MSE News: Guest Comment - Bank charges fight still alive

*MF*

Part of the costs to service the huge debts the UK has - relates to the bail out of the banks.

An early estimate was that the increased tax we all pay came to about £4,000 for every family in the country to cover just the costs of those bail outs.

I don't know if that early estimate is correct, I suspect it is highly variable over time - but as we all feel the effects of cut backs, of VAT at 20% - it is worth remembering that banks are responsible for far more costs - that effect every one of us - than perhaps we immediately realise.

proeleche

Alpine_Star wrote: »

This is a common misconception.

The OFT PCA market study found that 50% of revenues for personal current accounts is derived from those who stay in credit (by way of net interest income). Only 30% of PCA revenue is derived those who incur unauthorised overdraft charges.

So it's actually people like you who are paying the lion's share of the nation's banking.

Yes, didn't a senior Lloyds executive tell a treasury select committee that the bulk of revenue from current accounts is through interest forgone (ie. the banks not paying customers interest).

Of course some people takes risks and incur charges as a result, but I still stick to my original assertion that: it's the poorest it affects the most.

And posters above did miss the point: what do these services (DDs etc) actually cost? Not their tariff of charges for the service of refusing a direct debit.

If we think about retailers and debit cards, it costs pence - I can't imagine that direct debits etc cost much more. Sure, it will have cost the banks the initial investment of having systems installed, but they will have made that back many times over...

leclerc

proeleche wrote: »

Yes, didn't a senior Lloyds executive tell a treasury select committee that the bulk of revenue from current accounts is through interest forgone (ie. the banks not paying customers interest).

Of course some people takes risks and incur charges as a result, but I still stick to my original assertion that: it's the poorest it affects the most.

And posters above did miss the point: what do these services (DDs etc) actually cost? Not their tariff of charges for the service of refusing a direct debit.

If we think about retailers and debit cards, it costs pence - I can't imagine that direct debits etc cost much more. Sure, it will have cost the banks the initial investment of having systems installed, but they will have made that back many times over...

http://www.oft.gov.uk/shared_oft/reports/financial_products/OFT1005.pdf
Page 18 bottom of the page which explains revenue.
I should add that banks are flogging packaged accounts like they are going out of season(most bankworkers pay nothing for the accounts they are flogging so obviously they have them, but when they have to pay for them, that is another matter ).
The Interest forgone would have gone down you would have expected since interest rates are a lot lower than 5 years ago. Some of the bank charges revenue may have dropped as well since many banks changed the structure of their charges(if you want to know one success of the "bleating" reclaimers then that is one of them).
With regards to reclaiming, I would say do not start that route with regards to what the Govan Law Centre is doing, since they have not been argued in court and any decision given. Financial hardship is a viable route but be aware that you cannot reclaim 100% of historic charges based on FH since the bank will only look at a period of time in which the charges impacted on your ability to pay essential bills which does not include credit cards, loans but only priority debts or payments that would lead you to be imprisoned, lose your home and/or lose essential utilities(excl. phone and cable/satellite).

I think i've covered the main points.

rastor2003

Hi Martin

The judges that sat on the bench of the OFT v Banks possibly have substantial sums invested in Banks, and if so, possibly receive big dividends from the Banks' huge profits. If the OFT had won the case, the Banks would have had to fork out substantial sums, and this would have reduced their profits and the shareholding judges dividends. Given this to be true, it was not in the interests of the judges of the supreme court to let the OFT win the case. The judges should have been made to declare their financial and other interests concerning the Banks. Why weren't they challenged? In my view, those that could have challenged the judges didn't do so because they didn't have the guts and were also corrupt.
.

Regards

Bradley

Alpine_Star

rastor2003 wrote: »

Hi Martin

The judges that sat on the bench of the OFT v Banks possibly have substantial sums invested in Banks, and if so, possibly receive big dividends from the Banks' huge profits. If the OFT had won the case, the Banks would have had to fork out substantial sums, and this would have reduced their profits and the shareholding judges dividends. Given this to be true, it was not in the interests of the judges of the supreme court to let the OFT win the case. The judges should have been made to declare their financial and other interests concerning the Banks. Why weren't they challenged? In my view, those that could have challenged the judges didn't do so because they didn't have the guts and were also corrupt.
.

Regards

Bradley

Yes the whole Supreme Court hearing was a cleverly choreographed charade and was actually conducted under a cloud of intrigue and suspicion in the darkened corridors of the judges chambers....just don't let them see you....they're everywhere.....you know who I mean.....them.....

*MF*

I have today posted this e-mail to Mike Dailly and to MSE Guy. I have removed the direct link to the blog involved to avoid any breach of MSE rules:

"I refer to the recent post on MSE.

It is unlikely that Mike Dailly will recall an e-mail I issued to him on the 21st of December 2009, nor that Guy will remember my contact with him on MSE and by way of agreement from him, through a follow up by e-mail to him on the 23rd of March 2010 - both contacts directly relate to the question of Bank Charges and how to resolve the central question of "fairness", by adopting an entirely different approach, and providing hard factual evidence.

I received no response to these contacts, and in saying that I offer no criticism, I appreciate that amongst a host of contacts, one from someone you have no knowledge of does not perhaps merit a response.

However given Mike Dailly's recent comments I hope that this time round a response may be encouraged.

I have always held the view that to determine this central question of "fairness" a different approach was required - you will find part of my reasoning and the factual evidence to support my contention in this blog - (removed) - details of which (and more) have been notified to, and acknowledged by the FSA, the OFT, the ICB and to individual members of the Treasury Select Committee.

I stalled the blog in October last year, but will provide the final and conclusive evidence on the matter shortly.

Given the reasoning now offered by Mike Dailly, I simply ask that you take an interest in the evidence already logged in the blog, and will continue that interest as the blog is taken forward.

Yes, undoubtedly a blog by definition offers opinion, but far more importantly I believe, if you read it you will find that it already offers powerful factual evidence, with more to follow shortly, which may help resolve this whole matter."

As I have said in that e-mail, I stalled the blog last October, but will resume providing what I believe is crucial evidence, and it fully supports and indeed verifies the Guest Comments from Mike Dailly.

I post this so that members of MSE are aware of the situation - and I hope that it is acceptable to MSE that I do so.

Consumerist

*MF* wrote: »

I have today posted this e-mail to Mike Dailly and to MSE Guy. I have removed the direct link to the blog involved to avoid any breach of MSE rules:

Since there is nothing here which we could comment upon, shouldn't this be on the Rants board?

*MF*

Much as I might like otherwise MSE rules specifically prohibit me from posting the link to the blog, and like every other member I accept those rules to be here at all.

MSE Guy has today (and my thanks to him) acknowledged my e-mail and is now going to look at the blog - perhaps after he has done so MSE may consider allowing the link to be posted, but that is their decision and I am happy to abide by it.

The blog was started on the 8th of August 2010, it contains 19 very detailed posts and uses evidence drawn from a wide range of sources, the OFT, the FSA, the Treasury Select Committee and elsewhere - it is detailed, and whilst I do offer comments, most of it is hard factual evidence drawn from those sources. I believe that evidence when reviewed by MSE and Mike Dailly will help materially in this matter.

From the outset in the posts it has repeatedly asked this one very simple question:

Let's ask Lord Turner and the FSA this very simple question:

Do you believe that the charges levied by Banks on their customers were and are fair or unfair?

When you read Mike Dailly's Guest Comment you will I hope realise that obtaining an answer to that one simple question is key to unlocking this whole matter, and why the Concordats between the OFT and the FSA (dealt with in detail in the blog) reveal why it remains unanswered - hopefully not for much longer.

Again, I appreciate, you might say "So what - you still haven't given us anything to get our teeth into!" I would agree.

Let me try this, and again I hope that MSE will not find it in breach of the rules.

Today's post on the blog included the full comments from Mike Dailly as posted here on MSE, this is an extract from my closing comments:

Mike Dailly says " .... what we really need is a simple, no nonsense solution."

Mike Dailly has realised that the answer to this whole issue of "fairness" over bank charges may lie with the FSA, which the readers of this blog will realise has been the contention of this blog from the outset.

Be that as it may, proven as it can be, simple it isn't.

I believe, and always have believed, we need to go one step further than Mike Dailly, we also need hard factual evidence to elicit a solution - providing that very evidence is, and always has been the purpose of this blog.

The crucial evidence - eventually - is:

1) to identify, without exception or qualification, the regulatory role of the FSA in the matter, and

2) the FSA's firmly established position on "fairness" when it comes to charges.

In the posts which follow I will offer the evidence against both of those items, and will continue to repeat this:

Let's ask Lord Turner and the FSA this very simple question:

Do you believe that the charges levied by Banks on their customers were and are fair or unfair?"

Extract ends ...

Tomorrow, on the blog I will post the evidence, drawn entirely from the FSA website, which addresses 2) above - the FSA's firmly established position on "fairness" when it comes to charges.

It is again very detailed, it has to be, because it answers (not in my words but in theirs) the simple question of how the FSA view the question of the fairness or otherwise of "charges".

So, whilst I still cannot post a link to the blog, I will (with the continuing allowance of MSE) post relevant extracts here - I hope that will be acceptable to MSE. (Would they or the Board Guides please either PM or e-mail me if that is not to be the case)

The details, although only extracts, will I believe offer those with an interest in the subject something worth reading or criticising, but which fully supports the direction Mike Dailly is suggesting.

Later, over the coming week I will do like wise with the evidence for Item 1) - to identify, without exception or qualification, the regulatory role of the FSA in the matter.

However, these can only be extracts, they will suffice I think to let everyone know that Mike Dailly's assessment (and mine) has very real substance to it.

Let me stress the blog, its existence, and its evidence is already known to the FSA, the OFT and the Treasury Select Committee.

My intention in these posts is to open that evidence up for scrutiny to allow others to decide for themselves whether it is up to the task of resolving the issues involved.

Like Mike Dailly, (but in my case very much based on the factual evidence I think is vital), I believe it can and will.

Alpine_Star

*MF* wrote: »

Let's ask Lord Turner and the FSA this very simple question:

Do you believe that the charges levied by Banks on their customers were and are fair or unfair?

It doesn't matter what Lord Turner thinks. The FSA don't regulate overdrafts or their associated charges.

*MF*

Alpine_Star wrote: »

It doesn't matter what Lord Turner thinks. The FSA don't regulate overdrafts or their associated charges.

The following extract from Lord Turner's appearance before the Treasury Select Committee would confirm 100% that you are correct, and Mike Dailly and I are both barking up entirely the wrong tree:

Extract:

Lord Turner: This is an issue that we’ve discussed at great length, because we did discuss at great length the issue of the unauthorised overdraft charges where, you are absolutely right, the process was, you have a core product that might not make money out of the person who doesn’t go into overdraft, but the moment they go into overdraft they get hit by unauthorised overdraft charges. There was a clear legal decision, you have to remember, that the banks were justified in doing this. Even before that, this was more an issue for the OFT than us, because you have to remember we do not regulate at the moment consumer credit, and overdrafts count as consumer credit. But the answer is, when and if all that is tidied up, yes, I do think the appropriate regulatory authority should be directly looking at both the transparency and indeed the level of unauthorised overdraft charges. That should be part of our regulatory machinery.

From here:

http://www.publications.parliament.uk/pa/cm201011/cmselect/cmtreasy/uc612-ii/uc61202.htm

There is however, and that is the basis of the blog, other evidence from which an alternative conclusion can be drawn. I do not seek to alter anyone's views on this subject, but to offer that alternative evidence and then see what conclusions they draw - I hope that, if nothing else, is fair?

Tangent:

Interestingly, tied into an earlier post on ths thread, that link also takes you to some of the figures which were discussed by the FSA and TSC over the income the banks derived from "free if in credit" and "unauthorised overdraft charges, see below (same linK)

Extract:

Q49 Mr Mudie : Let’s stop it there. Hector has had enough time to read the report.

There is o ne thing you don’t mention that w e got from our first evidence session . An important thing you’re leaving out lies between the person walking through the front door, free, being able to open an acco unt and get on to insurance and mortgages and so on, and the £8.4 billion the banks charge opaquely to customers for things like overdrawing on cheques and so on. They broke it down : £ 4.1 billion was interest for gone, with a small amount they pay on their accounts. They make £ 4.1 billion out of that and they make £ 4.3 billion out of charges. If you left free banking alone , the free entry, but you got stuck into these hidden opaque charges that the banks make so much money from, wouldn’t that be a very good area of competition?

Ends ...