MSE News: Bank switching 'hassle' must be eliminated, as full-scale current account

Consumerist

grumbler wrote: »

. . Ultimately it's the customers, including the 'poor' ones, who pay for all this.

Since the "rich" customers (i.e. without any overdraft) don't pay for any of these services it must be ONLY the "poor" who pay. That is the injustice of the system which needs to be corrected.

Consumerist

Biggles wrote: »

It's been belatedly 'remembered' now.

Instead of just moaning about it I sent a PM the OP. Simplze.

Biggles

Consumerist wrote: »

Instead of just moaning about it I sent a PM the OP.

I assumed the OP read his/her own threads.

Archi_Bald

Consumerist wrote: »

Since the "rich" customers (i.e. without any overdraft) don't pay for any of these services it must be ONLY the "poor" who pay. That is the injustice of the system which needs to be corrected.

Rubbish. The "rich" pay for what they use just as the "poor" pay for what they use, if in different ways because they use different services. The fact that the "rich" don't have overdrafts and rarely use over the counter services doesn't introduce any form of injustice.

If the CMA will force the banks to implement detailed charges, just don't believe that the "poor" will be paying less than they do now. And don't believe that the implementation and maintenance costs of those charges will a) be negligible, and b) paid by the bank fairy.

Alpine_Star

Consumerist wrote: »

If overdraft charges don't subsidise "free banking" then where does the money come from to pay for current account services? The banks, of course, would have you believe that non-interest earning current-account balances pay for these services; is that your contention?

Foregone interest (net interest income) is by far the biggest source of revenue from PCAs.


From the OFT Personal Current Account Market Study:


''In 2006 the aggregate revenue of banks from current accounts was approximately £8.3 billion. PCAs generate more revenue for banks than savings and credit cards combined: 31 per cent compared with 17 per cent and 13 per cent respectively. Banks earned over 85 per cent of their revenues on PCAs from two sources: net interest income from credit and debit balances (£4.6 billion), and levying charges associated with insufficient funds (£2.6 billion).''

Consumerist

Archi_Bald wrote: »

Rubbish. The "rich" pay for what they use just as the "poor" pay for what they use, if in different ways because they use different services. The fact that the "rich" don't have overdrafts and rarely use over the counter services doesn't introduce any form of injustice.

Rubbish too. What banking services do the "rich" pay for?

If the CMA will force the banks to implement detailed charges, just don't believe that the "poor" will be paying less than they do now. And don't believe that the implementation and maintenance costs of those charges will a) be negligible, and b) paid by the bank fairy.

But at least the "rich" may be forced to pay their fair share. I agree, however, that the banks will pocket the extra they collect.

Thatcher's children should be made to forgo their greed and share some of the burden. The regulator, of course, is bound to make a complete dog's breakfast of it all.

Consumerist

Alpine_Star wrote: »

Foregone interest (net interest income) is by far the biggest source of revenue from PCAs.

''In 2006 . . .

In 2006 banks were predominantly charging interest for overdrafts which was, at least, reasonable and proportional to the size and duration of the overdraft.

It wasn't until later that banks increasingly started charging fixed daily charges for overdrafts in order to cover the shortfall created by "free" banking - using the excuse that customers found the new charging structure easier to understand.

They didn't seem to be bothered that customers also might not understand mortgage interest charges or credit-card interest charges, etc.

The sooner the "free banking" lie is ended the fairer the banking system will be for all of us. The losers will, at least, be those who can afford it.

Alpine_Star

Consumerist wrote: »

In 2006 banks were predominantly charging interest for overdrafts...

This is completely incorrect.

The market study found that revenues derived from insufficient funds charges were £2.56billion compared to just £530million for interest charged on authorized and unauthorized overdrafts combined.

I'm not defending it, just giving you the facts.

MegaMiniMouse

Consumerist wrote: »

The sooner the "free banking" lie is ended the fairer the banking system will be for all of us. The losers will, at least, be those who can afford it.

Bear in mind that free banking has become part of society's infrastructure - imposing a charge on banking would, arguably, be akin to imposing a toll on road usage. That's why the banks were too big to fail in 2007/8.

SFAIK, the banks do not actively search out the poor (they leave that to the payday loan companies), they simply don't regard them as a major source of potential future profit, and charge them accordingly.

Archi_Bald

Consumerist wrote: »

The losers will, at least, be those who can afford it.

That's a pretty sweeping statement - who decides and polices who can afford it, and what "it" is? If you determine that those who don't have overdrafts won't have to pay bank/transaction charges, I think you will be in for one massive surprise.

I predict that all customers will be losers as the cost of banking will go up for all of us. There will then follow lots of complaints from those who say they can't afford it.

We need to strike a sensible balance between consumer protection and consumer education. If those screaming for consumer protection would put the same amount of effort into demanding consumer education, we wouldn't need so much costly consumer protection, IMHO.

But we are all speculating for now, and nothing will fundamentally change for at least another couple of years.