direct debit that made you go overdrawn and £65 for standing orders. There was no reoccuring fees.
New fees are £15 monthly reoccuring fee if account is in a unplanned overdraft at any point of the month. Then an additional daily fee depending on unplanned overdraft amount. £6 a day for upto £25, then £15 a day upto £100 and finally £20 a day for anything above £100.

Lloyds also gave some leeway in that they wont apply fees until end of the day so if cash is deposited in the account the day the payment bounces there is no fee. The problem here is obvious, the returned payment usually takes 2-3 days to show on the statement and the letter usually takes a week to arrive.

So for the new system to be beneficial the account has to be corrected within 4 days for under £25 and within 1 day for under £100, over £100 it is always worse unless you put funds in during the grace period.

Bounced direct debits new charges are £20 so these are at least improved.

I say its good that (a) returned items are now been treated different to unplanned overdrafts whereas before they wasnt and (b) that the charge scales depending on the size of the unplanned overdraft, but for people to say these new charges are better they are not, in fact they quite likely to make the bank far more money than the old charges for people who get spiralling fees.

I will be staying with lloyds since its became evident these charges are been reviewed in lloyds and rbs the state owned banks, the government has decided to force the issue in these 2 banks but it looks like the private ones have got away with it for now. So for those with bank of scotland and lloyds tsb stay tight because the charges are likely to improve during 2010.

natweststaffmember

jkc wrote: »

RBS balance sheet has more debt than the country has money fact. Why do we have bankers apologising on national tv?

Not sure what that has to do with the OFT decision but no publicity is bad publicity so that is probably why.

natweststaffmember

LizzieS wrote: »

I am fed up of some assuming I am talking down to them (not recent posts). In reality I have been in their financial predicaments of having little income to stretch a long way, but I have never incurred bank charges or ever taken unaffordable credit (I offer opinion based on how I dealt with things and avoided the risks).

The whole case was bound to fall back to the courts to decide on individual merit. Whoever first started the campaign probably had a good cause and chance of success, but the masses who joined in were not in the same league.

Personally I can understand why anyone thinks £10 is more reasonable than £35 in charges, but I cannot understand why some are justifying their overspends in multiples of £35 instead of the difference of £25?
Lizzie, the terms of UTCCR 1999 is that a term that is not fair is unenforceable in its entirety and is null and void. That means that not only is fees repayable but repayable with interest and you have mentioned below this post. The contract itself can still be deemed to be fair without an unfair term so it doesn't nullify the whole contract which is within the original EC Directive from which UTCCR comes from. The reason people are justifying the full amount is because that is what the law on unfair contracts states.
The other main flaw in the reclaiming is the fact that people want not just the difference back, but also (legally) county court interest at around 8% (current accounts do not pay that much and realistically people should be asking for no more than the position they would have been in had lower charges applied).

On another thought - any campaign would have had a better chance of success if it focused on both sides of the field so to speak - those paying the charges and those losing more interest for having large amounts in their account (I'm not in either btw).

The issue is based on UTCCR 1999, and originally it is on the EC directive.
To quote:
Article 3

"1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.
2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.
The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract.
Where any seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent on him.
3. The Annex shall contain an indicative and non-exhaustive list of the terms which may be regarded as unfair."




There is a grey list which includes terms in the annex
"(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation; "


You have asked about interest forgone and here is that issue in paragraph (j)

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;

This is clarified later on with regards to financial services:
(b) Subparagraph (j) is without hindrance to terms under which a supplier of financial services reserves the right to alter the rate of interest payable by the consumer or due to the latter, or the amount of other charges for financial services without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof at the earliest opportunity and that the latter are free to dissolve the contract immediately.

Interest can be varied and can be changed but it doesn't make the term unfair.

Source on EC directive is below.
http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=31993L0013&model=guichett

gobbo

IT was brown that encouraged the banks to lend so that he could keep spending , don't want to get into this one again as its been discussed on this forum already

jkc wrote: »

RBS balance sheet has more debt than the country has money fact. Why do we have bankers apologising on national tv?

gobbo

LizzieS wrote: »

I am fed up of some assuming I am talking down to them (not recent posts). In reality I have been in their financial predicaments of having little income to stretch a long way, but I have never incurred bank charges or ever taken unaffordable credit (I offer opinion based on how I dealt with things and avoided the risks).

The whole case was bound to fall back to the courts to decide on individual merit. Whoever first started the campaign probably had a good cause and chance of success, but the masses who joined in were not in the same league.

Personally I can understand why anyone thinks £10 is more reasonable than £35 in charges, but I cannot understand why some are justifying their overspends in multiples of £35 instead of the difference of £25? The other main flaw in the reclaiming is the fact that people want not just the difference back, but also (legally) county court interest at around 8% (current accounts do not pay that much and realistically people should be asking for no more than the position they would have been in had lower charges applied).

On another thought - any campaign would have had a better chance of success if it focused on both sides of the field so to speak - those paying the charges and those losing more interest for having large amounts in their account (I'm not in either btw).

Very good arguements , I agree and think that there are a lot of proffessional complainers on this site

MoneyMiser

There seems to be a lot of arguments going on here with a lot of name calling and nit-picking. This really is not in the nature of this forum.

I am sure everyone will agree that the charges are unfair. £35 for going overdrawn by 50p is excessive in anyone's book. What people want from both sides of the argument is a fairer system.

Yes, those who go overdrawn should face a penalty. What people have to remember is that we are customers of the banks, therefore the customer should not be exploited. The problem with charges is that they snowball very quickly putting the customer under extreme pressure and the debt continues to build. This pressure then leads the customers to concentrate on one thing, getting themselves back below their overdraft, forgetting about everything else, rent, bills, even direct debits that are due to come out!! Next thing they know there are charges on charges on charges, within the space of one month, they have accrued £200+ in charges. The banks, instead of trying to help the customer get out of debt, are quite happy putting you further and further into debt. Is this fair? I thought it was only those dodgy loan sharks that did this?

Wouldn't it be fairer if the banks charged the customer a fee (I will leave the powers that be to decide this), if that then takes the customer over the authorized overdraft, an automatic freeze should be put on the account until the account is back in credit. This freeze would stop any pending DD's, effectively stop the customer having a bank account, but more importantly stop any further charges on the account. This way the customer is charged a fee, but does not face the prospect of going further into an uncontrolable debt.

Surely this way people on both sides of the argument are happy, as those going overdrawn are getting charged, and the people getting charged are not getting themselves into massive amounts of debt.

What you think?

MM

Alpine_Star

gobbo wrote: »

This sounds a bit dyslexiaist to me.

Everything I have said is based on fact and sound knowledge of the banking system and regulation , so I suggest that it is yourself that has no idea what they are talking about

If you had a ''sound knowledge'' of regulation then you wouldn't tell us - as fact - that the Government ''controls'' and can ''instruct'' the Office of Fair Trading and then cringingly and transparently back-peddle to have us believe you meant they could ''just change the law'', somehow confusing Government with Parliament and statute with law.

Is there anything you won't do to publicly humiliate yourself?

rickbonar

LordLee wrote: »

I just cannot help thinking that some dodgy deals were done between government, courts and banks. The government is helping the banks with handouts and cutting bonuses... they would not want to see banks having to shed out millions in reclaimed bank charges. I reckon there's more to this than meets the eye.

Here in a nutshell is why the OFT case failed.

We've seen bent politicians, bent bankers, we've all heard of bent Judges.

Does anyone honestly believe that the courts aren't in the governments pockets?

This had about as much of succeeding as a successful prosecution against the Police force. i.e. NONE IN HISTORY.

RIP ... Jean Charles de Menezes etc.

natweststaffmember

rickbonar wrote: »

Here in a nutshell is why the OFT case failed.

We've seen bent politicians, bent bankers, we've all heard of bent Judges.

Does anyone honestly believe that the courts aren't in the governments pockets?

This had about as much of succeeding as a successful prosecution against the Police force. i.e. NONE IN HISTORY.

RIP ... Jean Charles de Menezes etc.

Who was at the top of the conspiracy chain?
Who paid who?
How much?
Have you read any of the transcripts or any of the judgements from the case before making this post or read the EC directive or UTCCR 1999?

rickbonar

Who was at the top of the conspiracy chain?

There is no “conspiracy” chain as such but ultimately the UK government can’t let an already very unstable banking system be upset further.

The Judge would be made very aware of this fact by the government.

Reasons being that after the bail out costing billions if any bank did badly falter and people’s confidence went, and started taking their money out and hoarding it then the whole financial system of the UK could collapse leaving us all with worthless pieces of paper (banknotes).

If in a more stable time such as 2 years ago the ruling may well have been different but there are somewhat special circumstances today.

Who paid who?
How much?

No one has been paid anything as such in financial terms but jobs knighthoods and the status quo have been assured for now.

Have you read any of the transcripts or any of the judgements from the case before making this post or read the EC directive or UTCCR 1999?

Are you kidding?:rotfl:
It’s little like the reading Lisbon Treaty or indeed any transcripts from any politically sensitive case such de Menezees -Utterly pointless... See below.

I could have told anyone what the outcome would be even before the first court session had taken place!

Really it’s naïve of anyone NOT to read between the lines and words and verbiage of rhetoric.

I think what I’ve said earlier in this write up answers your questions.