MSE News: CONFIRMED - OFT gives up bank charges battle

pool-hustler

so it is worth making an individual claim under fairness then.
Like Natwest reducing returned DD's at £38 a pop. It is now £5. Isn't that an admission??

Chrysalis

natweststaffmember wrote: »

Explain how?

explain how what?

Before OFT got involved, the vast majority of claimants were getting their money back as they winning by default.

OFT gets involved, cases get put on hold unless financial hardship.
End of OFT big case they lose an argument which people were winning just fine before they got involved.

I cant believe I just had to explain this to you.

natweststaffmember

Chrysalis wrote: »

explain how what?

Before OFT got involved, the vast majority of claimants were getting their money back as they winning by default.
They weren't winning in a direct sense since all monies were being paid out as a gesture of goodwill. Barwick lost remember as did some who assumed a templated letter would lead to a pay out.
OFT gets involved, cases get put on hold unless financial hardship.
End of OFT big case they lose an argument which people were winning just fine before they got involved.
The OFT lost the collective challenge and they got rid of the penalties in law argument. Furthermore, you can't argue the level of charges anymore but you can argue fairness
I cant believe I just had to explain this to you.

I'm glad you did otherwise we both would have assumed things that may not necessarily be true.

davidgmmafan

"To be fair, the Direct Debit Scheme is an extremely robust procedure if people knew all the rules.
Unfortunately many people don't understand the scheme ... and I include many bank staff in that category.

The DD scheme does include a consequential loss clause within it's terms.
Whilst banks must make an immediate refund of disputed items under the terms of the DD Guarantee (and the word of the payer should be final as to whether any transaction is disputed), the consequential loss part of any claim is not refundable immediately (where the cause claim is not the responsibility of the bank), but only after the bank has received the claimed funds from the Originator.
It is the bank's role, under the terms of the DD scheme, to make the consequential loss claim if the payer requests one to be made.

This is fair in my opinion as why should a third party (the bank) have to fund any losses which it itself was not responsible for in the first place? "

With you 100% about bank staff, nobody told me about it when I worked in one. I am not familiar with this rule you mention in relation to conseuquential loss and it is not mentioned in the info companies and banks give to customers. Link below tieh text copied.

http://www.bacs.co.uk/bacs/businesses/directdebit/collecting/pages/customersrights.aspx

Your customers rights

As a collector of Direct Debits from other organisations and the general public, the Direct Debit Guarantee plays a vital role in giving your customers complete reassurance, knowing they are protected by a number of safeguards.

Direct Debit is the only payment method with a money back guarantee.
The Direct Debit Guarantee

• This Guarantee is offered by all banks and building societies that accept instructions to pay Direct Debits.
• If there are any changes to the amount, date or frequency of your Direct Debit (insert your organisation name)will notify you (insert number of) working days in advance of your account being debited or as otherwise agreed. If you request (insert your organisation name) to collect a payment, confirmation of the amount and date will be given to you at the time of the request.
• If an error is made in the payment of your Direct Debit, by (insert your organisation name) or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society.
  • If you receive a refund you are not entitled to, you must pay it back when (insert your organisation name) asks you to
• You can cancel a Direct Debit at any time by simply contacting your bank or building society. Written confirmation may be required. Please also notify us.

Its no wonder people don't know thier rights if they are not told about them. This information is taken from the BACS website and is the info people get from banks when setting an account up, and businesses when they are setting a DD up.




I remain sceptical that the bank suffers any actual loss, however I amr eassured that there is some process in place. Though I daresay someone on a modest income is still going to face a couple of weeks of cacking themselves about the apparent hefty charges looming. It took me eight weeks to sort out one DD taken in error, and then only when I mentioned the FOS did it get sorted. So IMO lots of room for improvement.



There's no money in it thought so I doubt the banks will bother.

Premier_2

davidgmmafan wrote: »

...Its no wonder people don't know thier rights if they are not told about them. ...

I suspect the average Payer wouldn't bother reading them even if they were provided them.

The full scheme's rules are, by necessity, extremely long and complex. For example, The Originator's Guide & Rules to the Direct Debit Scheme is a good half inch thick, A4 printed both sides.
There is a similar version available to The Paying Bank.
e.g. from the bacs site:
http://www.bacs.co.uk/Bacs/Banks/BacsServices/Accountswitching/Pages/TransferofDirectDebitsandStandingOrdersservice.aspx

As far as I know, there is no Payer's version as there shouldn't need to be one if those operating the scheme understood and abided by their guides,

The Payer's role is one that is, by necessity to ensure they are confident enough to use the scheme, one that is very simple and the protection of very strong safeguards of the DD guarantee should things not work out right. Whilst it may not cover every possible eventuality, do do so would probably result in a document of similar size provided to Originators and Paying Banks and that alone would put off most people even using the scheme.


Edit: Having said that, there are ways for those of us with sufficient interest to obtain the necessary rules and spend time to educate ourselves over the scheme, as I see from another post you decided to do in the past also.

pool-hustler

the direct debits get rejected and the bank does not go overdrawn cecause of this. How then can they justify £38 for rejecting the DD due to lack of funds?
What is the best way forward? Natwest charge £5 now. Surely I should jump on this. I have around £700 in relected DD's since 2007...

davidgmmafan

on this point

"I suspect the average Payer wouldn't bother reading them even if they were provided them."

But I was not aware of them at all and I used to work in a bank and have an interest in consumer issues generally, so its a little worse than it first appears. Which brings me to my next point

"As far as I know, there is no Payer's version as there shouldn't need to be one if those operating the scheme understood and abided by their guides,"

This is exactly the problem, they don't either by accident or by design. I believe it is by accident but this issue could do with being highlighted. I don't even know how it i policed, which could go some way towards explaining poor practices and knowledge.

I mean individuals can complain to the FOS but they aren't a regulator, I believe they would need many thousands of complaints to refer it to another body like the FSA.

So I stand corrected customers DO have more protection than I first thought, although the fact its not widely known brings into question the value of this protection. Its not much good me having an insurance policy if I don't know about it...

I might read it all on a cold day, well its fifty fifty, maybe if I expereince another direct debit screw up...

I do wonder sometimes how many people are told to take it up with the company. Anyhow back on topic!

"the direct debits get rejected and the bank does not go overdrawn cecause of this. How then can they justify £38 for rejecting the DD due to lack of funds?
What is the best way forward? Natwest charge £5 now. Surely I should jump on this. I have around £700 in relected DD's since 2007..."

They would say the fee is for a consideration of whether or not to pay and price alone cannot be used to determine if a charge is fair or not. Don't you just love the law

I don't know if you will get anywhere with this but I was certainly going to draft a letter for my brother pointing out this inconsistancy. He can't afford to pay the charges, which they have defaulted him for, so he's effectively tied to a Natwest mortgage for life. Well if he doesn't want to pay a sky high interest rate that is.

I've no doubt they'll come back with some pre-printed waffle, but there is an inconsistancy there since the procedures, processes and work involved is the same and it would seem logical to assume if they aren't making a loss at £5 the were making mucho bunce at £38.

Premier_2

pool-hustler wrote: »

the direct debits get rejected and the bank does not go overdrawn cecause of this. How then can they justify £38 for rejecting the DD due to lack of funds?
What is the best way forward? Natwest charge £5 now. Surely I should jump on this. I have around £700 in relected DD's since 2007...

I think you may have misunderstood the reason for the charge.

When you authorise a payment that you have insufficient cleared funds available to pay, the bank needs to assess whether or not it should accept or reject that transaction.

It is that assessment, which may or may not result in the bank agreeing to grant you an unauthorised overdraft, for which you pay the charge.

pool-hustler

i agree that a charge is justified but can i argue the amount any more?
£38 - £5 is a little bit obvious of overcharging is it not?
What siginificance to claiming an unfair amount did the OFT quitting cause?

Premier_2

davidgmmafan wrote: »

...
This is exactly the problem, they don't either by accident or by design. I believe it is by accident but this issue could do with being highlighted. I don't even know how it i policed, which could go some way towards explaining poor practices and knowledge.

I mean individuals can complain to the FOS but they aren't a regulator, I believe they would need many thousands of complaints to refer it to another body like the FSA. ...

My understanding is that what you perceive is a problem is in fact by design. i.e. the scheme is set up so that it is as simple and as straightforward as possible for the Payer, whilst at the same time gives the Payer total protection should things go wrong. In case of dispute, the scheme says the Payer's word should be taken as enough evidence to file a claim.

It is important to remember that DD is purely a means of payment. Where a transaction is disputed, all that is being disputed is the transaction itself in terms of the DD scheme. A claim under the DD scheme and the resultant action does not imply in any way whether the money is or is not actually owed in any underlying contract between Payer & Originator.

Whilst I agree that many bank staff apparently are not fully conversant with their banks role under the DD scheme, in the numerous claims I have made, only once was I stonewalled completely at branch/customer service level. Following the bank's usual complaint procedure soon resulted in bringing the matter to the attention of someone in the bank who had read and understood the rules resulting in an offer of corrective action, which I accepted. The letter, as usual, gave me the option of not accepting the corrective action offered in the event I didn't agree with it, but to pursue the matter further with the FOS.