Co-Op getting annoyed with refunds...?

Mark7799

Following on from your previous posts, I think the incentive is going to be that one's credit may be more deeply threatened for not using an account correctly, accounts will be closed quicker, less tolerance allowed and with damaged credit, it will be harder for anyone to get an account elsewhere.

Tim_L

That's a mad argument Copperplate.

The banks are allowed to charge the *full* costs to them of transgressions, including whatever staffing costs are involved. If a bank can show that someone is employed X% of their time to chase a customer and the total cost is comparable to the fee they are charging, then the fee would be upheld in the courts.

The fact of the matter is though that the only chasing is an automated letter if you're lucky and an automated charge - the banks are well aware that they can't give costings because if they did they would show them to be massively below the amounts charged in fees. Bear in mind also that most transgressions are transitory, fixed by a payment within a day or two if that, and you will surely see that no-one in their right mind would bother to chase them unless they could make a profit by so doing.

As for "using other people's money", well this is covered by the requirement to pay interest on the borrowed money. This is what banks do as part of their business, and they are in no more danger of default when someone is £5 over a £500 limit then they are when someone is £5 within it. If you want an incentive not to spend other people's money, then a proper way to do it is to use banded interest rates: this rewards people who borrow but don't transgress, and provides a decent incentive to sort out problems quickly.

On the other hand if you want other people to pay the cost of your banking, you ought to be encouraging them to pay more interest: there's a massive paradox at the heart of your argument which is on the one hand you cast aspersions at those who don't manage their money to your standards, but on the other hand you seem to want them to exist so you can have free banking.

CopperPlate_2

I was using a similary mad tangent to make a point in furtherance of Westernpromise's attack at smile. While not sticking up for the bank, I think that a degree of temperance is called for and it can't all be laid at the feet of the institution. I'd agree wholeheartedly with the content of your post.

MPH80

The banks are allowed to charge the *full* costs to them of transgressions, including whatever staffing costs are involved. If a bank can show that someone is employed X% of their time to chase a customer and the total cost is comparable to the fee they are charging, then the fee would be upheld in the courts

The problem is that this becomes unmanagable.

Even if the bank came up with a figure that said to chase customer x it took y% of some employees' time who is employed at £z an hour (so + NI + extras) it cost £abc - it wouldn't hold up for the next customer.

For example - what if the first customer wasn't in when the employee called? and then what if the second one was (thereby taking more time to chase customer 1)? How can a customer be sure a bank did call when they say they did if the customer was out?

What if the bank employee took longer writing up the notes for customer 1 rather than customer 2?

If customer 1 found out that he'd been charged more than customer 2 then the he'd be in the bank demanding to know why and they'd have to try and justify it ... all of which would require MORE computer systems and MORE time from employees and therefore more cost!

Which is why a flat fee is necessary and the thought of 'if a bank can prove it takes x% of an employee's time' is useless simply because the amount of time does vary from person to person. I also know that it is NOT always just a letter than gets sent out depsite what is made out. In the height of my indebtedness I was getting regular phone calls from staff at Natwest asking when my next payment was going to be made.

Of course ... what that flat fee is the debate surely?

M.

oldwiring

Rafter wrote:

The fact is that there is a cost for Smile for managing this situation, and that cost is not being covered by charges or income from this customer.

Co-op who own smile are an ethical customer owned organisation and I am sure abide by the 'treating customers fairly' regulations and the banking code.

If a customer refuses to manage their affairs and refuses to pay reasonable charges then what should co-op do? Give worse rates of interest to customers who do abide by the rules? This isn't a bank that is giving billions of pounds to its shareholders - it is owned by it's own customers.

<><><><><><><>>><>>>Does it make any odds who the bank is owned by? if you go in to a shop and haven't got the money to pay, you do not get the goods, If you play games with a contractor, you will be follish to ask him to do another job

Personally I'm not a fan of the German or Dutch system where a customer could get stranded unable to fill their car with fuel or pay for food for their children as a result of being a few pennies overdrawn.<><><><><><> I doubt anyone wants that and we are civilised with 30 day letters, but if people find dificulty in getting replacement accounts wit all that runs from that then they must recall it was they who broke the rules, i.e. live within yoyr means and adhere to arrangements

Customers and banks have sleepwalked into a situation where it is very easy to borrow money and where you don't have to monitor your finances that closely, all proped up by unlawful charges to cover the costs when customers overstretch themselves.

Take away the charges and banks have to take more care with their lending and be more selective about their customers.

Sounds like rChrisp has been the victim of the latter.

It is almost a side effect of being a 'pure' money saver. At some point organisations will have enough of losing money from refunding charges, stoozing, buying products and services below cost and the organisation will turn round and say 'no, we don't want you as a customer any more' which at the end of the day they are totally entitled to do.

The situation for now though is that companies and their marketing departments are happy to keep throwing out deals to be exploited by canny consumers.

R.

See comments interleved above

oldwiring

westernpromise wrote:

Well, it could be covered: Smile could charge according to its actual loss arising from the breach.

In that case, the OP would be hit with a fee of say £1 per contract breach, or something of that order. Plus perhaps £0.50 if a letter has to be written, or £0.15 if it's an email.

The trouble is that Smile has lied and lied and lied about the true cost of such contract breaches. It has insisted, right up to the steps of the court, that it costs £38 for you to go 1p over your overdraft limit.

It can't very well now charge £1 to cover its costs. It has to stick to the lie - that its cost is £38.

This customer has shown that s/he will not stand for charges like that. And therefore Smile has painted itself into a corner whereby it can either lose money on marginal contract breaches, or lose the customer's business.

The one thing Smile can no longer do is the honest thing, which is to charge only what the breach actually costs.

How to you get to your costs? what overheads have you taken in to consideration?

System

I think that the bank is quite justified to take this stance.

You clearly are not happy with the terms and conditions agreed, they refunded the charges and you did the same again.

If someone did that to me, I wouldn't do business with them too.

I don't agree with bank charges above cost either. Automated letters and so forth don't cost them £35. As for charging for their whole lending system, that would need to be in place even if nobody went over their limit. I think a couple of pound max, would cover their admin costs.

I think the bank makes enough to cover the money borrowed from the unauthorised interest rate, normally in the region of 30%

kenshaz

The question is did the bank retaliate for having refunded unlawful charges.?Termination of facilities because of breach of terms and conditions is acceptable ,retaliation for pursuing your lawful and rightful refunds is not.

CopperPlate_2

But then should a business continue to 'support' someone who is taking the proverbial by claiming back their money, only to continue breaching the terms again and again? Where do they draw the line?

westernpromise

All the bank need do is show two things. One is how much it spends per annum chasing breaches, in employees' time. The other is how many breaches it deals with a year.

It can then argue that its individual fees per breach simply represent the former divided by the latter.

I am not a lawyer, but I do have some experience serving courts as an expert witness. Judges are often depicted for comic effect as cretinous fuddy-duddy old morons, but believe me, this is far from accurate. Judges are paid to home in on the hard questions. If a bank went to court with the above defence of its charges, I think it would work.

All the other side could argue is that all those employees and costs existed anyway, to deal with other people's breaches, in effect. The judge would then say, "But Mr Promise, that amounts to you claiming that your breaches were incremental, while everybody else's were not. If everyone claimed that, then the bank would have nobody from whom to claim back its costs, which have arisen from what nobody disputes are breaches of contract. So your argument, in reductio ad absurdum, is that nobody should pay....this is not logically sustainable....etc..." and therefore it would be game set and match to the bank.

The problem for the banks is that they can't do this because it would only secure them their actual cost. Whatever that cost is, it sure isn't 30-odd quid a time, otherwise one of them would have taken it to court by now.

Hence the problem - they can't collect punitive fees and they dare not admit their costs and just take those, so they simply have to dump the customer.

And if they dump too many of those customers who have been cross-subsidising free banking for years, they're going to have rethink how they price their services.

So the whole thing is a triumph for the free market really. Adam Smith, to say nothing of Maggie Thatcher, would be proud of how market reality is going to force them to behave honestly.

I will probably end up worse off - I don't incur charges but neither do I want my banking to be funded by a raid on the limited funds of people who in many cases are probably worse off than me. Perhaps we will end up being charged per cheque or whatever, like in the Netherlands. As long as it's equitable it's fine with me.