MSE News: Bank charges campaign saves consumers billions

tifo

an excellent post above.

however, whilst some of us understand that it was only the OFT's powers to set charges which was the basis for the test case, from the judgments of lower courts and its own ruling the SC agreed that overdraft charges were not capable of being challenged by the OFT as an unfair term because they were included as a core service. This was a surprise to many.

the SC also said every case is individual so will be tested on that basis and that the banks were 'robin hood in reverse' (meaning taking from the poor to pay the rich).

however, the banks and the FOS took the ruling as meaning that overdraft charges were not unfair (as opposed to being fair) even though they were never actually judged as fair just that they can't be challenged by the OFT.

*MF*

It was always the case that the OFT were seen as the prime mover over the fairness or not over Bank charges, their latest review follows that pattern ... that was always the mistake

Another mistake was to take the Supreme Court ruling as definitive, it was in ruling that the OFT could not act, it had nothing to say on the question of fairness..

What my post above provides evidence for is that the appropriate regulator was always the FSA, and the appropriate adjudicator was always the Financial Ombudsman - both have failed in the statutory duties under which they are obliged to act.

Fwiw ... extracts from my post above, and a link to a blog, have over the past week (since the latest OFT review) been issued to various financial journalists, both print and media ... and I hope they may take the evidence on board ... I am not holding my breath.

I also hope that some of those at MSE might take an interest in what is evidence, it is not opinion, it is hard evidence drawn from the sources listed, and on what is yet another example of significant regulatory failure ... one which has affected the millions of consumers the regulators were established to protect.

Do you think Guy Anker or Martin Lewis might just take a few moments to read the post and consider the evidence ... I hope so, but again I am not holding my breath..

Pincher

When TSB was taken over by Lloyds, a relative's TSB account became a Lloyds account. When she rang up for soem telephone banking, her birthday failed the security check. Weeks and numerous phone calls later, because they REFUSED to deal with her as she was not the account holder since she didn't even know her own birthday, the case was escalated to somebody with a brain. The birthday on record with Lloyds was 00/00/00!
Obviously they subcontracted some data entry firm that hired some lazy entry clerk to transfer the details.

There was a tenant who switched bank just before a death in the family and left the UK to sort out the affairs of the deceased. The standing order didn't happen, after years of trouble free rental payments. The letting agent was getting no answer for weeks, and was about to start eviction proceedings.

I TYPE my forms using a typewriter (with ribbon!) because I am so terrified of the GCSE drop outs they hire to type in my forms. Even then, some idiot managed to lose my surname three months ago, and a mixture of my middle initials became my surname on the account.

I find the only way is to check and check again.
If the foul up count is too high, switch, and pray that you get out with your hide intact. Switch Manually, of course.

Alpine_Star

*MF* wrote: »

What my post above provides evidence for is that the appropriate regulator was always the FSA

I can't see how.

It's true that had the test case progressed to the second stage the FSA would have become a party tp the proceedings as they would have had responsibility to oversee refunds. But even if the banks had challenged the FSA (who had no regulatory jurisdiction over bank charges) rather than the OFT, what difference would it of made to the test case outcome?

*MF*

Alpine_Star wrote: »

I can't see how.

It's true that had the test case progressed to the second stage the FSA would have become a party tp the proceedings as they would have had responsibility to oversee refunds. But even if the banks had challenged the FSA (who had no regulatory jurisdiction over bank charges) rather than the OFT, what difference would it of made to the test case outcome?

Hello Alpine Star

Apologies, I need to make this post relatively brief until I can return to the subject in more detail, I hope that will be possible later this week.

By quoting only one part of my comment, ie, just the opening words re the FSA, a crucial aspect is omitted, this is what I said in full in that paragraph:

"What my post above provides evidence for is that the appropriate regulator was always the FSA, and the appropriate adjudicator was always the Financial Ombudsman - both have failed in the statutory duties under which they are obliged to act."

The FSMA which governs the subject allocates powers and duties to the FSA, in the simplest of terms to regulate, and the Act allocates powers and duties to the FOS, again in the simplest terms to address complaints ... it is a separation of powers and duties under statute, each having responsibilities for the areas allocated to them, and they therefore have to be seen and examined separately ... that in essence was the outcome of the High Court decision when the Banks raised a Judicial Review over PPI. (See the extracts and the full source document in my earlier post).

This separation, what applies to the FSA and what applies to the FOS has a critical part to play in "s150" - which the High Court recognised - put briefly that while the FSA have set a barrier over legal action by individuals under "s150" when firms fail to "Treat Customers Fairly", the High Court said it would be wholly wrong for that to apply to the FOS (again please refer to my earlier post - I am summarising which is never wise) - that, and only that is why we have the PPI refunds.

I will address the other issues you raise when I can log back on, but I wanted to ensure that the above comments were on record from me - but may I again repeat if you refer back to the earlier post and the extracts and source links I am using, the full impact of what I am saying is there - not in my words, but in those of both the Supreme Court, and the High Court.

Posted in haste - forgive any spelling or grammatical errors, please

Hanky_Panky

tifo wrote: »

No you're not. It's actually the opposite.

As you will know from the test case judgment of Nov 2009,its actually shown that overdraft fees keep accounts free. So those paying through the nose for a service they don't receive are keeping your well managed account free.

I think you misunderstood my comment. Previously I had a free overdraft which , on the very odd occasion I used attracted no fees. Now it does so therefore I am subsidising those that can't manage their accounts properly. What this means in real terms is that the vasy majority of us that do manage our accounts are paying small fees for using our (previously free overdrafts) and that those that mismange their accounts and were therefore racking up huge fees have had their costs reduced.

Also what has happened and again this is something that was trumpeted by many of us at the start, is that the banks will probably make more money than before on this. It's simple really - roughly 5% -10% of people racking up large amounts of charges whereas there is now scope for anyone using their overdraft (the majority) to incur smaller charges - bank wins ! It's a very hollow victory and also contrary to common sense where the minority wins out.

p.s. just for the record I think I have used my overdraft once since the revised fee structure was introduced.

Alpine_Star

Hanky_Panky wrote: »

I think you misunderstood my comment. Previously I had a free overdraft which , on the very odd occasion I used attracted no fees. Now it does so therefore I am subsidising those that can't manage their accounts properly.

The current account market is a malaise of cross-subsidisation. The 2006 OFT PCA market study found that more revenues are derived from those who keep their accounts in credit than from those who don't, by way of net interest income. Now that interest rates are much lower, for those who keep their accounts in credit the cost is less.

tifo

Hanky_Panky wrote: »

I think you misunderstood my comment. Previously I had a free overdraft which , on the very odd occasion I used attracted no fees. Now it does so therefore I am subsidising those that can't manage their accounts properly. What this means in real terms is that the vasy majority of us that do manage our accounts are paying small fees for using our (previously free overdrafts) and that those that mismange their accounts and were therefore racking up huge fees have had their costs reduced.

I understood you.

What i said is that those that pay overdraft fees keep/kept your credit account free to use. They still do as fee amounts may have decreased but their quantity has increased, such as daily fees.

You've had to use your overdraft once and you're complaining about paying for that service !!! Yet those paying for a 'declined overdraft' technically did not overdraw and no service was provided pay a lot of money which you're happy for them to pay, as long as you can keep using your in credit account for free !!

Hanky_Panky

tifo wrote: »

I understood you.

What i said is that those that pay overdraft fees keep/kept your credit account free to use. They still do as fee amounts may have decreased but their quantity has increased, such as daily fees.

You've had to use your overdraft once and you're complaining about paying for that service !!! Yet those paying for a 'declined overdraft' technically did not overdraw and no service was provided pay a lot of money which you're happy for them to pay, as long as you can keep using your in credit account for free !!

Yes - I run my account properly and with due care. I accept that the bank makes money from my usual positive balance and in return I liked the fact that I could, on occasion, use my overdraft and only pay the interest due. This was the case for the majority of customers and as is often the case a few bad apples have ruined it for everyone.

Your embolden section above is inaccurate.

Alpine_Star

Hanky_Panky wrote: »

Yes - I run my account properly and with due care. I accept that the bank makes money from my usual positive balance and in return I liked the fact that I could, on occasion, use my overdraft and only pay the interest due. This was the case for the majority of customers and as is often the case a few bad apples have ruined it for everyone.

Yes it really is appalling isn't it?

What ever is the world coming to?

Fancy having to pay for your own banking services without it being subsidized by the poor and those that can't manage.

Just how unfair is that?

Seriously, would you expect to have your gas & electricity services subsidized by those that can't manage their energy accounts?