The other side of the coin: The case for bank charges

MPH80

Hubert_Dalrymple wrote:

This is a legal and logical nonsense, but as the foregoing conversation shows, it has been extremely and depressingly effective.

Ok - let's see if you can understand this example. Remember in this entire example whether the income is lawfully or unlawfully obtained does not matter. (n.b. these figures and percentages are not representative of the banks)

You are the CEO of a company. Your company earnt £500M profit last year. You are publicly owned. Your job is on the line if share holders aren't happy.

A regulator comes along and tells you can't earn 20% of your income in the way you used to earn it.

Now - as the CEO - remembering that your income is dropping, thus the dividends and share price are going to drop and the shareholders won't be happy ... do you:

a) Ignore it - it's only 20% and we earnt enough last year?
b) Try to find another income source to make up that 20%?

I'll give you a clue - it's not a.

This is exactly what the banks are doing now. They are adjusting their other income streams to compensate. It is neither here nor there whether the money they earnt from penalty charges was lawful or not - they had it - now they have 1/3rd of it and they have to compensate.

Having thought about it now - I suspect we are going to end up seeing a raft of different current accounts - looking, I suspect, something like this:

a) Very basic account - no charge - cashpoint card, no debit card, no chequebook, no overdraft.
b) Basic account - limited charge (£2-3 a month - waved for min income) - cashpoint card - choice of chequebook or debit card. Perhaps a limited overdraft.
c) 'normal' account - £5 a month (or minimum income/balance) - cashpoint/debit card - chequebook - overdraft - no fluffiness - no interest paid.
d) 'Executive' account - £10 a month (or min income higher (>£40k pa?) than normal account) - as normal account - medium overdraft (£1k?) with interest paid and perhaps a fluffiness of travel insurance
e) 'Mega Rich' Account - £20 a month - as normal account - big overdraft - with lots of extras.

And I suspect that Martin will be one of the first to complain about how confused consumers are.

The game rolls on. The rules are changing and we just have to adapt to the new rules. How we got here matters little.

M.

oldfella

a) Very basic account - no charge - cashpoint card, no debit card, no chequebook, no overdraft.
b) Basic account - limited charge (£2-3 a month - waved for min income) - cashpoint card - choice of chequebook or debit card. Perhaps a limited overdraft.
c) 'normal' account - £5 a month (or minimum income/balance) - cashpoint/debit card - chequebook - overdraft - no fluffiness - no interest paid.
d) 'Executive' account - £10 a month (or min income higher (>£40k pa?) than normal account) - as normal account - medium overdraft (£1k?) with interest paid and perhaps a fluffiness of travel insurance
e) 'Mega Rich' Account - £20 a month - as normal account - big overdraft - with lots of extras.

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and why isnt this a good thing - the banks will need to compete on price and service - instead of extracting large fees unlawfully

Mike

Hubert_Dalrymple

If income is generated from unlawful means then the banks can't really claim that it is unfair when it is stopped, by whatever means.

A supermarket can't complain about being stopped from selling certain items, because, for example, their sale is unlawful or heavily regulated, by complaining that if they are stopped they will have to put up prices elsewhere or lose a profit.

Nobody has yet shown me why defaulting customers should be forced to subsidise other customers to be unprofitable. If they default, the banks are able to charge any reasonable costs incurred in dealing with the default. In all other respects, the accounts cost exactly the same to maintain, so why should you get it for free.

If bank accounts cannot be operated profitably for free then the simple fact is that people should pay transparent fees. It should not be for the few to subsidise the rest of the clientele.

For me the crucial question is "what happens if no customers default and therefore no income is generated from the charges?" The banks would, apparently, be in a desparately unprofitable situation because their clients had all adhered to their contracts. They would then have to recoup their losses by other means. The effect on the customer would be the same as now. Why do you wish to blame the defaulters for the fact that, apparently, banking cannot be provided for free?

oldwiring

Hubert Dalrymple

Complain ot not, the banks will get the income back. I bet you would do the same if your income was curtailed.

Mercenary

AndieJagain wrote:

balance transfers from one account to another taking 3 days?, I have one from FD to A&L leave every friday, arrives every tuesday, that's 4 days per week £100 of my money is in transit, earning one of them two more interest over the year than it is me.

If it's not vital that the money arrives on a Tuesday, help yourself a little by transferring the money on a Monday, not a Friday .
It will still be 3 or so working days (depending on whether cleared or uncleared funds).... but, at present, by making the transfer on a Friday, you are putting the weekend in between the weekday working days necessary for the transaction, therefore you are losing yourself more time...and interest.

For a basic banking transfer the money has to be processed and leave the FD clearing system at the end of the first working day, then transfer between banking systems to the A&L clearing system, processed again....then finally it is credited to your A&L account. This is (usually) only done during the usual weekday working days. Weekends don't count.

HTH

millie2_2

Just have a quick trawl through some Canadian bank sites to see where we're headed.

cibc.ca
royalbank.ca
hsbc.ca

We have always paid for banking there; when we left 15 years ago we were paying at least $20 per month in fees. You still pay every time you use your debit card in a shop. (see Interac transactions) You also pay every time you use an ATM, and double if it's not your own bank's. You have to buy your own personalised cheques which is a pain if you move because you must have the correct address printed on the cheque.

I think there's very little chance that other banks won't follow.

Millie

Bamber19

It's kind of ironic that the most interest in claiming back bank charges appears on a "money saving expert" site, it's seems many people have an agenda that is more "how can i use these expert money saving tips to save a bit of cash and then use that, plus money from the bank that doens't belong to me and which i have absolutely no authorisation to take in order to spend beyond my means and live a lifestyle that i shouldn't really be able to" People need to look at the long temr here, everybody currently thinks they are winning the war against banks by claiming back money that they were charged for effectively stealing from the bank, whilst not considering that they currently pay nothing to have their bank account, pay nothing to send out a cheque etc, but if banks lose out on this source of income then they're going to look for it another way and the obvious way to get money in will be to start charging for accounts again. Secondly the financial institutions define the country and keep it running, if you start taking money from them and the judiciary cans ee the negative effect this will have then it only takes one House of Lords interpritation of the legislation on the matter(which contrary to may people's belief has not yes had legal interpretation in case law on the matter, and the whole situation will change, failing that the government could just pass an amendement to the current act, it wouldn;t have the negative opinion people think it would, the majority of people affected by it would be Labour voters, and we all know that even if a Labour government dropped a bomb on the UK the stubborn Labour voters would still vote them in again. SO go on, claim back your charges, but don't complain too loud when you can;t get a bank account in the future because the charges merely for owning an account are too high for you.

Turtle

AndieJagain- fd actually pays you interest on your account when you transfer funds to an external account until the day it reaches the other account. So, in this instance it matters not when you do the transfer. I do not know of ANY other bank who does this.

JohnPeard

Bamber19 wrote:

Bamber19's comments

I'm sorry, but I think many of your arguments here are entirely spurious, and indeed unfair.

Personally, I DO pay a monthly charge for my account, like many others. I am perfectly happy with this as it is by far a more transparent way of working and charging. I also accept that those who prefer, or need, 'free banking' may have to accept that the banks need to make money in some other way e.g by earning interest on their account.

However I expect my bank to behave efficiently, professionally and lawfully.

The two main issues I have with your points of view are these:

Bamber19 wrote:

claiming back money that they were charged for effectively stealing from the bank.

If you were to repeat this, referring to a bank rather than a customer, then this would be libelous. Many of the people on this site, and others, have no money in their accounts precisely because they banks have unlawfully removed their funds in the first place. It might be useful to add that 'the jury's still out on this' but since all the banks seem to be avoiding defending their position, it has proved impossible to get this tested in court.

Bamber19 wrote:

Secondly the financial institutions define the country and keep it running

Woh! I thought it was the principles of democracy (people's power), adhesion to the law and those that produce the food and goods we need that define what we are. As for 'keeping it running' those who have lost their homes, their businesses and jobs because of the ammoral way banks have operated in pursuit of profit would find your comments deeply offensive.

inmypocketnottheirs

Some very interesting posts from Hubert Dalrymple. I would summise, in essence, that as the banks are looking to introduce/increase charges because of the curtailment of the penalty charges, that this indicates that they have been making a profit from levying them.