A Bankers View, Open Letter To Martin Lewis And His Followers On Bank Charges.

nickmack

WestonDave wrote: »

But is it a breach of contract.

It used to be until the banks decided to amend the T&C's to call it a 'service charge'

In breach of contract the business relationship terminates - if banks were shutting down accounts and demanding the money back along with an exorbitant penalty then the facts would be comparable. In reality people have been accepting hundreds of these charges with no attempt to terminate the relationship (i.e. move banks)

Not always, it depends what the 'breach' is. You only need read some of the posts on this forum to see the relationship between customer and bank has been 'terminated' on many occassions. This has been initiated from both sides. However as the banks are now claiming these charges are not for breach of contract, why have accounts of customers who have reclaimed been closed after a 'review'?

amandathepanda

As a Bank clerk myself I am appauled by some of the things that the Banks do, things have got so bad over the past couple of years that I am now looking for another job and can't wait to hand my notice in.

Badger_Lady

To me, the point of this post was less a defence of bank charges, more an attack on Martin and how he "leads his flock".

In response to that attack, the core users of MSE are full clued-up on how to manage their finances and afford daily life without having to incur these charges. Desperate circumstances are exacerbated by charges and can spiral out of control... but Martin gives good, clear advise and this shouldn't be in dispute.

Martin does not recommend that we all go around getting charged willy-nilly and then claiming it back.

And, BANKER GIRL, be careful - if we on here (and anyone else coming across this) can work out who you are / where you work, you could be disciplined for posting this message... there are very strict rules about publishing to the media, which you may not be fully aware of, so make sure you don't give too much away.

I also think you are a victim of your team's culture when it comes to the way you interact with customers - it's so easy to judge someone over the telephone (even without them "ranting"), but the best way to forge a positive relationship with them is to give them the benefit of the doubt and treat them with respect. Remember "the customer is always right"?

And please also remember that, when a single mother on a fixed income is suddenly charged £55 and therefore may not be able to feed her children this week, she's liable to get upset and frustrated. She's not deliberately targeting you with her emotions, but you have chosen to take a role where you represent your company.

Tim_L

Tootsie, I haven't defeated my argument. My argument is that these are charges designed to make profit, not to educate or punish customers. And they are a relatively new invention, certainly at the scale that caused the backlash.

You (and the OP) seem to be extending this into a moralistic argument wherein certain customers have to be punished for the heinous crime of not knowing to the farthing what they have in their account at any time.

I'm pointing out that this isn't the intention of the banks. The banks want people to fall foul of their systems because they are a profit stream. They design the system to trap people. And under contract law they're not allowed to impose penalties above reasonable costs for the infringements. It is not a defence in law to say that the costs are reasonable because they allow the subsidy of other peoples' banking costs, if this is the argument. The remedy relates purely to the agreement between the customer and the bank.

Actually there are very good arguments to say that the users of a service should pay whatever it costs themselves, rather than dipping into the pockets of another users. It's not actually going to happen with UK banking, because of the level of competition - banks would love to charge fees, have wanted to for years, and as you can see from the explosion in 'premium' accounts are experimenting with the idea. This would be the case whether or not people were reclaiming fees: no commercial organisation would ever say "well, we've made enough profit for this year, so let's forget that idea for a while".

But if we're running back over history, it's worth pointing out that banks told us that they were closing branches so that we could have free banking in credit. They can't then say, having closed branches, that they also need fees to allow us to have what we already paid for by reducing the service level we were prepared to accept.

Personal banking may not be profitable in itself, though if this is the case you wonder why it is so competitive, but it provides a customer base for further products. No-one ever forced the banking industry to create a loss leader. They judged that they could make money from doing it. I'd love to know what it costs my bankers to hold thousands of pounds of my cash, send me one automated letter a month, and deal with a few payments, but I'm guessing it's not actually all that much.

rog2

Smasher wrote: »

penalty charges are against the law. Nobody is allowed to impose them for breach of contract. Not a bank, not a catalogue, not your local builder. The law applies to EVERYONE.

I could not agree with you more, smasher. :T :T

WestonDave

nickmack - presumably if banks regard charges as part of the ongoing contract - a charge for processing etc - rather than a penalty on breach, a customer who refuses to pay the charges breaches the contract thereby terminating the contract!

(I'm not supporting banks by the way, just making debate!)

rog2

BANKER_GIRL wrote: »

I have worked for the bank for the last 7 months and thus have knowledge of how bank charges reclaiming has been dealt with before and during the test case.

I would like to have a frank discussion about how your site makes me feel, which is depressed and ashamed. Ashamed for the poor misguided fools your site attracts and the false, undeserved and unnecessary hope it gives them.
<O></O>
My true message is that customers need to take responsibility for their own money and not rely on what you say, You have no real contact with some of the customers you claim to wish to help, and you have no idea how you affect their treatment of bank workers. You have no idea how many times I have been sworn at, screamed at and verbally abused by customers who believe what you say. You seriously need to look at what you saying to people and the message you are giving as it is simply wrong.

Hi Aly - and welcome to MSE. I hope you don't mind if I ask you a couple of pertinent questions:

Is the opinion, that you are promoting, purely your personal opinion - or is that the view of the Bank that you work for?

If it is your personal opinion, then you are perfectly entitled to come here and express it - in fact I would admire your commitment to your beliefs and your courage in choosing this forum to express them.

If, on the other hand, the opinion that you promote is that of your employer, may I ask if you have the Bank's permission to speak 'on their behalf' whilst there is a 'test case' being heard as we speak? My only concern is that openly expressing the views of the Bank could prejudice the outcome of the case.

Again, if your views are being expressed on behalf of your employer, I would like to congratulate your employer for entrusting an employee of seven months' standing for expressing, so eloquently, what they are paying barristers, with many years of training, thousands of pounds a day to express in the High Court.

Again - welcome to MSE.

nickmack

WestonDave wrote: »

nickmack - presumably if banks regard charges as part of the ongoing contract - a charge for processing etc - rather than a penalty on breach, a customer who refuses to pay the charges breaches the contract thereby terminating the contract!

In most cases the customer gets no choice over paying the charges, they are debited from the account regardless of whether the customer agrees. One of the reasons why banks have so much power in these situations to charge as they wish. There is no breach of contract in this case.

Phaelok

i once recalll that i had mis-calculated my account by 5p , and a direct debit tried to go out for £6.95 and i only had £6.90 available , so the bank refused the D/D and then charged me £39 for the returned D/D and said they would also charge £29 if the initial charge took me into an O/D .

All for the sake of 5p , and the worst thing was money was due to clear into my account the following day , and they could see that!


Well if I was speaking to you the day that happened I would have refunded/waived any charges as a result of that. But if this is a miscalculation on your part, which we all make, should we not accept that if it happens again the bank(s) have aided us in the past?

The bank are not obliged to pay that transaction, even though you were only 5p short? Does it sound ludicrous? Of course, but if you are helped the first time to resolve this then surely it should not happen again.

Its like me going to the same supermarket every Friday for 10 years where I know all the staff. If I was 5p short to pay for a particular item would they let me get away with it? NO! You either have the full money to pay for the goods or you don't. The same is true of the bank.

In terms of the level of charge I accept this must be reviewed, however people will STILL complain if the charge was reduced significantly. People, quite rightly, will question the cost involved but will always complain if they are charged.

The example of a hotdog at a cinema comes to mind. £4+ ish for what? a hotdog in a bun with ketchup? Outrage! Whats the cost involved for making that? Should I write to the OFT to claim back the money I've invested in hotdogs? You either buy it or you don't. With bank's you either accept the responsibility involved by setting up regular payments or a standard account which dosent have such facilities.

Smasher

Tootsie_Roll wrote: »

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Ahh, well that explains it

WestonDave wrote:

But is it a breach of contract. In breach of contract the business relationship terminates - if banks were shutting down accounts and demanding the money back along with an exorbitant penalty then the facts would be comparable. In reality people have been accepting hundreds of these charges with no attempt to terminate the relationship (i.e. move banks) but because MSE has started a bandwagon rolling they now see this as a route to free cash.

I have my original overdraft agreement from 2005. It states that I must not exceed my overdraft limit. If I do exceed my limit, I will incur a charge. It clearly explains that this charge is to cover the banker's administration costs.

Now, at around the time the "test case" started, my T&C's have been re-written (as have millions of others and a new "service" has been introduced. No longer are the charges to cover administration costs for breaching my T&Cs. They are now "fees" for the "service" of making payments if I have already exceeded my limit. I was not asked if I wanted this "service", I was given no choice, it was forced upon me.

Curiously, all major banks have taken exactly the same action all at the same time. So, either this a monumentally spooky coincidence that they all discovered a new service for all their customers at the same time, or it is because they know that they couldn't possibly argue in court that the charges were to cover their costs because they know full well that they are far beyond that and will be found to be a penalty and this is their only refuge..
Which one would you say it is?

Furthermore, do you really think that the OFT is going to completely and publicly contradict themselves over disguising penalties as services? Here is their current stance on disguising penalty charges from their report on credit card charges last April.

_OFT_Report_2006 wrote:

Disguised penalties
4.21
The analysis in this statement is in terms of explicit, transparent default
fees. Attempts to restructure accounts in order to present events of
default spuriously as additional services for which a charge may be made
should be viewed as disguised penalties and equally open to challenge
where grounds of unfairness exist.12 (For example, a charge for 'agreeing
to' or 'allowing' a customer to exceed his credit limit is no different from
a charge for the customer's 'default' in exceeding his credit limit.) The
UTCCRs are concerned with the intention and effects of terms, not just
their mechanism.