'Should big banks have an ENFORCED public service remit?' blog discussion

2

Comments

  • Alpine_Star
    Alpine_Star Posts: 1,354 Forumite
    First Anniversary Combo Breaker First Post
    KTM_Gordo wrote: »
    Not all of them... HSBC, Barclays, Santander etc. were not "bailed out" so they're still entirely independent.

    It's Lloyds Banking Group, Northern Rock and RBS that are publically owned.

    But back to Martin's blog post, the setting off works both ways. For example, if you have two accounts and one is in credit the other is overdrawn, the bank may charge you a fee for being overdrawn. Alternatively, it could move some money from the account that's in credit to the overdrawn account and not charge a fee.

    I know which I'd rather happen - and my bank has done it for me a couple of times, which I'm more than happy about.

    The problem is that the banks have a right to set off but not a duty and as such they will invariably use it to their advantage and not their customers'.

    I have never come across a bank taking it upon themselves to set off in order to avoid charging overdraft fees.
  • KTM_Gordo wrote: »
    But back to Martin's blog post, the setting off works both ways. For example, if you have two accounts and one is in credit the other is overdrawn, the bank may charge you a fee for being overdrawn. Alternatively, it could move some money from the account that's in credit to the overdrawn account and not charge a fee.

    I know which I'd rather happen - and my bank has done it for me a couple of times, which I'm more than happy about.

    The problem with set off is that the Bank cannot win - whilst employed by one of the largest UK banks, I know that we also did try to help our customers by transferring from a savings account to allow us to pay cheques and help avoid charges. However, on a number of occasions we were accused of theft and threatened with legal action as the customer maintained that he knew exactly the position on his accounts and had earmarked the savings funds for a particular purpose which we had interfered with. The fact that we were only prepared to pay the cheque in the first place because of the savings balance was, he considered, immaterial.

    If we had quite legitimately not paid the cheque because of the insufficient current account balance, the story would have been 'But there were plenty of funds on the savings account so why didn't you do a transfer'
  • RussellR wrote: »
    The problem with set off is that the Bank cannot win
    Got it in one - banks and bankers (which means anyone who works for a bank) are evil and only out to line their own pockets at the expense of everyone else. It must be true because I've read it in newspapers.

    (I work for a bank, I am not a banker, I do not get enormous bonuses, please me nice to me! :cheesy:)
  • Please not the end of free banking again... a hundred and fifity pounds per year is what banks make from the average current account. This was admitted to the Treasury Select Committe I believe.

    Interesting idea, not sure on the get lending going. For business certainly but would it be a disaster if lack of mortgage finance reduced house prices?

    Regarding banks charges the current system is SUCH a joke. The OFT cannot rule on fairness so nobody, but the banks, can decide what's fair come off it. At this point I'd settle for forcing the banks to stop the debt snowball which destroys so many people. The way to do so is clear.

    You said they are service charges so invoice seperately for this 'service'. DO NOT put them on the aco!!!! as this can (and does) generate other charges which some people are unable to pay.
    Mixed Martial Arts is the greatest sport known to mankind and anyone who says it is 'a bar room brawl' has never trained in it and has no idea what they are talking about.
  • JuicyJesus
    JuicyJesus Posts: 3,830 Forumite
    First Anniversary Combo Breaker First Post
    You said they are service charges so invoice seperately for this 'service'. DO NOT put them on the aco!!!! as this can (and does) generate other charges which some people are unable to pay.

    THe banks clearly set out in their T&Cs when the customer will be charged and what for. They agreed to this by accepting those same T&Cs. If the customer uses a service and doesn't budget to pay the resulting charge, whose fault is it? Certainly not the banks.
    urs sinserly,
    ~~joosy jeezus~~
  • antrobus
    antrobus Posts: 17,386 Forumite
    Must offer everyone (with ID) a basic bank account

    As far as this requirement is concerned, someone has already thought of it. As in former Chancellor Alistair Darling in his swansong budget see http://www.guardian.co.uk/money/2010/mar/23/budget-2010-bank-accounts. No idea whether this proposal is still live following the change of government, but then the BBA were largely unimpressed by the proposal to begin with. Largely because almost every major bank already offers a basic bank account.

    Need to loosen up lending criteria for small businesses

    Well you'd need to define what you meant by a 'small business', what you meant by 'lending', and what 'criteria' you felt needed to be 'loosened', otherwise it's just waffle.

    Should not use charging orders or setting off

    Why ever not?

    Must ensure fair bank charges

    Define fair.


    Of course, in principle to engage in the business of banking a licence is required, and so the authorities can impose whatever conditions they like in return for granting a licence. Subject to the requirements of European competition law I suspect.
  • Pincher
    Pincher Posts: 6,552 Forumite
    Combo Breaker First Post
    edited 19 December 2010 at 3:41AM
    We had a public remit basic banking provider, it's the post office.

    We overloaded it with public remit obligations, so it's impossible to turn a profit. Universal coverage, so they have to deliver to inaccessible mountain dwellings, whereas its competitors can cherry pick profitable routes. Try telling banks to train their staff in issuing tax disc, collect TV license fee in tiddly small payments.

    No, you create more competition in the basic banking sector.

    1. Encourage small scale credit unions to operate locally. The IT and backoffice functions are tendered to the big banks, who actually have the skills to do so. Supervised and sub-contracted by FSA.

    Saver's money are kept by the contractor bank, and guaranteed by the state against embezzlement. The credit union just needs a few PCs and broadband. If we see this as a civic service, it can share some space and facility with libraries and citizen advice bureaus.

    The mobile library service can bring banking to the housebound.
    Mobile broadband and Wi-Max.

    2. Combine shopping and banking in one trip.

    Like cheap petrol, a supermarket is eager to use a zero profit product to increase footfall. Not so a bank.

    Obviously a larger branch can have dedicated windows with trained staff. A small Tesco Express would have a Pay-In deposit machine, which can also be used for sending documents securely. Maybe an ATM can also act as a live chat terminal, but this will have to be a privacy booth.
    Call centre is just a phone call away.



    Don't legislate and waste my tax money on getting freebies out of pimps. The banks will simply cross sell products and repossess the poor customer's house.
  • JuicyJesus wrote: »
    THe banks clearly set out in their T&Cs when the customer will be charged and what for. They agreed to this by accepting those same T&Cs. If the customer uses a service and doesn't budget to pay the resulting charge, whose fault is it? Certainly not the banks.

    If I put a gun to your head and you 'agree' to do something have you really consented? In essence this is the kind of 'consent' banks have. They're all much of a muchness and if you want to get paid (ever) you have to 'agree'.

    Lets take your example a little further. What if the customer approaches the bank and says I can cover the £30 but not until next week or next month, the bank does nothing except hammer the customer with charges. Depending on the customers circumstances this could go on until the bank gives up and sells on the debt (which they largely created) or the customers gives up and goes bankrupt or similar. How is that in the banks interest?

    Also if, as you seem to believe, it is a service then lets have a level playing field. Should I used such a 'service' (which has a huge benefit to the bank and little if any to the individual) then like any other service provider they should invoice me seperately for this service and await payment.

    Instead they want it both ways, its a service therefore we don't have to justify our costs (which is handy because we can't), but we have an absolute right to take our monies first, even before any PRIORITY debts. Gotta love em. Heads they win tails you lose.

    BTW I am no affected by bank charges and therefore bitter, I just recognise a scam when I see one.
    Mixed Martial Arts is the greatest sport known to mankind and anyone who says it is 'a bar room brawl' has never trained in it and has no idea what they are talking about.
  • jago25_98
    jago25_98 Posts: 623 Forumite
    edited 5 January 2011 at 6:25PM
    Can a credit union fill the gap? Or, even better, an organisation that is barred from lending money? What if there was a financial organisation that was not allowed to lend money, like an Islamic bank?

    What if people simply had that choice? The choice to play it safe or go with a bank that is cheaper for them because it lends at profit?

    It costs ~$2 million to start a bank that can interact with BACs. The cost there being mostly the banking license. There's enough money in the people talking on the forum to do that easily. However....

    that is in some far flung location and then (afaik) you then incur international transaction fees. I'm sure the costs will be higher the more regulation there is.

    Do people need banks exactly? Or is it actually a case of needing the services a bank provides? If so, what are those services?

    1) Ability to accept a wage by PAYE
    2) Accept payments by BACs (let's forget about FPS for the moment)
    3) Direct debits?

    A credit union can accept payments. They can also issue cash cards.

    Can they accept a PAYE wage though?
    Can they apply for a direct debit license?
    Cash cards generally charge >£1.50 every time they are used, including purchases. Can that be reduced to zero?

    edit::
    In the age of the internet why do we even need banks?
    Answer: fees and licensing. If these barriers were lower there would be more variation in the market?
    Order of events: Banks lose our money -> get bailed out -> were inflating GBP to cover it -> now taxing us -> next will grab your funds direct -> things get really desperate to balance the books. What should have happened?: banks go bust and we lost our money much quicker
  • wozearly
    wozearly Posts: 202 Forumite
    First Anniversary Combo Breaker
    RussellR wrote: »
    The problem with set off is that the Bank cannot win...on a number of occasions we were accused of theft and threatened with legal action

    This suggests to me that the decision was being made arbitrarily (even if in a well-intentioned way) without warning/consulting with the customer. A swift way to destroy trust, there.

    Assuming a bank decided that it wanted to adopt a more customer-friendly position with regard to setting off to avoid charges it would otherwise apply, a better route would be to contact customers proactively and ask them if they would like you to do this or not as a default approach.

    Or ideally, try to contact them at the time or, if a bank was really going for the heart-of-gold award, retrospectively along the lines of "You went overdrawn, the t&Cs of your account means what we should do is charge you £x. However, if we transfer (£y) from your savings account then we won't apply a charge. Give us a ring to let us know what you'd prefer - if we don't hear from you by (day) then we'll do (whichever of the above you intend)."

    I can't imagine customers climbing the walls on finding their bank was giving them a chance to avoid an unintentional fee via setting off, but leaving the decision in their hands.

    On the other hand, I'm not surprised that customers were livid when banks were demonstrating that they could rearrange someone's finances at will without seeking prior consent.
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