Current Account Charges - Why I have no sympathy

Wyndham

Fran wrote:

When you see a speed camera it is a clear message: - if you speed here you are likely to get a fine.

So you also think that the only places you can't speed are where there are speed cameras? I have little sympathy for that point of view - if you break the law then there is always the risk of getting caught, and you should take it on the chin. The law isn't only there to be observed when you think you might get caught, it is there to be observed all the time.

Fran wrote:

Were you long term unemployed though, or you did you have financial or help in kind from other sources? You probably left university without debt because you had a GRANT! Did you have help from your parents at all?

I was unemployed for 15 months, does that count as long term? I didn't get a grant, but my parents (from whom I learnt most of my attitudes to finance) did help when I was at University, though it was a struggle for them. But other than when I was at University I have been independent, which hasn't always been easy.

Fran wrote:

I would say you know what is due etc. because you are good with figures, you are from a prvileged background and possibly had financial help at the point where you might have slipped overdrawn. MANY people STRUGGLE with figures and what might seem simple to you just is not to them.

How dare you make assumptions about my background? How dare you say I am privileged? Exactly how do you reach that conclusion? You know very little about me so how can you draw these conclusions?

And how difficult is it really to say 'well, I had £100 and I've spent £40 so I've got £60 left'? It's basic addition and subtraction, not advance calculus! It's also backed up with documentation from companies etc. - e.g. notice of direct debit gives the date and the amount due. I keep receipts, and enter the details into Money Manager on a regular basis, this means I can see the end figure. Before I had this, I used a book and a pen (and a calculator). Spreadsheets could also do this for you and help with the maths.

I do however think that money management should be taught in schools, and that far too many of the population come out of education with a fear of figures because they were deemed to be 'not good' at maths and this affects the rest of their lives. It's not that they can't do this, they just believe they can't.

Tim_L

Copperplate, the only people ramming views down anyone's throats are those that start threads with inflammatory titles such as "Why I have no sympathy".

I for one am not going to sit back and let the misanthropic construct a set of unchallenged received world views where anyone being charged has only themselves to blame, and the "decent people" are losing out as a result.

As far as I can tell the arguments from your side of the fence are something like (1) People sign up to t&c and should respect them even if they are unlawful. (2) People reclaiming charges are abusing the system. (3) If banks are forced to pay back money unlawfully taken they may start charging other customers in other ways.

And I have answered all of these points: (1) Unlawful t&c can be ignored - anyone needing a bank account which in practice is everyone is obliged to agree to these t&c because there is no option. (2) Most people involved are not abusing the system but are in marginal difficulties, often temporary. (3) Banks will make any charges they feel they can get away, regardless of the status of any other charges they make. And in any case 'virtuous' activities such as stoozing and rate surfing which are now become mainstream are causing are just as likely to cause charges to increase elsewhere as charge reclamation. Everything anyone does to take money from banks risks a reaction of some sort.

If I have missed any points here then do flag them up, but I think this is the crux of the argument from the other side of the fence. I can acknowledge the argument exists, but honestly I can see no logic or merit to it, so I'm hardly likely to say "well, you have a point, I'll modify my views".

I sort of agree that people should learn money management, but then again how necessary is it to most people? If someone is oscillating +/- a hundred quid on a £1000 overdraft limit at the end of the month because they are not tracking transactions via MS Money, then the lender is at no great risk, and the customer will be paying interest which those of us in credit might expect to help towards returns on our own money.

As to the charges themselves we have a fundamental disagreement. It is not a question of these charges being pitched at the wrong level, it is the fact that they are designed as a money making exercise (and are therefore unlawful). One transgression even by a penny means one fixed rate penalty per transaction. Even pitched at a low level they mount up quickly.

There are perfectly fair and reasonable ways of dealing with such situations, including tiered interest rates, that allow people who are basically acting in good faith to fix problems without massive charges. A temporary shortfall because of an unexpected debit should not cost 50 or 100 pounds, but just the interest on the money: if the situation is not fixed then ultimately the bank can close the account.

Hopefully the OFT will be able to ensure that any such replacement system is actually fair, reflects the risk lenders are taking from transgressions, and doesn't just become another ripoff scheme by proxy.

michaels

Tim_L wrote:

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

But this is my point - everywhere we go we face charges for services which do not relate to the true cost of providing the service but we don't run around complaining that they are unfair. I accept that legally there is specific legislation limiting charges levied for breach of contract to the cost incurred. My arguement is that the banks should be allowed to provide whatever services they wish and set charges as they wish, with customers as always able to decide whether to use the service or not. If the charges were presenteed as fees for use of a service (for example a service allowing people to spend money they didn't have) it would seem to me that they could then be set at whatever the banks chose.

A final question to all those who have been very moralisitc about the banks 'unlawfully' charging more than the costs they incurred - are you refusing to accept a full refund but rather only taking say 75% to allow the banks to keep what they could lawfully have charged, or giving this amount of any refund to charity?

Mark7799

Tim_L wrote:

I sort of agree that people should learn money management, but then again how necessary is it to most people? If someone is oscillating +/- a hundred quid on a £1000 overdraft limit at the end of the month because they are not tracking transactions via MS Money, then the lender is at no great risk, and the customer will be paying interest which those of us in credit might expect to help towards returns on our own money.

.

Surely money management is necessary to EVERYBODY. Teaching budgeting should be part of any maths curriculum. Even an extra £5 per month can be £60 over a full year and could be a week's shopping or another bill at the end of the year. They're probably no great risk to the lender but what about any unnecessary expenditure they are incurring themselves? What about educating people of the need to build up rainy day funds when times are good?

Fran

Wyndham wrote:

And how difficult is it really to say 'well, I had £100 and I've spent £40 so I've got £60 left'? It's basic addition and subtraction, not advance calculus!

It's not that simple for people on a low income. A sudden high utility bill, unexpected things that need replacing, new school clothes, an illness, partner leaves for example. Once the first charge is incurred for people living on this knife edge of cash flow it is really difficult to turn it around.

I do however think that money management should be taught in schools, and that far too many of the population come out of education with a fear of figures because they were deemed to be 'not good' at maths and this affects the rest of their lives. It's not that they can't do this, they just believe they can't.

I agree.

Tim_L

Michaels, it's a simple matter of fact that where charges attached to non-compliance with an agreement are deemed to be penalties and do not represent the actual cost of a transgression they are non-recoverable under English law.

This is quite separate from the idea of a charge for a service which no-one has any objection to. Usually though you can opt out of services by not using them. A penalty charge disguised as a service would I think you would find receive short shrift from the courts.

Until the banks divulge what the actual cost to them of transgressions, there's no basis for working out what percentage of the charge should be refunded. Banks seem to be refunding 100% which tells its own story: probably if they were to divulge costs they would become liable for refunds to everyone which they want to avoid.

Why on earth anyone should be asked to give a proportion of their money to charity when it shouldn't have been taken in the first place? This is a ludicrous suggestion. Perhaps I should counter by suggesting that everyone who feels they have had cheaper banking because of penalty charges should give a proportion of the profits to charity too?

Tim_L

Mark7799 wrote:

Surely money management is necessary to EVERYBODY. Teaching budgeting should be part of any maths curriculum. Even an extra £5 per month can be £60 over a full year and could be a week's shopping or another bill at the end of the year. They're probably no great risk to the lender but what about any unnecessary expenditure they are incurring themselves? What about educating people of the need to build up rainy day funds when times are good?

I agree absolutely that it should be taught - it's the most practical use for maths most people will ever have. But I don't think that marginal problems - not managing finances to the penny is something that most people will ever do, realistically.

YorkshireBoy

Tim_L wrote:

...it's a simple matter of fact that where charges attached to non-compliance with an agreement are deemed to be penalties and do not represent the actual cost of a transgression they are non-recoverable under English law.

This is quite separate from the idea of a charge for a service which no-one has any objection to. Usually though you can opt out of services by not using them. A penalty charge disguised as a service would I think you would find receive short shrift from the courts.

Until the banks divulge what the actual cost to them of transgressions, there's no basis for working out what percentage of the charge should be refunded.

Tim_L

Several months ago I posted (on a similar thread) that, in a current account information pack I'd picked up from branch, HSBC were stating that they had an "overdraft review fee" of £25. This would be charged if the account holder exceeded their overdraft limit or went overdrawn where no previous authority had been sought/granted. The total fees charged would be limited to £125 per month (despite more than 5 reviews being possibly required).

Now, bearing in mind that this is clearly a 'service fee', because a bank employee(s) would manually review your banking arrangements/account management, would you agree that they could 'legally/lawfully' charge this service fee without fear of being taken to court and asked to explain how they came by the amount of the fee. After all, challenging this would be like challenging Ford on the retail price of their Ford Focus (because you know it didn't cost them £12K to build it) and wanting to know the gross/net margins they were making - wouldn't it?

Tootsie_Roll

Tim L

I can't even be bothered to read the last few of your posts - you seem completely unable to grasp some of the fundamentals.

On what are you basing your opinions - where do you get all of your 'facts' ?

Fran

Tootsie_Roll wrote:

Tim L

I can't even be bothered to read the last few of your posts - you seem completely unable to grasp some of the fundamentals.

On what are you basing your opinions - where do you get all of your 'facts' ?

Perhaps if you read the posts.....

What is your opinion?