Bank of Scotland - charges even for un-used overdraft

noh

br1anstorm wrote: »

I'm struggling to see what is misleading or alarming, jalexa. I had a healthy credit balance in my various accounts. This was evidently over the threshold at which BoS provide what they call 'private banking'. This does not involve any change in the actual bank account admin. In practice the main features include being able to talk to a "relationship manager" (aka your old style bank manager!) and being sent info on, for example, specific offers on things like market-linked deposits. Sadly, however, statements still come as computer printouts - no fancy notepaper! What's misleading or alarming about that?

The title of your post is misleading.
It infers that you complaint is about "normal" BoS accounts.
Had it contained the words "Private Banking" there would not be room for confusion.

The terms and conditions and the charges applied to Private Banking accounts are different to those applied to "regular" accounts.

Your original post is valid though as it serves as a warning to others to familarise themselves with the T+Cs of all their accounts and read letters received rather than filing them without doing so.

br1anstorm

ChiefGrasscutter wrote: »

The banks have to make provision in their daily operations for lendings that they might have to make - ie someone taking up an overdraft regardless of whether they DO take it up. OK for one person that sounds trivial/silly, but taken over a few 100000's of customers it will be significant. It will cost the banks to have these facilities in place on a daily basis.
It's a bit like you or me having someone who might at any time demand a 500 cash loan from us with one minute's notice given. We would have to keep that £500 in cash ready available at all times in the house about our person. Instead of which it could be earning interest in a savings account. So it costs us money in lost interest just to have the £500 ready and available even if the £500 is never actually loaned out.

So to reduce the costs to the banks there are a number of strategies they can use.
1. Reduce the amount of overdraft available - seen on MSE regularly
2. Starting charging for merely making the provision available.

Yet another step in the road towards charging an annual fee for the services provided by the bank in running your account for you - much like what happens in most other countries.

That's the clearest and most cogent explanation I have seen, and it is superficially plausible.

But to continue my 'shopkeeper' example, that's a bit like the shopkeeper who has to hold stocks of goods on his shelves or in his warehouse in case customers want to buy those goods. Charging a fee for holding-money-in-case-it-is-needed-for-an-overdraft is a bit like the situation where someone comes into the shop and buys a toothbrush, and the shopkeeper also charges him for the storage cost of toothpaste..... because that customer might, in due course, want to buy toothpaste!

If we're looking at business strategies, then on that analogy, the banks ought to do what the shopkeeper does: either
(a) spread the costs of storage/stockholding across all his prices and customers (ie the overheads of his business); or
(b) put the costs of storing the toothpaste [= providing the overdrafts] on to the price paid by those who actually buy toothpaste!

meer53

From first direct t & c's

Section 3 1.2.2
If we receive a formal request for an overdraft or an increase to an existing overdraft limit from you, we will consider your request and, if we agree to it, we will give you a letter setting out the terms of the overdraft. An arrangement fee may be charged if we agree to your formal request. We may agree to provide you with another overdraft at the end of the term of your facility and if we do so, an arrangement fee may be payable.

noh

Which account do you hold with BoS Private Banking?
There are two listed on their web site and neither has a charge for arranging an overdraft only for using one.

http://www.bankofscotlandprivateclients.co.uk/privatebanking/banking.asp

br1anstorm

noh wrote: »

The title of your post is misleading.
It infers that you complaint is about "normal" BoS accounts.
Had it contained the words "Private Banking" there would not be room for confusion.

The terms and conditions and the charges applied to Private Banking accounts are different to those applied to "regular" accounts.

Your original post is valid though as it serves as a warning to others to familarise themselves with the T+Cs of all their accounts and read letters received rather than filing them without doing so.

OK, fair point, noh.

But I can't control what readers might infer from a generic title. The title is accurate in that I was commenting on the Bank of Scotland's policy; and I explained in some detail in the text that they were treating me as a "private banking" client.

I simply do not know, so could not comment on, what sort of charges or Ts & Cs the bank might apply to the multitude of other accounts they run - whether normal, special, private, corporate or whatever. For all I know HBOS might be hitting all customers with these new fees. Part of my purpose was to be helpful and to alert others - and also to discover whether HBOS was the only bank adopting this "pay before you use it" approach.

I cannot see how anyone who actually read my original post in full could have been misled.

noh

that they were treating me as a "private banking" client

Are you a "Private Banking" client or not?

If at sometime you changed account type to become one you will of course be treated as such.
Or are you trying to say you still hold a regular account but are somehow being treated differently to other account holders because you have a larger savings balance?

br1anstorm

noh wrote: »

Which account do you hold with BoS Private Banking?
There are two listed on their web site and neither has a charge for arranging an overdraft only for using one.

http://www.bankofscotlandprivateclients.co.uk/privatebanking/banking.asp

Hello again noh. My account - which for 30+ years was just a normal current account - is a "Flexible Current Account". And you are right, there is nothing on their website which indicates that they charge a fee for agreeing to permit a (planned) overdraft - because I checked there as soon as I saw the charge on my monthly statement! Like others who have posted, I thought I had an "authorised overdraft" which would not cost anything unless I actually went into the red.

Indeed if you delve into the BoS Private Banking site and look at the detailed PDFs of the Ts&Cs, and the Price List of rates and charges, there is nothing that says a fee will be charged - still less how much it will be - simply for agreeing on a contingency basis to make an overdraft facility available. All the sections on overdrafts indicate that fees and charges will only be calculated and levied when an overdraft is actually incurred. The Price List says that - on planned overdrafts - "you may also need to pay an arrangement fee". The Ts&Cs, paras 8.1 to 8.5, make no mention of prepaying for agreement to an overdraft, they simply refer to how a limit is decided and notified, and to how the interest and the daily fees are charged.

The letter I got in late November advising of the annual 'renewal' of the overdraft facility (which I confess I did not scrutinise closely at the time) advised that a "Planned Overdraft Fee" of £62.50 was payable on 8 December, and was accompanied by the statement that "We can vary fees or charges, charge new or different fees, or change how you have to pay fees - see our BoS Private Banking Current Account Conditions. Fees and charges will also be payable in accordance with the Bank's Price List".

So even though this fee is not in the Price List, and there is no mention in the Ts & Cs about a prepayment of a fee for permission to have an overdraft, it looks as if the bank is using paras 12.14 to 12.19 of their Ts&Cs, which effectively give them total discretion to charge or change fees, provided the customer has the option close the account if he/she does not want to accept the changes.

The moral of the story? Even scrutiny of the small print does not necessarily reveal the full explanation. In the words of the graffiti slogan: "BE ALERT - the country needs more Lerts....!"

br1anstorm

noh wrote: »

Are you a "Private Banking" client or not?

If at sometime you changed account type to become one you will of course be treated as such.
Or are you trying to say you still hold a regular account but are somehow being treated differently to other account holders because you have a larger savings balance?

Let me try to spell it out in words of one syllable.

For 30+ years I have been a holder of a "normal" BoS current account.
I also have money in BoS savings accounts.
The bank - noticing the amounts I held with them - pointed out that this made me eligible for "Private Banking".
The only difference appeared to be that the bank seemed to offer a more personal service, ie I can phone my so-called Relationship Manager, and I occasionally get notifications of specific savings/investment offers.
So I said "fine, OK".
It seems fair to assume that I am indeed now subject to the Private Banking Ts&Cs.
No change has been made to any of my accounts (numbers, sort codes, chequebooks etc remain as they have always been)...
In practice the way I run my bank accounts is unchanged.

Is that clear enough?

opinions4u

Sounds like a screw up.

I bet you're not the only one.

I'd also bet it's linked to the move of HBOS accounts over to LTSB systems.

noh

br1anstorm wrote: »

Let me try to spell it out in words of one syllable.

For 30+ years I have been a holder of a "normal" BoS current account.
I also have money in BoS savings accounts.
The bank - noticing the amounts I held with them - pointed out that this made me eligible for "Private Banking".
The only difference appeared to be that the bank seemed to offer a more personal service, ie I can phone my so-called Relationship Manager, and I occasionally get notifications of specific savings/investment offers.
So I said "fine, OK".
It seems fair to assume that I am indeed now subject to the Private Banking Ts&Cs.
No change has been made to any of my accounts (numbers, sort codes, chequebooks etc remain as they have always been)...
In practice the way I run my bank accounts is unchanged.

Is that clear enough?

It's clear enough but makes no sense
As opinions4u says it sounds like a screw up.
You are either a regular customer of BoS or a Private Banking customer.
If you moved from one to the other you would have to have accepted new T+Cs and you would know you did I hope rather than assuming.
You still haven't stated what account you have ie its name.
Nowhere on the BoS private banking site or the normal BoS site can I find an account that charges soley for the arrangement of an overdraft.

http://www.bankofscotlandprivateclients.co.uk/privatebanking/banking.asp

http://www.bankofscotland.co.uk/bankaccounts/