BBC Website on Charges

Paul_Herring

sgx.saint wrote:

I only say this because, I don't like it when people assume that everyone reclaiming bank charges are people who are poor with money management and just trying to flaunt the system.

Because the people who are poor at money management are also reclaiming them, again and again. And then turning round and going "who me?" when this is pointed out.

I agree that there are exceptional circumstances (like your own, or where a partner has left, or <insert unusual circumstance here>) where people may get charged due to circumstances beyond their control, but I cannot conceive that this is a majority of all cases that have been charged.

I can say for one that if the law states that these type of charges are illegal, then why not pursue our legal right to reclaim them?

The charges aren't illegal - yet; no precident has been set. The level of the charges is thought to be illegal.

sgx.saint

Penalty charges are illegal. The banks are only allowed to recover their administration charges.

Penalty charges are illegal and not recoverable.

I've copy and pasted a snippet from a CAG letter:-

"I now understand that the regime of 'fees' which you have been applying to my account in relation to direct debit refusals, exceeding overdraft limits and so forth are unlawful at Common Law, Statute and recent Consumer regulations."

I do agree with you Paul that some people abuse the system. But this goes with pretty much everything nowadays.

Hereward

sgx.saint wrote:

Penalty charges are illegal. The banks are only allowed to recover their administration charges.

Penalty charges are illegal and not recoverable.

I've copy and pasted a snippet from a CAG letter:-

"I now understand that the regime of 'fees' which you have been applying to my account in relation to direct debit refusals, exceeding overdraft limits and so forth are unlawful at Common Law, Statute and recent Consumer regulations."

I do agree with you Paul that some people abuse the system. But this goes with pretty much everything nowadays.

Paul_Herring is right, Penalty charges are unlawful, not illegal (these are not the same thing); however, the charges applied by the banks and building societies have yet to be proven, in a court of law, to be penalty charges. Any ruling will probably state that the current level of charges are too high and they should be reduced. This is all speculation at the minute as a bank or building society has yet to defend their charging structure in court.

sgx.saint

Apologies, I did not realise that these two legal terms had different semantic meanings

Tim_L

Paul_Herring wrote:

The other side of this coin is "why should people, who can run their accounts correctly, subsidise the costs of those who cant, by paying a monthly fee?"

What costs?

People not managing their money "correctly" pay interest on their borrowings. Probably, given the choice, the banks would keep this group of customers over those who are more prudent. But in any case, this provides additional income for the banks: those in debt subsidise those not in debt, as has always been the case.

The costs of running a bank account to a bank are pretty much identical for both groups of people. Banks will still be allowed to charge reasonable amounts for any loss to them from people transgressing their limits - say £2.50 to £4.50 according to the BBC figures - so this is completely neutral.

So those who don't run accounts "correctly" are not placing an extra burden on the virtuous. If charges come in generally, they will be paid equally by everyone for the same service. Which is fair enough really, especially since those in debt will still be paying interest on top.

Paul_Herring

Tim_L wrote:

What costs?

Flippantly: Computers to send letters out, hiring lawyers to not attend court when fees are claimed back, hiring people in indian call centres....

On a more serious note:

So those who don't run accounts "correctly" are not placing an extra burden on the virtuous.

it has been argued that they have now...

If charges come in generally, they will be paid equally by everyone for the same service. Which is fair enough really, especially since those in debt will still be paying interest on top.

I seem to recall some arguement a while back about all these people claiming bank charges were the poor (and the notion was questioned at the time.) Now, ostensibly because all these (non-poor) people are claiming back the charges, other 'real'-poor people will now have to pay for their banking. "Slippery slope" dictates that you now have the poor subsidisising the accounts of the not so poor.


No - I don't know where I'm going with this arguement, why do you ask?

Keith

Paul_Herring wrote:

Perhaps they meant unauthorised overdraft (they type that incurs these fees)?

Ah, the difference between borrowing from a mate and going to a loan shark to borrow 12p at a cost of £58?

Tim_L

Paul_Herring wrote:

it has been argued that they have now... I seem to recall some arguement a while back about all these people claiming bank charges were the poor (and the notion was questioned at the time.) Now, ostensibly because all these (non-poor) people are claiming back the charges, other 'real'-poor people will now have to pay for their banking. "Slippery slope" dictates that you now have the poor subsidisising the accounts of the not so poor.

This is pure through-the-looking-glass nonsense. If you accept that the banks penalty charges were at a level that produced revenue for them (over and above the cost of the transgression cost, whatever that was), then it is quite clear that by definition this comes disproportionately from the worse off. If you have money it's unlikely you would be bouncing along an overdraft limit. If you now argue that the inevitable result of this is that people who weren't paying the costs of their banking will have to, then the inevitable logic is that the worst off are paying less than they were and the better off are paying more, and that the true costs of banking are being shared more evenly.

No-one has ever said as far as I know that banks should not recover costs from people transgressing limits, and certainly no-one has suggested that interest charges should be waived. So people who don't micro-manage their finances do pay the price for their careless transgressions, but it is not reasonable that they should be fleeced.

As it happens I doubt there will be generalised charges. The charges that are being introduced are more marketing devices than anything else, persuading people to take up other products from the bank via charging them if they don't rather than the more traditional way of providing an upfront cash incentive. They are stupendously easy to avoid.

And it's also worth saying that money from these charges is going straight into profits, not really subsidies. Banks are profitable without them, and this is really the gilt on the gingerbread. So in fact they were being used to boost investment returns rather than to pay the exalted cost of chequebooks, bank statements, and junk mail.