Avoid First Direct - They are gonna charge all customers £10!

Fitzy29

I hear what you are saying, and agree banks make money from you being overdrawn etc, what I don't like in what you say is that we cost them money by being 'in credit' they use every customer as a money tool...

If they make so little money in customers who are in credit, why do some banks only accept customers who have say £1,000,000 plus in cash funds? Surly this would cost the bank money in your argument then?

CopperPlate_2

I don't think I said that it costs them if you are in credit, what I meant or implied was that if you run your account within the terms, don't go overdrawn authorised or not, and don't have ANY other products with them, i.e. no savings, insurance, etc. then the money they make from reinvesting your DECREASING current account balance each month, offset against the cost of providing the service in totality, is negligible or non-existent.

Savings accounts are different as I said in that the balance usually remains consistent each month - for most peoples main savings anyway.

And I am talking about the cost of providing the service versus the money made by reinvesting the decreasing balance each month. I am referring to normal ordinary everyday balances, that normal people would have in a current account - not Posh & Becks.

oldwiring

All accounts must cost a bank something. One of them paid me for 31 years to turn up and work for them. Is that not a cosit that has to be shared through all the operations that bank undertook? Have premises machinery and other things like pensions no costs? IMO the problem is whether a particular operation generates sufficient profit above the costs- a not easy thing to calculate with a bank's complexity. It would be easy, were they sweet stalls, but they aren't.

Fitzy29

I'n not sure why people stick up for the banks so much, lets take the Halifax for example. It once was a building society, building societies were created as a tool for people to build their homes, ie a building society. They were created by the rich Mill or other bosses for the workers so everyone could have a good start in things and create a stable home for their families, basically a way of saving. Over time these societies became bigger and bigger to the point where in the late 80's and early 90's the government decided they could become a profit making organisation, hence the birth of 'Halifax PLC' a nice profitable taxable british company. Now I have no problem with companies needed to make money to pay their cost, their workers and so on but I do have a problem with them trying to cash in every single way they can, bank charges, expensive insurance, account charges, mortgages interest rates..so on and so on.

I mean fair enough if they had to charge us for using the service as they would run at a loss if they didn't, fair enough..we can't expect our service for free, we all need the banks...But account charging is just another excuse for fat cat profits... come on you have to admit it, barclays made something like 6 billion in the first half of this year... do they really need to extract that much money from society...No, they don't. banks are there, created by the people for the people what's the point in vast profits??? Non, that's what..

The only reason buliding societies changed to PLC's is so they could make a profit, they too have forgotten their routes!

There, rant over.:cool:

Detail_Merchant

fitzy29 said:

The only reason buliding societies changed to PLC's is so they could make a profit,

I think the only reason that many of the BSocs changed to PLCs was because a majority of their members voted to take the cash rather than keep them mutual.

If fd do start charging £10 p.m. (& I'm going to wait for the details before jumping) I'm considering Nationwide, as they're still a mutual. Co-op/smile are the other possibility, as they are owned by their members, not shareholders.

Regards,

Detail Merchant

Hereward

Fitzy29 wrote:

...The only reason buliding societies changed to PLC's is so they could make a profit, they too have forgotten their routes (sic)!...

I hate to point this out by Nationwaide BS made £539m profit last year (see http://www.nationwide.co.uk/about_nationwide/results_and_accounts/prelim_res_2005_2006.htm). I admit that this is less than the big 4, but when you consider the number of customers its still a vey large profit.

Detail_Merchant

Hereward wrote:

I hate to point this out by Nationwaide BS made £539m profit last year (see http://www.nationwide.co.uk/about_nationwide/results_and_accounts/prelim_res_2005_2006.htm). I admit that this is less than the big 4, but when you consider the number of customers its still a vey large profit.

True, but you won't find a line for payment of dividends to shareholders in those accounts. Any profits are retained by the BSoc for investment in the business, which should therefore benefit members/customers in the future.

CopperPlate_2

Fitzy29 wrote:

lets take the Halifax for example. It once was a building society, building societies were created as a tool for people to build their homes, ie a building society. They were created by the rich Mill or other bosses for the workers so everyone could have a good start in things and create a stable home for their families, basically a way of saving

Incorrect in most cases. Building societies originated in the self help movement of 18th century Britain. Working men began to pool their funds in organisations from which they could borrow to build houses - not a fund set up by the employer or benevolent landowner.

[quote-Fitzy29]Over time these societies became bigger and bigger to the point where in the late 80's and early 90's the government decided they could become a profit making organisation, hence the birth of 'Halifax PLC' a nice profitable taxable british company.[/quote]

Incorrect. The government had nothing to do with the BS demutualising. Members decided that mutuality was not right for the organisation and it DM'd. Halifax Building Society would have paid tax to HM Govt before it was a plc regardless.

Fitzy29 wrote:

Now I have no problem with companies needed to make money to pay their cost, their workers and so on

Indeed, why make a profit, why not let them just break even. In fact, why not go the extra mile and give them charity status..:rotfl:[/quote]

Fitzy29 wrote:

but I do have a problem with them trying to cash in every single way they can, bank charges, expensive insurance, account charges, mortgages interest rates..so on and so on. I mean fair enough if they had to charge us for using the service as they would run at a loss if they didn't, fair enough..we can't expect our service for free, we all need the banks...But account charging is just another excuse for fat cat profits... come on you have to admit it, barclays made something like 6 billion in the first half of this year... do they really need to extract that much money from society...No, they don't. banks are there, created by the people for the people what's the point in vast profits???

They were most certainly not created "by the people for the people". We are not living in some communist society where we have one provider of banking, media, transport, health, etc. Banks were not created as charities, nor were they set up to 'help the poor in society' - they are not human, they don't have feelings as such, yes they take more than they should perhaps, but their purpose is never for wealth redistribution. We have a government that is hell-bent on that...and a shambles they are making of it too.

Fitzy29 wrote:

The only reason buliding societies changed to PLC's is so they could make a profit, they too have forgotten their routes!

Rose tinted specs I think. Take a look at any of the mid sized BS's and you'll see that they award their directors massive pay rises, way beyond that awarded to the plc directors: because there is little accountability.

CharleneUK

I've read through the thread, funny how the OP was getting slated earlier!

Anyhow, FD are crazy to charge £10 pm, I bet they will change their tune and come up with something else.

Hereward

Detail_Merchant wrote:

True, but you won't find a line for payment of dividends to shareholders in those accounts. Any profits are retained by the BSoc for investment in the business, which should therefore benefit members/customers in the future.

True, but banks do not have to give all of their profits to their shareholders. Most, if not all, will retain some of that profit to reinvest in themselves, thus improving the service they offer, just as the Building societies do. As Copper plate stated, a large number of Building Society directors get bigger salaries and bonuses those of the banks as the members are less influential than shareholders in a Bank (I suppose it would also have something to do with the media focus on bank directors pay as well).