Let's find a way to take action ourselves

Paul_Herring

lordash wrote:

I had sufficient finds in my account according to the ATM

Um - hello? After everything that's happened over the past few years, people are still treating the number on a piece of paper that comes out of an ATM as gospel? Say it ain't so!!

Were you completely unaware of how much you had available in your account, taking into account any debits up to, and including, the day the next payment was due into the account?

The bank is not the one to blame here.

Oh - silly me; just noticed which board I was on - of course they're 100% to blame.

jamesd

custardy, Paul_Herring, better to be more sympathetic really. It can be hard to keep on top of things, particularly when depression enters the picture. Even with quite careful watching I did occasionally go below my target one penny balance over the last few years. I've since increased that to a £100 target but it really doesn't matter much to me these days because I have an unused few thousand Pounds of overdraft facility as protection if I make a serious mistake.

lordash, in theory you should be keeping track of all planned transactions and maintaining an expected balance instead of relying on the ATM. Unfortunately variable direct debit amounts mean it can be fiddly to get this right as well. Trying to arrange a small overdraft facility or aiming to have some small positive balance instead of zero as the lowest target is likely to be the least bad option. Though using banks that have lower charges for mistakes and the unexpected (in amount or timing) might also help.

Best not to do anything that might appear to be encouraging a run on a bank. That's almost certainly a serious crime. Instead of one day you might substitute six months so that there's a loss of funds and profit but not a run.

lordash

Thanks for your comments. This situation actually occurred a few years ago now, and I was just using it as an example (I have not occurred a single charge for at least a year now). Unfortunately, when you're running close to £0 you don't have the luxury of having a buffer of a few hundred to absorb any unexpected debits. And I don't believe people should have to learn all of the bizarre quirks that some banks have just to avoid being charged (such as direct debits/standing orders due for Sunday/B.H. Monday being taken out on the Saturday).

Fact remains, most of the people who incur charges are the poorer people in society, and as a result, they are the least able to afford the charges. For example, somebody on minimum wage a few years ago, one £38 charge is a whole day's work gone. And if you're living at that level, it causes problems that are very difficult to repair, leading to the situations where people run up so many charges because they simply cannot afford to pay them.

The other point is that it is almost compulsory now for people to have a bank account. And, until recently, all the banks charged around the same amount (£20 to £40) for going overlimit. So people have no choice in the matter, they have to have a bank account and therefore have to agree to be charged. I'm sure a lot more people would choose to deal with cash and not have a bank account at all if it was a feasible option.

Fortunately, charges have been cut quite significantly, but in my opinion a lot more could be done.

As for my suggestion, that was only hypothetical. However I would not have thought it was illegal to do this as long as it wasn't targeting specific bank(s) (i.e. done consistently across all the major banks) and it was done over a number of months (as was suggested).

Paul_Herring

lordash wrote: »

Fact remains, most of the people who incur charges are the poorer people in society,

I'd like to disagree with that.

Most on low incomes are perfectly able to manage their finances such that they don't incur fees. And I'd guess that the vast majority of those who fall into that category would take offence at the implication that they're crap at managing their money.

I'd postulate that the majority of those who do incur substantial fees are those who don't bother managing their finances, and keep on not managing them to the point where the fees end up in 4 figure sums.

And it is those who are most verbal about the charges. (Not that that's any excuse for the banks to rack them up like that.)

I accept that there is a (small) minority who end up being charged fees for no fault of their own (totally unexpected redundancy, death of breadwinner, e.g.).

natweststaffmember

Paul_Herring wrote: »

I'd like to disagree with that.

Most on low incomes are perfectly able to manage their finances such that they don't incur fees. And I'd guess that the vast majority of those who fall into that category would take offence at the implication that they're crap at managing their money.
I think they would and I think many people who have incurred charges would say the same.

I'd postulate that the majority of those who do incur substantial fees are those who don't bother managing their finances, and keep on not managing them to the point where the fees end up in 4 figure sums.
I think that is partially disingenuous of you. Some people do approach their bank and the way that the charges are explained to them simply do not add up and in some cases are blatantly incorrect. Blagging it I would say sometimes.
Furthermore, financially uneducated is a word I would use, ie that they assume(yes they do get to know wrongly) that the balance at the ATM will be inclusive amounts under a shop floor limit. The would not necessarily understand that some shops do not ALWAYS seek authorisation for a transaction so that it is taken off their available funds. There are very rare occasions where there is a deliberate attempt to simply to rack up fees intentionally.
And it is those who are most verbal about the charges. (Not that that's any excuse for the banks to rack them up like that.)
I am quite verbal on the charges. Guess how many charges I have incurred from the bank for unpaid items?
I accept that there is a (small) minority who end up being charged fees for no fault of their own (totally unexpected redundancy, death of breadwinner, e.g.).

I think the circumstances can be widespread but I think using the terms "manage your finances" implies financial education to begin with. You and I both have that installed into us at an early age.

jamesd

lordash wrote: »

Fact remains, most of the people who incur charges are the poorer people in society

Paul_Herring wrote: »

I'd like to disagree with that.

Most on low incomes are perfectly able to manage their finances such that they don't incur fees. And I'd guess that the vast majority of those who fall into that category would take offence at the implication that they're crap at managing their money.

lordash merely wrote the equivalent of saying that tall people are more likely to hit their heads on low ceilings. It doesn't mean they are any more careless than short people, just that they are more vulnerable because of their situation, being taller.

Most of those incurring charges being poorer doesn't imply that most of the poorer people aren't able to manage their finances. Rather, it implies that of those who do have trouble, those who are poorer are more likely to suffer charges than the better off members of society. That makes perfect sense because they will have lower safety margins from available balances, lower savings to use to pay any charges before they start to accumulate and less ready access to overdraft facilities that might prevent the charges.

Alpine_Star

''Fact remains, most of the people who incur charges are the poorer people in society''

Paul_Herring wrote: »

I'd like to disagree with that.

:eek:

''....consumers on low incomes or with less than £1,000 in household savings were significantly more likely to have been charged in the past 12 months for a refused payment (15 per cent and 31 per cent respectively, compared with 11 per cent and eight per cent of those with higher incomes or more savings). The most common reason for refusal among low income consumers was insufficient funds165 (48 per cent compared with 45 per cent for all consumers who had a payment refused).........The following example shows the disproportionate effect that charges can have on low income consumers.......'' http://www.oft.gov.uk/shared_oft/reports/financial_products/OFT1005.pdf


''The frequency of exceeding overdraft limits is marginally higher among the lower income groups.'' http://www.oft.gov.uk/shared_oft/reports/financial_products/oft1005d.pdf


''This can often mean potentially 'vulnerable', low income and low saving customers paying more as a result of incurring insufficient funds charges.'' http://www.oft.gov.uk/news/press/2008/84-08

ILW

Alpine_Star wrote: »

''Fact remains, most of the people who incur charges are the poorer people in society''





:eek:

''....consumers on low incomes or with less than £1,000 in household savings were significantly more likely to have been charged in the past 12 months for a refused payment (15 per cent and 31 per cent respectively, compared with 11 per cent and eight per cent of those with higher incomes or more savings). The most common reason for refusal among low income consumers was insufficient funds165 (48 per cent compared with 45 per cent for all consumers who had a payment refused).........The following example shows the disproportionate effect that charges can have on low income consumers.......'' http://www.oft.gov.uk/shared_oft/reports/financial_products/OFT1005.pdf


''The frequency of exceeding overdraft limits is marginally higher among the lower income groups.'' http://www.oft.gov.uk/shared_oft/reports/financial_products/oft1005d.pdf


''This can often mean potentially 'vulnerable', low income and low saving customers paying more as a result of incurring insufficient funds charges.'' http://www.oft.gov.uk/news/press/2008/84-08

This does pose the question, are these people the poorest BECAUSE they are unable or unwilling to manage their finances, and live within their means.

jamesd

The frequency of exceeding overdraft limits being only marginally higher in the lower income groups suggests that they are only marginally less able or willing than the rest.

But once that happens the banks are less likely to be willing to extend credit and any charges will be a higher percentage of income than for others, so the damage and chance of problems snowballing will be higher.

One approach that might be interesting is putting charges into a different account so that they are less likely to snowball by reducing funds for later debits after the income is paid into the account. The banks could then collect the money to pay off the different account balance at some appropriate rate based on how much new money is coming into the main account from outside sources like benefits or pay.