Halifax Halifacts Halifiction

masonic

blueberrypie wrote: »

There were quite a few options discussed in the very long threads about the changes to Halifax's fee structure in the latter half of last year. Some customers were advised (by Halifax staff) to turn their accounts into Ultimate Reward Accounts, which gave them a fee-free overdraft of £300 - there is a charge for the URCA, but it is cheaper than paying £1/day, and it could be partially offset by collecting the £5 reward payment. Others were advised to take out a Halifax credit-card, and were offered an interest-free period on transfers, so that they could shift their overdraft debt onto that and aim to pay it off during the interest-free period. So it's not quite true that Halifax did absolutely nothing.

Sounds like Halifax did plenty to accommodate those people who wanted to avoid this charging structure but could not simply pay up and move on. I'd imagine the option of converting the overdraft to a loan would also have been on the table as an option for large overdrafts, although £1 a day on, say £5000, isn't such a bad rate.

davidgmmafan

"So it's not quite true that Halifax did absolutely nothing."

Thier solution was to sell them other products and that is a good thing? Let me get this right a business forces a change on people to 'encourage' them to take up other products and this is fine and dandy. Think I'll give up on this thread and agree to dis-agree!

£1 per day for five grand isn't bad, but the equivalent interest rate rises massively if you look at a lesser balance.

There are other easy options Halifax could have employed such as reducing the overdrafts over time. The thing that stands out for me if this action taken is fine and dandy then there is little to stop ANY bank introducing and interest rate of say 500% or similar.

The customers can pay up or 'choose' to accept the new terms. Unless there is some magic that means this wouldn't be allowed? And please don't say competition as certain people are not in a position to switch. They were over the proverbial barrel and will probably have lead to write offs for Halifax.

That is the base of my objection to the way it was done banks approach to (not helping people in difficulty. They would rather turn down viable offers or repayment, even though they know they'll get much less in insolvency.

blueberrypie

davidgmmafan wrote: »

There are other easy options Halifax could have employed such as reducing the overdrafts over time.

Or the customers could have reduced their own overdrafts between the time the new charging structure was announced and the time it was implemented.

It's not up to banks to manage people's money for them. There are some people who, no matter what banks do, no matter how much notice they're given, no matter what their options, just won't take their own finances into their own hands - they'd rather complain that the banks have forced them into debt. With very few exceptions, this is not the case. No bank forces anyone to spend money that isn't theirs. If customers choose *not* to address their overdrafts when such changes are announced, it's hardly reasonable for them to expect Halifax to do something about it a year later.

Halifax gave them a year's notice, and *then* offered them new products. I don't really see what more could reasonably have been expected.

LongTermLurker

davidgmmafan wrote: »

"So it's not quite true that Halifax did absolutely nothing."

Thier solution was to sell them other products and that is a good thing?

er, yes, I think it is - Halifax could have just stayed silent and not mentioned more appropriate services. They don't have to. I think, for a bank, they acted very helpfully in that case and they should be applauded.:T

Let me get this right a business forces a change on people to 'encourage' them to take up other products and this is fine and dandy. Think I'll give up on this thread and agree to dis-agree!

The original Ts & Cs (sorry to bring them up, but after all, they are important) told everyone that the bank had the right to make changes. They made these changes after public and regulative pressure. They didn't force a change on anyone, they changed the terms as was their right - your boss has exactly the same right, and if you don't like the new terms you have the right to look for another job, in the same way customers had 12 months to look for another loan/bank.

Halifax customers had the right to look for a new bank/alternative loan source, but to try and keep their custom, Halifax staff offered suggestions as to more suitable in-house products.

I'm not backing banks out of personal interest, but I don't see your point - they did what they said they may do, gave a hell of a long time in notice and suggested ways customers could reduce their liabilities. You can hardly call that mean.

davidgmmafan

"With very few exceptions, this is not the case"

Unless you have facts to back this up its just a meaningless statement. I trust the CAB's words, as they actually deal with people in difficulty over yours or any other random poster on here.

I'm bowing out now, wel'' agree to dis-agree. I have one final question for long term lurker you say they can vary the terms, would you at least grant there are SOME limits on this?

The current charges, in terms of an interest rate, can work out very high for small sums. If that is ok is there any level which is not acceptable? And if so what would that be?

I'm thinking here of the kind of situation where a loan shark makes a loan, which can never be repaid (or close to it) because of the interest rate. I recall a case where the judge basically told the loanshark guy 'on your bike' because he'd been repaid many times over.

Would it be permissible for Halifax (or any bank) to have an APR of say 100% of a milllion %? If not why not?

That's what I'm getting at, for someone on a low income struggling this change could have the same effect.

BTW not sure the employer example is a good one, I don't think they can compel you to take a pay cut for example, but I agree they can fiddl with other stuff.

I'll check the reply to this and I'm out

noh

BTW not sure the employer example is a good one, I don't think they can compel you to take a pay cut for example, but I agree they can fiddl with other stuff.

Seems a reasonable example to me.
An employee cannot be compelled to take a pay cut as you rightly say.
The bank account holder cannot be compelled to accept revised T+Cs.

If the employee refuses a pay cut the employer can terminate the contract of employment.

If the bank account holder refuses the new T+Cs the bank can terminate the agreement and ask for immediate full repayment of outstanding overdraft.

LongTermLurker

davidgmmafan wrote: »

I'm bowing out now, wel'' agree to dis-agree. I have one final question for long term lurker you say they can vary the terms, would you at least grant there are SOME limits on this?

Unfortunately, there aren't any limits - there might be arguable moral limits, but they're just that - arguable. Banks say "we can make (unquantified) changes" and it's up to the customer to accept or reject them. I realise that for some people, taking in all the conditions is really hard, and I really do understand where you're coming from, but the hard fact is the changes can be made, and I do believe that Halifax went beyond the norm, if aguably not far enough, to help suggest options and give an extended length of time to get out. TBH, at the time, I thought the charge was intended to "encourage" certain types of customer to leave, and although I don't agree with the ethos of kicking out long standing customers, that's hardnosed business - same as Nationwide is doing at the moment. If you read the thread at the time, which stretched for many pages, there were a lot of people who "took the hint" and voted with their feet - unfortunately, as bluberrypie suggests, I suspect many were apathetic.

The current charges, in terms of an interest rate, can work out very high for small sums. If that is ok is there any level which is not acceptable? And if so what would that be?

I'm thinking here of the kind of situation where a loan shark makes a loan, which can never be repaid (or close to it) because of the interest rate. I recall a case where the judge basically told the loanshark guy 'on your bike' because he'd been repaid many times over.

Would it be permissible for Halifax (or any bank) to have an APR of say 100% of a milllion %? If not why not?

I think this common view looks at it from the wrong angle. It's a flat charge and wrong to compare that with 60% interest rates or whatever. In the flat fee case, some will benefit and some will be stung severely, but there is an average that presumably has been calculated by someone far more mathematically focused than me. The business decision has been based on that calculation. It's wrong to compare that with a high interest rate that stings everyone, whether they owe £1000 or £10,000 - say person A earns 15x what person B earns; A owes £10k and B owes £1k - they'll probably both be hurt to the same degree (I've taken into account the fact that A will have more disposable income). Nobody wins and there is no happy medium. To put that medium into context, some Halifax customers make money from the free fivers and others lose money in fees. I don't feel the person making the money is directly affecting the person paying fees.

That's what I'm getting at, for someone on a low income struggling this change could have the same effect.

BTW not sure the employer example is a good one, I don't think they can compel you to take a pay cut for example, but I agree they can fiddl with other stuff.

You have a contract, which cannot change, and Ts & Cs, which can - your wage, holidays, pension, etc are defined in the contract but hours of work, reporting structure, how many weeks a year you get full sick pay, etc can change.

I'll check the reply to this and I'm out

I'm really touched that you've chosen to ask for my thoughts, and I've tried to give my considered opinion. I don't kick the underdog just for the sake of it, but I think people have taken a distorted view of the new Halifax system. The truth is that more time and advice was given to the potentially affected than has been seen from other banks, and for that reason, at the very least, Halifax appear to have proven themselves "the best of a bad bunch".

I'll pose you a question, and you can choose whether to answer it: don't you agree that an overdraft is not the ideal vehicle for a long term loan, and that if credit is available, a short term loan is generally more suited where several months' credit is envisaged?

I've been very low on money in the past (think Thatcher's Britain) but I made sure I set my life to suit. While I enjoy a comfortable lifestyle now, I've never bought more than necessary just cos I wanted it or because someone else had one. So question 2, accepting that it's hard to get out of severe debt, don't you agree that given a year, many who were borrowing a few grand on an OD could have ebayed their surplus and turned to a few months of eating mince (not literally just mince) in order to get their finances in order?

blueberrypie

I'm not saying there weren't people in difficulty due to the changes - I'm saying that the majority of them *had options and could have chosen to improve their situation*. You can go and read the threads on this from the end of last year/beginning of this year (although you should probably set aside at least a weekend to do so - there were a *lot* of posts) and see what people were actually saying then. Many people posted in horror and received constructive suggestions, and realised that in fact they did have options that they just hadn't been aware of. Some of them - especially those who dipped into their overdrafts for a few days before payday - realised they'd actually be better off with a Reward account, with the £5 reward payment offsetting the £1/day. And some posted, received constructive suggestions, and chose to ignore them, preferring to rant and blame the bank.

Someone who worked in the banking industry posted around that time about having been at a presentation about the changes, during which it was demonstrated that the changes would a) not bring in extra income for Halifax and b) make many customers better-off.

As for varying the terms...as I've said, the t&c allowed them to demand immediate repayment of any OD, in full. Would you have preferred them to stick closely to that?

You can't really put the current charges in terms of an interest rate - it's not interest. But as I'm bored (waiting for my dinner to cook), let's just play with some figures.

Mr A is consistently overdrawn by £100 and will therefore pay £360 a year, which is equivalent to 360%. But someone who is £100 into their OD almost certainly has options, and Mr A certainly had time to do something about the OD before the changes were implemented. Or he could switch to the Ultimate Reward account, get the £300 interest-free overdraft, and pay £12/month instead.

Mrs B is consistently overdrawn by £10 and will also pay £360/year, which is equivalent to 3600%. Miss C, who is consistently overdrawn by £1 is going to be paying the same fees (equivalent to 36,000%). Except that Mrs B and Miss C aren't paying anything at all, because there's a £10 buffer-zone. So it's equivalent to them paying 0% interest - and as there used to be interest, they're actually better off.

Mr D (who is most definitely fictional) is paying 1,000,000%, which works out to £360/year. To get to those figures, he must have borrowed about 3.6 pence. If Mr D can't pay off his 3.6 pence OD, he is truly in trouble. But then there's the £10 buffer anyway...so it's costing him nothing.

Ms E owes £2500, and is paying £360/year, which is the equivalent of about 14% - and even that's assuming she's not doing the sensible thing and offsetting it with the £5/month rewards.

Mrs F owes slightly more so is paying the higher fee of £2/day, so that's £720/year. If she owes £2600, that works out to the equivalent of an interest-rate of about 28%. Mr G owes £5000, and it's costing him the same (£720/year) - the equivalent of an interest-rate of about 14.5% - again, assuming no offset with the monthly fivers.

Still nobody getting near that million percent of which you speak...

The first group of people the new structure really costs are those who dip into their OD for several - more than five - days each month (because those who use it for less than five days each month can use the £5 reward to balance it out). A bit better budgeting, shifting of DD dates, saving a little each month to build their own buffer, can eliminate those costs.

The other group the new structure really costs are those who spend a lot of time overdrawn past their authorised limit - but even for them, it wasn't as bad as it appeared at first glance, because they were no longer paying £28 for going past their OD limit, plus £35 for every transaction.

All the stuff about interest at an extremely high rate makes for good soundbites and headlines, but as you can see from what I've written above, it doesn't really describe the reality.

LongTermLurker

Mr D (who is most definitely fictional) is paying 1,000,000%, which works out to £360/year. To get to those figures, he must have borrowed about 3.6 pence. If Mr D can't pay off his 3.6 pence OD, he is truly in trouble.

I love you for that - now I really hope you're female...

"blueberrypie"... my rep must be safe...

davidgmmafan

Its interesting that Noh says there is no limit, when I've been discussing this issue before when the question is asked people tend to say don't be silly they'd never have a rate of (insert ridiculous fictional amount here) it wouldn't be enforcible and anyway competition would stop it. Persoally I feel there should be some kind of limit, I'm not sure what it is but the principle I agree with. Just like with those pesky admin fees all that's needed is a new law.

I must say to be fair Halifax IMO IS one of the best banks at the moment, I personally benefit from the whole free fivers thing. They do seem to have a lot of good offers at the moment and I quite agree removing huge charges for a slight oversight is a good thing. Equally I can see people in different circumstances to myself who might find themselves very stuck.

BTW I'm prety sure if an employer terminated an employment contract just because an employee refused to take a pay cut they would be on dodgy ground legally.

I've enjoyed the discussion and can see both sides a bit better now. I think my gripe is that Halifax was responding to peoplem saying we cannot honour the previous interest rates etc etc. Non-sense, of course they could. What they really meant is we will not.

As you say they have that right, but for the small number of people affected who WANTED to repay the balance, they could have done so if they wanted to.

I don't believe people should be living in thier overdraft, but as posted earlier the blame is not just one way. Individuals are to blame yes but so is the system for allowing this behaviour unchecked.

Halifax has come up with a remedy, not the best way IMO but one way of tackling it certainly.