Its not just about the amount...

davidgmmafan

There is a principle at stake here. Now before I start I’d like to say I totally accept that there are two sides to the story and I am sure there are many cases where people were trying to reclaim charges as some sort of money making scheme. I am not defending those people, I am concerned with those who the charges do the most damage too those on low incomes.

I remain somewhat sceptical that there are people incurring charges left right and centre who are funding some kind of lavish lifestyle but I’ll accept that they exist for sake of argument.

I can also accept the argument that, in principle, customers do not set the price of a product. I would however add the proviso that indirectly they DO set the price of goods and services in the sense that they can choose to buy or not.

On the issue of bank charges there have been several developments which were connected to the test case. Most of the banks (apart from Nationwide, to their credit) have changed the sections of their terms and conditions which deal with charges to make them sound less like penalties and more like services charges/admin fees.

This means at best they inadvertently gave customers a false description of the charges. This simply should not happen when they have access to vast numbers of expensive legal advisors. At worst they deliberately mis-lead their customers and only changed when they feared they might be found out.

As I’ve said above I’d be willing to agree that bank customers are dishonest scoundrels who refuse to abide by the rules provided that others accept that the banks also have a strained relationship with the truth.

For the sake or argument I can accept that the banks should be able to charge what they like, they are in the business of making money at the end of the day. In that case they should name the fees accordingly, profit boosting fee, Christmas party fund or similar. They are not alone in this kind of behaviour, estate agents do it, BT and Virgin do it, Ryan Air do it, Ticketmaster to it.

All of the above have fees or charges which claim to be admin fees but are not. They there to boost their bottom line, hell some even charge a payment processing fee; yet processing payments is a fundamental part of any business. Akin to bank charges these type of fees mean that the price is not in fact the price and THAT is the problem with business these days and bank charges in particular. If they are going to be an admin fee then it should be just that, not a sneaky boost to their profits.

To sum up then banks should just admit they got caught with their fingers in the till and admit that they wouldn’t know the truth if it hit them in the face.

Why has all this mis-leading language been used? The answer is quite simple because the charges are fines or penalties in line with the everyday use of the word. They just don’t fit the legal definition of penalties.

natweststaffmember

Yorkshire Bank/Clydesdale are the only bank to have it on record admitting that increasing fees will boost profits(and yes I can provide a link before anyone suggests that it is libellous to sugggest it). I don't accept that an individual goes into the bank will the sole purpose of defaulting on their agreement. They go into a bank trusting the bank to do the right thing for them and to advise them in the right manner.
Sadly misplaced and disappointingly so.
They have never fitted the legal definition of penalties either btw

davidgmmafan

To be fair Nationwide came fairly close, their CEO stated the charges bear a large proportion of the costs of current accounts. This is different to thier initial answer of we incur costs and these fees cover our costs. Any banks that took that position was clearly lying, unless the word cover now means exceed.

I guess the point I'm making is that I know the banks have a clause saying they can change thier T & C's but this is meant to be used when something changes. For example Halifax have changed thier T & C's because they claim thier APR is not 0% and they just charge a set amount per day. That's misleading in itself since the APR would work out at several thousand percent in some cases.

The point is there has been a significant change to the contract and so they had to change the T & C's. With the re-drafting that went on just before the test case NOTHING had changed but they wanted to make it sound different.

You are right about people trusting the banks, and I would venture to say that banks play on this. What worries me is that, currently, there is nothing to stop them increasing the charges again. Apart from, as you point out elsewhere, the threat of a referral to the competition commission. However given the astonishing symmetery in charges until fairly recently, and the OFT's view that charges and the current account market in general is NOT served well by competition why have they not already made such a referral?