What impact will the OFT have?

paul1e

Hiya

I agree Jamalfatty


I know this is a scarey thing to do but surely after OFT's 'RECOMENDATION'S' the fundamental's of the claiming process remain unchanged, we are claiming what we percieve to be a unfair penalty and not proportionate to the cost incurred by the banks, we are willing to pay the incurred cost's just tell us what they are??????????? (never gonna happen)... Just because the OFT says it will not look into any charge under a certain amount doesn't mean that's how much they can charge it is merely a threshold they are given or they will have to reveal there actual cost's to OFT and therefore everyone else. All we are actually saying is provide us with your actual cost's and we will pay them if your not prepared to do that then we'll have it all back!!!!!!!!!!!!!

Plus you get a part payment straight away and accept without prejudice and carry on as normal for the rest????????

krisskross

paul1e wrote:

Hiya

I agree Jamalfatty


I know this is a scarey thing to do but surely after OFT's 'RECOMENDATION'S' the fundamental's of the claiming process remain unchanged, we are claiming what we percieve to be a unfair penalty and not proportionate to the cost incurred by the banks, we are willing to pay the incurred cost's just tell us what they are??????????? (never gonna happen)... Just because the OFT says it will not look into any charge under a certain amount doesn't mean that's how much they can charge it is merely a threshold they are given or they will have to reveal there actual cost's to OFT and therefore everyone else. All we are actually saying is provide us with your actual cost's and we will pay them if your not prepared to do that then we'll have it all back!!!!!!!!!!!!!

Plus you get a part payment straight away and accept without prejudice and carry on as normal for the rest????????

So are you seriously suggesting that if the banks choose not to open their books completely to the world that they will never be able to make another charge for late payment, failed DD etc? I honestly feel you are living in a fool's paradise. Make the most of what you are getting now and spend it wisely. The gravy train WILL get derailed.

Who is going to force them to reveal their true costs? If you think they will have to justify their charges down to the last £ then I think you are very much mistaken. The courts will decide on what is reasonable I am sure. Once that is done all the people now racking up charges because they think they will get them back easily may get an unpleasant surprise.

jamalfatty

krisskross wrote:

So are you seriously suggesting that if the banks choose not to open their books completely to the world that they will never be able to make another charge for late payment, failed DD etc? I honestly feel you are living in a fool's paradise. Make the most of what you are getting now and spend it wisely. The gravy train WILL get derailed.

Who is going to force them to reveal their true costs? If you think they will have to justify their charges down to the last £ then I think you are very much mistaken. The courts will decide on what is reasonable I am sure. Once that is done all the people now racking up charges because they think they will get them back easily may get an unpleasant surprise.

Think you may have lost sight of why this whole process is working. They can carry on making charges until the cows come home, but until they are a level that it actually costs them and not punitive as they are now, consumers can carry on claiming them.
And yes, to prevent people claiming they are going to have to open there books up and prove that the charges they are making are the actual cost to the bank of that default, and not a penny more.

With regards to who is going to force them, if one of these cases ever got in front of a judge, which doesnt look like happening anytime soon, then they would have to order full disclosure to settle the case, whereupon the bank would have to prove there costs.
I disagree with your case on the court setting what it thinks is reasonable, they would do this on rates being claimed back for contractual interest etc, as this is subjective, but under contract law, the charges have to reflect the true cost, not what the bank or the judge considers to be fair.

krisskross

So in your scenario every single bank would have to itemise how they come to their costs? So can London banks charge more as their salary and building maintenance costs are higher? I just do not see this happening. So every year I suppose bank charges can go up in line with inflation or do the banks have to re-justify everytime they increase the charges.

As banks make just a small proportion of their profits from personal banking they could decide they only want the 'good' customers as using your reasoning they cannot charge the 'bad' ones. Barclays make a small amount on my account by using my money until I need it. Perhaps they would prefer to just have customers like me?

jamalfatty

krisskross wrote:

So in your scenario every single bank would have to itemise how they come to their costs? So can London banks charge more as their salary and building maintenance costs are higher? I just do not see this happening. So every year I suppose bank charges can go up in line with inflation or do the banks have to re-justify everytime they increase the charges.

As banks make just a small proportion of their profits from personal banking they could decide they only want the 'good' customers as using your reasoning they cannot charge the 'bad' ones. Barclays make a small amount on my account by using my money until I need it. Perhaps they would prefer to just have customers like me?

I see where your going with this and agree it would be virtually impossible for banks to set default charges individually. It will always need to be a flat fee across the board for all customers, this doesnt change the fact though that it still needs to represent as near to possible the actual costs incurred, and we all know this is not anywhere near £12.

And with your scenario with london banks, this has already happened with the OFT's ruling on credit card defaults. Egg were given a ceiling of £16 compared to all other companies of £12, as there cost per default was higher due to them requiring all customers to have DD's and thus less people defaulting

YorkshireBoy

jamalfatty wrote:

And yes, to prevent people claiming they are going to have to open there books up and prove that the charges they are making are the actual cost to the bank of that default, and not a penny more.

They're not going to have to "open their books" at all. That is an unreasonable request to make of a business (especially in a sector as competitive as banking), and the judges won't ask for the banks' business models to be disclosed in open court.

Moreover, I believe the banks' legal team will refer to the OFT as their expert witness, citing their lengthy investigation and subsequent "£12" figure.

And yes, they will be allowed "a penny more". In fact, I would imagine that they'll be allowed to apply their gross profit margin to any costs incurred in administering reasonable* default charges.

* The OFT spent 6 months(?) investigating credit card charges, and in doing so have probably looked at business models under confidentiality agreements. They have then announced that, based on their investigation, they would consider intervening where charges exceed £12. Hence, and by my interpretation then, they wouldn't intervene where charges were below this figure.

Egg were given a ceiling of £16

I don't believe Egg were given a "ceiling". The OFT stated that some lenders "with exceptional factors" (para 1.6) may set higher default charges, and Egg chose to set theirs at £16

krisskross

And another little thing I wondered about that I hope to get YB's always well informed opinion on.

When the charges are deliberated on and decided fairness about can the banks take the current account bad debts they have to write off each year into account?

Too many people on these threads consider the banks charges should be limited to the cost of a sheet of paper, an envelope and a stamp.

MSE_Martin

update Note Added To The Article.

jillie1974

i thnk that even the fact that OFT are investigating bank charges shows already what a success martins (and other websites) campaign to reclaim bank charges have been!!
while we may not get charges reduced to a fee of what we think it costs banks at least they wont be able to charge such excessive amounts for what at times can be pence or afew quid that you go overdrawn.
so well done martin

jamalfatty

YorkshireBoy wrote:

They're not going to have to "open their books" at all. That is an unreasonable request to make of a business (especially in a sector as competitive as banking), and the judges won't ask for the banks' business models to be disclosed in open court.

The section of my post you quoted said to prevent people claiming they would have to. I believe they will need to, to stop all action being taken by all consumers, they will need to demonstrate that these charges are a genuine pre-estimate of their costs. Can you think of any other way they can do this?

And yes, they will be allowed "a penny more". In fact, I would imagine that they'll be allowed to apply their gross profit margin to any costs incurred in administering reasonable* default charges.

This goes against the very reason consumers are claiming. They are not allowed by law to build in profit margins to these charges

they wouldn't intervene where charges were below this figure.

This doesnt make the charges any more lawful than they were before

Agreed with your last point about Egg, just read through the report and hold my hands up, was wrong about that!