Current Account Charges - Why I have no sympathy

Graham_Devon

westernpromise wrote:

It's just that there are a lot of people who think the law is, or should be, what they'd like it to be.

Contracts and Terms and Conditions are set at, always at the start or a application for anything. Whether it be your job, a service whatever.

It is up to the user of that service to review the contract and T&C's and make their mind up as to whether they agree and wish to use those particular services.

Many will sign up and will take the penalty (also laid out at the start which you accept) for breaching the T&C's and contracts.

Unfortunately, we now live in a society where more and more people are finding ways to breach the contract, but not pay the penalty, often through loopholes and new laws, reversing the contract and making it pay in their favour.

This is what I and many others call 'greedy' and 'selfish'. What other words do we have for 'no win no fee' lawyers etc? Are they out there to protect us and the country and make the place a better place to live in? Or are they out there to screw other businesse's and make a healthy profit while doing it?

It will only get worse, were just following the US.

I am not responsible anymore, so i seems, for looking around me when I'm out and about walking. And if I bump into something, or trip over something, I can go and sue my council. Hell, they probably don't even realise that the slab has overtime raised slightly. But don't matter, they should inspect every slab every day and I will sue them, and a lawyer is more than happy to help me.

I wouldnt actually sue, I'd say, whoops, I should have seen that asI'm repsonsible myself for walking down this path and I shouldnt be walking round with my eyes closed.

Same as why is it always the drivers fault that some drunk person, who has got themselves in that state has walked out in front of your car?!

westernpromise

Paul_Herring wrote:

Consider an oversimplified situation:

Bank holds £100,000 from savers.
Bank lends out £100,000 for a mortgage.

Consider the difference between what the bank is charging on the mortgage and what the bank is handing back to the savers.

Economists hold that banks manufacture something - namely, credit - and that their margins are actually rather high in consequence of how this works.

In the example you give, the deposits and the mortgage cancel out, so the bank is effectively using no capital at all to generate its profit margin of 1.5% or so.

There are regulations about how much capital a bank must actually hold, but nonetheless it is fundamentally quite a good way to make money, and of course credit is absolutely critical to a modern economy. IMHO it is the second most useful economic invention ever, after money itself.

Banks' returns on capital from retail banking are not especially excessive that I recall, but it appears that they are heavily bolstered by revenues from unlawful charges, levied in many cases on people in difficult circumstances. There's thus a moral case for opposing these charges, but there's also an economic one which I think is even more important.

Quite simply, banks should not get away with running operations whose sloppiness and inefficiency are masked by the income stream from charges of problematic legality. Neither should they be offering a product which it is fundamentally uneconomical for them to provide.

If they genuinely need this fines revenue to survive, they should either:-
1/ improve their efficiency so as to survive without it, or
2/ charge for the service what it actually costs, or
3/ quit the retail banking business.

Incidentally...I've always thought it interesting that there are two examples in the economy where technology has made things more expensive. These are defence spending, and healthcare. Weapons and MRI scanners just seem to get more and more expensive, even as every other kind of technology - computers, cars, washing machines, airliners, satnav systems, mobile telephones, plasma screen TVs, DVD players - simultaneously get both better and also cheaper.

The reason why defence and healthcare don't work is well understood - instead of market economics applying, defence and healthcare suppliers get costs-plus pricing, meaning the customer (usually a state bureaucracy) is incentivising the supplier not to bother becoming more efficient. This is why the state often pays huge amounts for weapons that don't actually work properly, or at all. From the supplier's perspective, it doesn't really matter either way; he gets paid what he spent, plus a margin, regardless of how effectively he spent it.

If people bought MRI scans like they buy microwave ovens, OTOH, an MRI scanner would cost 50p by now. Weapons you can buy over the counter, like hand guns in the USA, actually do get cheaper and better because there is consumer pressure for this to happen. Fighter planes get ever more preposterously expensive, because there isn't.

Banks apparently want their charges to be the third item on that list of two things that we just accept will always get more and more expensive. Despite all the fancy IT banks have, it supposedly costs more to bounce a cheque now than it did when it was all done with quill pens and ledgers.

In point of fact, if it really did cost £10 to bounce a cheque 10 years ago, then the cost by now must be down to a quid or so. So they are fines and as outlined above they are unjustifiable morally and economically as well as legally.

Tim_L

Unfortunately, we now live in a society where more and more people are finding ways to breach the contract, but not pay the penalty, often through loopholes and new laws, reversing the contract and making it pay in their favour.

This is what I and many others call 'greedy' and 'selfish'. What other words do we have for 'no win no fee' lawyers etc? Are they out there to protect us and the country and make the place a better place to live in? Or are they out there to screw other businesse's and make a healthy profit while doing it?

You're conflating two issues here. Reclaiming charges does not rely on a loophole, nor does it rely on no-win no fee lawyers. Banks appear to operating in breach of contract law by fining their customers.

They are allowed to charge the costs to them of a breach in their t&c but no more, and of course the t&c having been breached they're at liberty to end the contract.

They have chosen to do two things. Firstly they are refusing to disclose their cost structure, and prefer to refund the full amounts of all claims. And secondly they are choosing as a rule to keep the customers who have transgressed, presumably because they are more profitable than the prudent money managers.

There is no greed involved in claiming back your money that was unlawfully taken from you. No new money is generated. There are no new laws involved.

westernpromise

Tim_L wrote:

There is no greed involved in claiming back your money that was unlawfully taken from you. No new money is generated. There are no new laws involved.

It is perhaps also worth pointing out to the proponents of unenforceable charges that there is a downside to this, in the form of unintended consequences.

Huge charges may encourage people to avoid debt, but they may also increase people's debt so that, in marginal cases, they declare themselves bankrupt.

To alleviate the problem of excessive personal indebtedness, the government recently made it easier to get discharged from bankruptcy, which means of course that more people have gone into it because it's less hassle than it used to be to get out again.

This is why HSBC had £849,000,000 of UK bad debt last year. Predictably, they are having to write off more, because more people are evading repayment by going bankrupt via the reformed law.

There is thus a clear trail between banks imposing heavy charges to dissuade debtors, and some debtors then going bankrupt to avoid paying anything at all - to anybody. Not just to their banks, whose claims are of debatable legality, but to anyone, where there may be no issue around the validity of the debt.

It may only be marginal scrotes (whom I shall call MSs) who are doing this, but these are exactly the people whom none of us on either side of this debate have any time for.

I have not seen any decent research on this, but it does seem economically plausible that charges to deter bad debt actually cause quite a lot more of it, by liberating the MS from the burden of repayment.

It would actually be quite funny, if it weren't so tragic, if bank charges were shown to have contributed to a climate whereby it's actually easier for an MS to spend money and not pay. I'm not sure that's where the charge supporters expected it to lead.

dchurch24

Dchurch!!! Thats just it! Applying for an overdraft BEFORE you get into trouble so that you HAVE that cushion there SHOULD anything happen is the WHOLE POINT!

So, I should potentially indebt myself to a bank. Not a situation I would like to be in. I also would not like to have to indebt myself to a bank just to pay their unlawful fines.

I wouldn't sign up to an overdraft with a bank under any circumstances - have you read the T&C's of overdrafts.

Incredibly one-sided. Have you ever heard the expession "a bank gives you an umbrella when it's sunny and takes it away when it rains" ?

They can call in an overdraft at any time they like - and I for one do not trust them.

All they had to do was abide by the law and there would have been no problem, and thus no need for a 'cushion'.

Sort problems out at the root I say.

Graham_Devon

dchurch24 wrote:

So, I should potentially indebt myself to a bank. Not a situation I would like to be in. I also would not like to have to indebt myself to a bank just to pay their unlawful fines.

I wouldn't sign up to an overdraft with a bank under any circumstances - have you read the T&C's of overdrafts.

Incredibly one-sided. Have you ever heard the expession "a bank gives you an umbrella when it's sunny and takes it away when it rains" ?

They can call in an overdraft at any time they like - and I for one do not trust them.

All they had to do was abide by the law and there would have been no problem, and thus no need for a 'cushion'.

Sort problems out at the root I say.

Ok, now I'm pretty positive your on a wind up. You won't indebt yourself to a bank, but you want them not to charge you when you haven't got any money....

You won't take out an overdraft, but then moan because you haven't got any money and the bank charges you for going over your '0' amount.

'All they had to do was abide by the law and there would have been no problem'.

WHAT!!?

All you had to do was either have some money in the account (forget your damn employers!) as a rainy day fund, which you keep saying 'isnt needed if the banks would be lawful' and then they wouldn't have charged you!

LMFAO! :rotfl:

Dude, your unreal! But thanks for the laugh! :rotfl: :rotfl:

dchurch24

Why should they charge me when I haven't got any money?

I find this quite intrieging.

If I haven't enough funds available to pay a DD for say, my gas bill, then what business is it of the banks?

None. At all. It's a private matter between me and a supplier of a service that I have chosen to have. Nothing to do with the bank at all.

So it doesn't get paid. That is still a matter for me and my supplier.

I haven't asked the bank to pay it for me, and indeed, they haven't. I have no problem with that.

I have a problem with the fact that they take it upon themselve to steal £35 from me and then charge me another £30 for going overdrawn because of it.

I either have an overdraft or I don't. They should make up their minds.

You keep saying that I should have had a 'rainy day' fund. My reply is there would not have been any need for one if the banks hadn't taken the £35 then the £30 would there?

The only need in that case would have been for me to have the money aside to pay the gas bill, which would have turned up a few days later in any case when the wages finally arrived.

What can you not understand about that?

You won't take out an overdraft

So you are saying that because a business that I am effectively forced to use cannot operate within the bounds of the law, I have to sign up to a very bad and expensive service from the same untrustworthy organisation?

Good thinking!

Graham_Devon

I have officially given up. But I will tell you my thoughts on what you have said.

1. They should charge you a fee (I agree the fee was too high) because you have contracted your suppliers to take money from your bank account in payment for the services they provide you with. They cannot take any money because you have not got any in there. Therefore, someone has to intervein. Someone then has to send you a letter. The charge has to be sent back as 'unpaid' to the supplier etc etc.

2. It is not a private matter. You have told your supplier to take money from your bank, therefore, involving your bank in your finanicial outgoings. It's got everything to do with the bank.

3. As per the terms and conditions of your bank account which you signed up to, you agreed, by signing about the charges and penalties of such an outcome.

4. The bank should make up their mind as to whether you have an overdraft or not? Christ, case for more complaints there when they decide to give you an overdraft and you go down the route of 'the bank made me shiver in my blanket which had holes in it because the bank took money from me and I had to eat my blanket'. No no no. YOU either ask for an overdraft or you don't.

5. EVERYONE should have a rainy day fund! Thats one of the first steps to being financially savvy! If you had a rainy day fund, i.e. if you had some money to pay for stuff you had used, then the bank simply would NOT have taken any money, please, just stop blaming the bank for your oversights!!

6. Your wages....dunno how many times I have to tell you, employers fault not yours. BUT! It's NOT your employers fault that you haven't got any other funds. You said not too long back you ran your own business, what about funds from there? And if you don't keep at least a couple of hunded for business purposes kept back god help you.

Your responsible mate, not the bank, not your employers and not your neighbours or the shop down the road. I suggest you dont pay by DD if this is the way you want to live, i.e. not planning for anything. Then, you pay by cheque when you know you have the funds.

Damn! I'm lost for words!! What is it that stops you getting yout head around the fact that if you had the overdraft YOU WOULD NOT HAVE HAD THE CHARGES or if you had a rainy day fund YOU WOULD NOT HAVE HAD THE CHARGES.

dchurch24

No no no. YOU either ask for an overdraft or you don't.

I didn't ask for one, and I never will. The bank GAVE me one to pay their own unlawful charges out of.

You said not too long back you ran your own business, what about funds from there?

Sorry for any confusion - I did not run my business at the time.

What is it that stops you getting yout head around the fact that if you had the overdraft YOU WOULD NOT HAVE HAD THE CHARGES or if you had a rainy day fund YOU WOULD NOT HAVE HAD THE CHARGES.

...and of course, I wouldn't have had the charges if the bank was acting within the bounds of simple contract law either.

The difference is I did not break the law. They did.

yeslek

ironic wrote:

I do not have much sympathy in relation to account charges in particular overdraft ones.

Firstly all charges are detailed in t+cs of accounts so its makes sense a, to be aware what they are and b, to have an account with the cheapest charges.

Secondly, by going over your allowed limit you are using the banks money and costing them. Even being in an overdraft in the first place is silly as it is *not* your money. Lots of my friends seem to think an overdraft is free money.

Thirdly, the fact a bank will honour payments is important. For example would you rather the bank did not pay your mortgage?

If you don't have it, don't spend it! Is it just me that thinks this?

not all banks will 'honour payments'

and tell me if you think this is fair - i was with halifax a few years back, my employer messed up my wages and did not pay me at on the 28th (they messed up internally and i suffered for 6 weeks before they gave me anything) and because there was no money in my account, 2 direct debits bounced, and i was charged £30 for each. the bank did NOT pay them for me and just charge me for it, they charged me because they had to print out a letter to inform me i had no money in my account (which i knew already)
luckily they were the only charges i incurred.
now tell me, is that fair a charge? the mistakes were out of my hands and at that point i refused to have an overdraft for the simple fact that its not my money, its the banks.
then the cherry on top was that due to this first fault on my account i was not allowed an over draft (which i applied for the same day i was supposed to be paid).
i was shocked. my bank new my situation, i had always had something in my account and had never had anything bounce before.

so i believe i am well within my right to claim these charges back (which again happened the next month thanks to argos)