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

tifo

olly300 wrote: »

Unfortunately while financial institutions are suppose to use clear definitions to enable consumers to understand their products and services they don't.

Exactly my point.

For banks to exclude any assessment of charges under Reg 5(1) by using the exclusion of Reg 6(2) the agreement must be in plain english under Reg 7(1). This is how the test case proceeded and why the banks changed their terms and conditions during the case.

The new terms were assessed to be in plain english (or easy enough to understand) and thus the OFT could not take action under Reg 6(2) and 5(1). No historic terms were assessed, especially those during some charges.

As an example, some peoples charges may be from before July 2007 and the bank has sent them revised terms from the test case and current as applying to the charges. But if the accounts were closed before July 2007 or sold off then any terms before that never applied.

But the bank will still quote the test case and their charges having been judged as fair when in fact only the new terms were assessed.

tifo

olly300 wrote: »

A "service charge" in this context is an additional charge for banking services for example an unauthorised overdraft fee.

I don't understand how banks have got away with this for basic accounts which don't have any overdraft facility so there's nothing for the customer to request.

It's also not technically an overdraft. The banks charge for 'considering' a request for an overdraft, even on accounts that don't have that facility, and decline the payment. The customer hasn't really overdrawn because the bank returned the payment. But banks leave the account in minus for the day as another way of thinking we're overdrawn when we're not.

TruckerT

Being honest, I have to say that I have not read every post in this thread. But, over the years, I have fiercely exploited every loophole in the banking/credit card system...

Retail banking is an 'invisible' service/product, and, for most ordinary people, money is not a commodity

That's why it is so annoying when banks charge people for doing 'nothing wrong' - wheel clampers operate in a similar way

If you want to avoid getting clamped, then you will either have to pay to park, or be considerably inconvenienced by having to use public transport, or undertaking a longish walk

On the other hand, banks do themselves no favours by allowing so many dormant or near-dormant account-holders

I now have only three current bank accounts - one of them has been dormant for a year or more, and another was opened only last week, and so far has seen no transactions

Why would a bank allow a new customer to open an account, unless it is clear that he/she intends to use it?

TruckerT

tifo

TruckerT wrote: »

That's why it is so annoying when banks charge people for doing 'nothing wrong' - wheel clampers operate in a similar way

It's not the same.

People get clamped because they park where they shouldn't. If the clampers do anything unlawful that's for the authorities to take up. It's also up to them to set any charges.

We get EXCESSIVELY charged because we do something wrong (not have enough money to pay our commitments). But there are already laws for this which say the bank can only charge what it costs them and not make a profit.

Whilst the banks 'got away' with the test case based on technicalities, no one should really believe that there is any 'core service' provided or that the charges are fair and reflect costs.

I've never said there should be no charge but it should be around £3 - £5, not the over £20 and up to £35 that some banks charge under the guise of a 'service fee' and the free reign that the test case gave them.

TruckerT

tifo wrote: »

We get EXCESSIVELY charged

I absolutely agree that the charges are excessive, but they are also easy to avoid altogether

Do you drive your car into Oxford Street, London?

Of course you don't!

Do you present your card to an Oxford Street till operator without being certain that there are sufficient funds in your account?

TruckerT

tifo

TruckerT wrote: »

Do you present your card to an Oxford Street till operator without being certain that there are sufficient funds in your account?

A returned payment such as direct debit is not the same as presenting a card for payment at a shop. For most people it's an error that gets jumped on by the banks, spiralling into more and more charges.

It's not deliberate, it's usually a mistake. One that only those on lower incomes can make. This is why those* that are on higher incomes or manage their money better are happy to get free banking as long as other poor souls are paying for it. *most.

Of course, we could argue that if highly paid and intelligent bankers cannot manage the banks money, e.g. the credit crunch and everything else that came with it, what chance has the average consumer who makes the odd mistake?

opinions4u

tifo wrote: »

It's not deliberate, it's usually a mistake. One that only those on lower incomes make.

That's slightly insulting to the many low income people who manage their money well.

It is entirely a money management issue. I've seen many good earners pay bank charges they didn't need to. Equally, I've seen many low earners manage their limited funds superbly.

Mistake or not, I'd go as far as to say lower earners probably manage their money better.

Of course, we could argue that if highly paid and intelligent bankers cannot manage the banks money, e.g. the credit crunch and everything else that came with it, what chance has the average consumer who makes the odd mistake?

And that rather backs up the point that the well paid can mess up with finances.

tifo

opinions4u wrote: »

That's slightly insulting to the many low income people who manage their money well.

It is entirely a money management issue. I've seen many good earners pay bank charges they didn't need to. Equally, I've seen many low earners manage their limited funds superbly.

There are others making comments against those that get charged which can be seen *by some* as more insulting than this.

I didn't say that those on low incomes don't manage their money well, I said it's *usually* a mistake. Those on low incomes cannot *usually* find the funds to meet the charges plus the returned payment (some banks take money for the charges first). This leads to a debt spiral that many know. This can lead to defaults, sold debts and much more. All from the bank behaving unfairly and after the test case, getting away with it.

Those on higher incomes can *usually* afford to pay the charges and it is not as large a percentage of income as it is for others.

tifo

opinions4u wrote: »

And that rather backs up the point that the well paid can mess up with finances.

This is not messing with their own income but the bank's money. They continue to do it knowing the taxpayer will bail them out.

Those that don't manage their own finances well and get charged by the bank are *ticked off* by some members as being their own fault. Of course, the taxpayer does not come to their aid.

ChiefGrasscutter

intrepid777 wrote: »

On the other hand does any country in the world charge for putting your money in banks? .

Yup,
Most other countries do.
They charge for you utilising the services of the bank in respect of the bank operating your account and dealing with your credit, debits, etc..etc.....
Simple really: they provide a service for you and you pay for it.