MSE News: 'Free' banking system isn't working, says FSA

tifo

callum9999 wrote: »

The system works fine, the only issue is a group of people who are incapable (or not interested in) working out how to use such a simple system. You go overdrawn without authorisation, you pay a large fee.

If these people 'behaved' themselves and incurred no charges then the bank's wouldn't get the income to subsidise those who don't incur any fees anyway (everyone would be the same).

So what do you think they would do? Start charging a fee from everyone? Then you might complain that it's not fair (on you) because those who used to get charged no longer do and are not subsidising your free banking.

What you're trying to say is that everyone should pay a fee.

izools

TBH I reckon if the banks are forced by new legislation to make free banking actually free they should retalliate by simply closing the accounts of those who misuse them.

Just like Co-Operative do with their Cashminder account I feel the same should be applied to every account in the land.

"Complaint about the charges? You want them refunded? Sure sir, I'll waive the fees. Could you pass me your debit card please? Excellent. That's your account closed. We've offset your overdraft balance against your savings account balance so here's the 10 p balance back to you. Caio!... Oh, and you might want to avoid using your credit card as your limit is now £7.83 more than your balance. Ta ta then, enjoy the rest of your day..."

I'd vote for that any day :beer:

callum9999

tifo wrote: »

If these people 'behaved' themselves and incurred no charges then the bank's wouldn't get the income to subsidise those who don't incur any fees anyway (everyone would be the same).

So what do you think they would do? Start charging a fee from everyone? Then you might complain that it's not fair (on you) because those who used to get charged no longer do and are not subsidising your free banking.

What you're trying to say is that everyone should pay a fee.

No I'm not. I'm saying people who break the rules should continue paying their charges.

Should they all suddenly start running their accounts properly, which forces the banks to introduce charges then so be it (though 1) that's never going to happen and b) I doubt the banks are as reliant on that income as you think). Yes it would be annoying that I'd have to start paying (and I'd have to radically reshape my finances and close the myriad of accounts I have) but I'm not going to force people to default on their payments to subsidise me...

People seem to have the attitude nowadays that banks and every other business is there to serve them. They are not - you are there to serve them. You are no more entitled to free banking as the banks are to demand free banking services from you. (Not "you" personally, "you" as in the public!)

hermante

I always thought that banking was subsidised by interest anyway - bank takes my money and loans it out, so the borrower pays for my account and some profit. However I now realise that banks use loans to create deposits, after all, when you borrow money, it goes straight back into the bank (of your landlord or retailer).

[Deleted User]

In my opinion, people are often too quick to badmouth the banks.

They publish the tariffs and charges there for anyone who wants to read them, and charge if a service is used.

People can usually be found moaning because:

a) they got charged for something that "wasn't their fault" because:
(i) the dog ate their statement
(ii) they thought it would be ok
(iii) it was the first time they've gone overdrawn
b) they didn't know about the fee they got charged because:
(i) they didn't bother to ask / look
(ii) they didn't think it applied to them
c) they got charged and thought it was unfair that they had to pay for a service they used as a result of
(i) poor money management
(ii) complacency
(iii) etc

One question I think all people should ask when signing up to something (bank accounts included) is this: "How are you going to make money from my custom?" - makes things 10 times more transparent.

tifo

callum9999 wrote: »

I doubt the banks are as reliant on that income as you think

Didn't they win the test case in 2009 based on the fact that the overdraft charges subsidise the free banking for everyone else and are a 'service charge' triggered by a returned payment?

If that subsidy stops, then who's going to pay for the free banking?

adindas

Like majority of people in the UK, I also have benefited a lot from free banking.

The FSA is only cater for minority of people who go overdrawn because of their own fault ... and who just always blame the banks rather than blaming themselves.

brambram

Do I have a choice in having a bank account
No
My wages are paid in, there for I will have to pay whether I like it or not.
Do I recieve any service for paying, no. I dont have DDs, overdrafts, loans.
Does the bank recieve interest from monopolising my money, yes.
The banks will gain more money by charging everyone rather than a few defaulters, this is a scam that is being backed shamefully by the FSA.

John_Pierpoint

billbennett wrote: »

One question I think all people should ask when signing up to something (bank accounts included) is this: "How are you going to make money from my custom?" - makes things 10 times more transparent.

Why are we so mealy mouthed / naive in the UK.

The job of "that nice man" is to make a profit for his employer.

As someone once said "When you can fake sincerity you have got it made".

Alpine_Star

JC_Derby wrote: »

So are the FSA expecting those that dont go overdrawn to subsidise those that do?

The OFT Personal Current Account Market Study found that banks derive significantly more revenue (through net interest income) from those that keep their accounts in credit than from unauthorised overdraft charges incurred by those who overdraw.

And so it can be argued that the category of consumers who keep their accounts in credit actually subsidise the group that don't. But of course such is the lack of transparency of the true cost of retail banking people like you are fooled into thinking otherwise.