Current Account Charges - Why I have no sympathy

Mark7799

This may well be the choice in the future - basic accounts with very few facilities and NO charges or accounts with all the facilities and charges - including whatever the figures are deemed lawful for returning items etc.

If these choices are available will people who opt for the latter still be complaining about charges? As yorkshireboy has said, what about working on prevention of the charges being incurred in the first place? There have been many posts on various threads about Banks 'stealing' hundreds (and even thousands) - using this analogy, if someone was regularly taking £50/100 out of your wallet/purse every month, wouldn't you be doing something to try and stop it before it got out of hand?

Have to say I'm amazed to hear the number of comments 'I don't read/keep/check my statements' or 'I don't have time' from people with post counts in hundreds on this site.

Right, tin hat on....;)

Tim_L

I think that there is a good deal of confusion about the charges being reclaimed. The regulator (not the courts) has expressed the view that charges are excessive and should be reduced, but this is quite separate from the legal position which is that charges should reflect the actual cost to the bank of the default rather than being a penalty.

Since the banks have so far declined to explain what the cost actually is by producing a breakdown of costs, it's impossible to tell what the correct level should be, but probably it is pennies since they are generated by automatic systems.

It really doesn't matter what the t&c were if they are unlawful: any money paid under unlawful t&c will have to be repaid. At present the banks are repaying all of it rather than take the question to court. You can quite happily sign up to unlawful t&c without even reading them, because they can't be enforced: when was the last time you actually read a EULA?

I simply do not agree that the consumer is paying the price in terms of increased costs and so on for banking services as a result of the repayment of charges. I see no evidence of this whatsoever, and as I have explained several times, the charges banks make and the rates they give are determined by what they the can get away with. If they feel they can get away with increasing overdraft rates and charging for current accounts they will do so. It is simply not a case of banks scratching their heads having lost an income stream and reluctantly finding another one to balance it with great regret.

This doesn't of course stop them from using the reclamation of unlawful charges as an excuse for charging more in other areas. And this is what I think is happening. It's sad that there is a constituency of people who seem just to be lapping this up and turning on those claiming their own money back: probably this is one of the aims of the tactic.

YorkshireBoy

Fran wrote:

The accounts you are talking about are basic accounts;

No, I'm talking about good old savings accounts. No frills, you have money paid in - and take it out manually. Even (most/all) 'basic bank accounts' allow DD's and SO's - they just don't allow an overdraft or any kind of 'credit', ie a 30 cheque/£3,000 'unofficial overdraft' facility via the cheque guarantee system.

as I understand it you would always have to make cash payments for everything. You are at a disadvantaage with things like insurance because they want a card no. and often won't even take cheques now. You could never take advantage of anything that doesn't involve cash. Of course we're not talking about essentials (food), but in general you are at a disadvantage with those kind of accounts.

Ah, but now you want your cake and eat it!

If you want the benefits of a fully functional bank account, you'll have to do something in return following the OFT ruling.

Just to re-inforce my earlier point, the charges will still be made if you transgress the T&C's - it's just that they'll be around 50% less than they were before. So, we're all going to have to manage our accounts better because the charges have now been SET and will not be refunded going forward.

So, if we're going to encourage people to reclaim their charges, I say again...lets also advise them on what they can do better* to PREVENT them being incurred in the future.

* I accept there will be exceptional life events that will prevent some people from doing this.

CopperPlate_2

Tim_L wrote:

It is simply not a case of banks scratching their heads having lost an income stream and reluctantly finding another one to balance it with great regret.

This doesn't of course stop them from using the reclamation of unlawful charges as an excuse for charging more in other areas. And this is what I think is happening. It's sad that there is a constituency of people who seem just to be lapping this up and turning on those claiming their own money back: probably this is one of the aims of the tactic.

I believe we've been over this ground many times before. There is obviously no mileage in trying to put across a point which is diametrically opposed to your views. You have your views on the charges, I have mine. At the risk of sounding like a scratched record: I think the level the charges have been set at previously were punitive; but at the end of the day a penalty or charge, call it what you want, is necessary in order to ensure accounts are run properly and a) huge levels of debt are not incurred by continuously withdrawing cash that is not their own, and b) as a sharp shock to make the customer stop and perhaps rethink their spending strategy or habits. All very simplified I'd have to say.

People are not reclaiming their money - banks are simply capitulating and paying out - that said, a freeze has been made I read the other day, as a test case is currently going through court on this very point so it might very well turn out a result soon.

On the point that banks are causing people to turn on various sections of society: I'd say that you are making a fairly good attempt at adding to that with the unacceptance of another point of view from your own.

michaels

Do you know how much it costs Sky to provide you with a service? Or your mobile operator? The answer is some tiny proportion of the amount they charge you each month...and yet when a bank wants to set a charge that is several times its direct cost then everyone gets on their high horse and says how unfair it is...to all those who want to deny the banks the option to set the charges they wish - are you going to start fixing every price in the economy? I beleive the last time this was attempted on a large scale the results were not too positive...

Tim_L

Michaels, Banks can set charges for services. But a penalty charge is not a service, it is a penalty, and therefore unlawful. Banks have plenty of lawful options for discouraging customers to exceed prearranged limits, including tiered interest rates and (at the limit) closing accounts. But what they have chosen to do is to milk customers with spurious 'costs'. Worked for a bit, but they've been caught out.

Copperplate, I'm certainly not alone in my opinions. Are you suggesting I shouldn't express them because they're not yours - for each one of my posts there are at least three expressing scornful disdain for people who don't manage their finances to the penny! And I might point out that the title of this thread is itself pretty revelatory of the attitudes of those starting the argument.

You don't seem to have engaged with the actual arguments, i.e. (1) that these charges affect the less well off disproportionately and that it is unreasonable to expect the less well off to subsidise other people's banking(2) that banking and financial services are extremely competitive and market leading products are not necessarily backed by penalty charges so it is clearly untrue to suggest that reclamation of charges (or whatever you want to call it) inevitably means financial products will be worse value, and (3) that banks will in any case charge what they feel they can get away with.

You seem far more interested in attacking me personally. Which is tiresome, but since you won't engage with points 1 to 3 I suppose it's inevitable.

From another post today quoting Which:

But a Which? spokeswoman said: "These charges do not reflect the true costs incurred by banks when a customer goes overdrawn."

Which? has issued the banking industry with its own Asbo - an "antisocial banking order" - as part of its campaign to reduce the penalty charges. Eddy Weatherill, of the Independent Banking Advisory Service, said: "If the OFT really want to do something for consumers, they should make sure the system is properly regulated.

"The banks have been given free rein to plunder customers' finances and that has to end. We don't object to banks charging sensible fees but we do object to them remorselessly attacking customers' finances. It's immoral and unjustifiable."

CopperPlate_2

Because you don't seem to address the points I raise or acknowledge that there is another side to the argument. It seems that opinion is being rammed down the throat of others and any contradictory thoughts are rubbished or denigrated as being selfish, etc.

I'm not attacking you personally, but you seem to be the only one responding to comment with the same responses but at the same time failing to acknowledge the fact that I don't disagree the charges at the previous levels were too high or that they did cost those less-well off in society more in the long run.

From the title of the thread - it is self-explanatory, however, I didn't realise that the thread was intended only to discuss one side of the argument which is what you're implying or that the title of the thread is the only view which is correct/can be expressed. Perhaps I've misinterpreted you on that point...

From your posts responding to mine, it appears you're not happy unless I fully convert to your views which I'm not prepared to do. So lets just call it stalemate shall we and leave it at that - this debate will go on and will remain unresolved for a while to come.

inmypocketnottheirs

CopperPlate wrote:

He

For the last time - the charges are NOT unlawful - the level of the charges was held to be unlawful I have accepted that things will change - and you are quite wrong in that it is a dispute between two parties: the changes affect everyone in a banking relationship.

That's my last word on this, as it appears that if you don't agree with certain views, you are fundamentally wrong in your outlook.

The charges are unlawful - regardless of the level. You are getting your knickers in a twist here. Under English law, punitive fines, i.e. charges that do not represent the liquidated losses (the true cost to the Bank in this instance) are not recoverable in law.

Here are three cases where punitive fines have not been upheld in court:

Murray v Leasureplay (2004)

Dunlop Tyre Company v New Garage and Motor Co. (1915)

Bridge v. Campbell Discount Co. Ltd. (1962)

The OFT may have ruled that the charges are too high, and have set a level below which they will not intervene. But this ruling does not change the fact that these charges are not recoverable in a court of law.

This is why to date not one single bank has sought to defend action bought against them by customers who are seeking the return of these unlawful charges.

Hereward

YorkshireBoy wrote:

You are not forced to have a bank account. You can have your wages/tax credits/benefits paid into a building society account or bank savings account. As long as it has an 8 digit account number and a 6 digit sort code, it matters not a jot whether it's a current account or not.


Please tell me which, of life's essentials, you need a bank account to pay for.

In regards to reclaiming bank charges, I think you should read bank to mean a Bank or Building Society (BS) as the BSs have their charges set at a similar level to the banks. If you tried to use a standard saving account in the manner you describe (paying into it regularly, and making frequent cash withdrawals) the bank, or Building Society, will probably change your account to a current account as that is what you are effectively using it for. You would also run the risk of losing more money from street crime as you would be carrying a large amount of cash.In response to your second point (as quoted above), although you do not need a bank account to acquire food, it does help if you use energy companies to supply for heating and most landlords and mortgage providers will only accept an electronic money transfer (BACS, Direct Debit or Standing Order) as payment. If you do not have a bank account for these transactions then you face an additional charge at a bank or building society to cover the cost of their counter staff serving a non-customer (that is someone who does not hold an account with them).

Hereward

CopperPlate wrote:

At the risk of sounding like a scratched record: I think the level the charges have been set at previously were punitive; but at the end of the day a penalty or charge, call it what you want, is necessary in order to ensure accounts are run properly and a) huge levels of debt are not incurred by continuously withdrawing cash that is not their own, and b) as a sharp shock to make the customer stop and perhaps rethink their spending strategy or habits. All very simplified I'd have to say.

</p>I have mentioned in other threads that your two points could be covered in other ways. One is to use the unauthorised overdraft rate on the entire overdraft until the account balance has been reduced under the agreed limit. If a Bank, or Building Society, notices that a customer is continually breaching their overdraft limit (and before someone points out that not everybody has an overdraft, these customers limits are effectively £0) then they could offer a money management course to help people budget better, and possibly become a more profitable customer. I would expect the banks to have a charged for these courses to cover their costs, and this could be used to offset the income lost from reduced charges.