Why a bank charges win doesn’t mean the end of ‘free banking’ blog discussion

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  • ONe thing that should definately be investigated by someone and maybe should be another campaign for Marting is whne banks offer to write "Free" wills or reduced rate wills for clients.

    I recently saw a lady who a major high street bank wrote her and her husbands will free of charge a few years ago. He unfortunately died last year and the estate was worth £750k the said high street bank had insisted on being executors in the will and for basically performing the executors service and trasnfering the assets over to the wife with four small gifts to the children they charged £37.5k, this is criminal.

    The will they wrote, was OK but did not consider any inheritance tax planning or other assets protection but the fact that they charged £37.5k for what must have been at most 15 hours work for a solicitor is outragous.

    Many, many people will face the same type of thing.

    Just one way big banks make money.

    That is appallling - if a solicitor charges too much you can complain and get the fees charged properly assessed and if thought unreasonable they are reduced. And they are backed by the Solictors indemnity fund

    I would suggest the lady complains to the Banking Ombusdman or takes legal advice as to any redress - take advantage of the inital free consultation with a solicitor to find out.

    And get your will drawn up properly - a tax planning will may cost about a grand but it could save your beneficiaries a lot more than that in inheritance tax. Free wills are only ever going to be the really simple bog standard wills and if their affairs are really that simple can be handled by most lay executors with a bit of nouse, a phone and a willingness to seek advice.

    And while I'm on my soapbox. Solicitors do go into liquidation, or stop trading for all the usual reasons so unless you intend to keep very close track of them while they have safe custody of your will it is a better idea to lodge your will with the Probate Registry. Then you don't have to try and find the will -they already have it. (link to relevant page below)This is the voice of experience speaking.:D

    http://www.hmcourts-service.gov.uk/cms/1218.htm
  • I wonder how many people are aware of Fractional Reserve Banking. This is the debt based system which ALL the banks legally operate within and which is a complete scam.
    The banks do not lend you money, they give you CREDIT. Banks are allowed to lend around 9 times more "money" than they have on deposit. So if you put a hundred pounds into a bank account (ie a deposit), the bank can "loan out" around 900 pounds, 800 pounds of which doesnt even exist!. Yes folks believe it or not, you are paying interest on money which does not even exist other than on paper. That is why banks are constantly wanting you to open accounts and transfer your debt to them. To a bank, even your debt is classed as a deposit. Google"Fractional Reserve Banking" and find out how you are paying interest on something that doesnt exist. The reason Northern Rock is in such a state is that the illusion of banks having sufficient money to pay back customers when they want it is shattered when everyone wants it at once!
    Hey Martin, how about blowing this scam?
  • Very good article but i would like to share the fact that I have found an alternative.

    Quote below from your article

    There’s rate competition, but no charges competition. Another oft-quoted myth about bank charges is “if you don’t like them why don’t you switch bank.” Yet there really is virtually no competition in the bank charges sector and never has been, so where do you go?

    I have gone to "Think Banking" they have guaranteed me no penalty charges ever on their managed account. For my wife and I to have a maestro card is 17.50 a month. Apparently 10 a month for one maestro.

    After abbey stinging me for loads more charges after christmas I have delighted in cancelling all my debits and look forward to finally closing my account. I thinnk this could be a way forward for many forum users..

    cheers mick
  • JS64JS64 Forumite
    2 Posts
    Could you give me an example of this "choice" of how to pay the company?
    Sky Digital, Mobile phone contracts, Internet Service Providers and others only accept Direct Debits. On the few occassions when I have not had sufficient funds in my account(not due to overdraft!!) and have had to phone and pay by debit card I have had an admin charge added at a later date.
    Believe me, if I could pay everything with cash, Postal Orders, or Bank Giro slips I would.
    No it wouldn't. You have a choice of how to make payment to the company. They would just stop giving discounts for people paying by DD.


    I consider I have free banking. I have never paid to make a payment, I have never paid for an overdraft or overdrawn account. I always keep my money in top saving current accounts, and any extra in high interest savings accounts. My banking is paid for by people that are less careful.

    If the banks lose and are only allowed to charge minimal fees for overdrawn accounts, then why don't the banks charge say £500 per year for a bank account. If you remain in credit for the full year and pay in your salary (or £1500 per month), then they could give you a bonus of £500 back at the end of the year. If you do not pay in your salary or go overdrawn just once, then you lose your bonus. That would not be paying over the odds to go overdrawn, since it would formally cost nothing to go overdrawn.
  • Brilliant. Explained very clearly, unlike the sharks, oops, I meant banks.
  • I have worked for a major UK bank for more years than I care to admit and while I agree charges are often excessive I think people often miss an important point that banks often make a loss on current a/cs.

    I saw figures a few years back that showed that for the company I work for it costs £100 in the first year of the a/c opening and then £70 in subsequent years to run a current a/c. Why? because i) it costs money and time to recruit new a/cs ii) it costs money to produce cards/chq books/statements, you have to staff call centres (there is a ratio of 1 call centre person per x thousand a/cs) and pay for back office and branch staff, computer systems etc.

    The average balance in current a/cs is actually suprisingly quite low so little money is made that way. The main way money is made is through selling loans, credit cards etc and also through bank charges.

    It would be my guess that if charges are reduced banks will follow First Direct's lead and introduce charges for not funding an a/c by a cretain amount each month but who knows we could return to the situation that existed up until the mid 1980s (not so long ago) when most bank's made a small charge per transaction.
  • My banking is paid for by people that are less careful..

    Or less lucky. A friend of mine always managed his limited finances impeccably. For no particular reason (?) his bank took out a DD twice, putting him overdrawn. Charged. Charge meant his budget was shot to pieces, from then on a spiral costing thousands of pounds, all from charges, and all stemming from one 'bank error'.
    If the banks lose and are only allowed to charge minimal fees for overdrawn accounts, then why don't the banks charge say £500 per year for a bank account. If you remain in credit for the full year and pay in your salary (or £1500 per month), then they could give you a bonus of £500 back at the end of the year. If you do not pay in your salary or go overdrawn just once, then you lose your bonus. That would not be paying over the odds to go overdrawn, since it would formally cost nothing to go overdrawn.

    Assuming you earn over £1500 per month?

    If banks can't make their money from everything else, then they shouldn't be in business, but since charges bring in a few billion to the industry a year, and the biggies make £9bn a year or so each anyway. (RBS £9bn, HBOS £5.7bn, really I think they'll survive.
    for more info check out www.consumeractiongroup.co.uk . You'll find me there.
    New Year's Resolution: Post less unnecessary posts. (and that was 2007)

    yes, I realise I may appear cold and heartless a lot of the time.
  • JS64 wrote: »
    Could you give me an example of this "choice" of how to pay the company?
    Sky Digital, Mobile phone contracts, Internet Service Providers and others only accept Direct Debits. On the few occassions when I have not had sufficient funds in my account(not due to overdraft!!) and have had to phone and pay by debit card I have had an admin charge added at a later date.
    Believe me, if I could pay everything with cash, Postal Orders, or Bank Giro slips I would.

    I was thinking of utility companies - gas, electric, water, etc. Nearly all these type of companies will give a discount for using DD. If there was a fee, then they would stop giving the discount.

    If there was an extra fee associated with a DD, it will be you that pays it, not the company. If you don't want to pay with DD for things like mobile phone contracts, then use an alternative - eg. use pay as you go with a cash top up.
  • GiveItBack wrote: »
    If banks can't make their money from everything else, then they shouldn't be in business, but since charges bring in a few billion to the industry a year, and the biggies make £9bn a year or so each anyway. (RBS £9bn, HBOS £5.7bn, really I think they'll survive.


    Banks will always make money, same as any business.

    Banks want some people more than others, so they will price things according to things like how much income the investor will pay in. If someone regularly has their salary paid in, and invests this money in their savings account, then the bank will want this person. They can make money out of the person, so want to tempt them with free (or fee free) banking. Other people on lower salaries or who do not pay in their salary and do not invest in the bank are less attractive. Why should they get free (or fee free) banking, when they are not making money out of them in other ways?

    This then leads to the question of should a bank have to give an account to someone, especially if they cannot make money out of them? Is everyone entitled to a bank account? Is everyone entitled to the SAME bank account? Should someone saving large amounts with a particular bank get free banking while another that does not save with them have to pay on a per cheque / per deposit / per payment basis?

    If everyone should have access to a bank account, but the banks cannot make money from them, then why should other people subsidise their costs?
  • dchurch24dchurch24 Forumite
    1.2K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
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    There is also a HUGE point that has been missed so far.

    The Wages Act was changed in the 80's to allow Maggie's mates to more or less have a captive audience when it came to bank accounts.

    There was a time, when only the wealthy were 'allowed' bank accounts (how I long for those times!).

    Anyway, the wages act was amended in the 80's giving the rights of the employee to the employer with regards to how wages are received. This of course was welcomed by big employers. They no longer needed to keep huge sums of cash on site, and the whole thing could be automated and savings could be made. There were also other incentives from the bank that are of course now long gone in favour of making more money, now that everyone is signed up and they have a monopoly.

    All fine and dandy you might think - well, I don't, I have nearly managed to do completely without a bank account for about 6 months now. I just have one last cheque I need to pay into an account with my name on it and I'm nearly there.

    ...but I digress.

    The ECHR Act has a clause that stops any (local - i.e. member state government) gov. from passing legislation that forces EU citizens into buying third party goods or services.

    Now, if we have to 'buy' these services from banks, remembering that we cannot actually choose to not do so unless you have a very sympathetic employer, then we are in exactly that position.

    By way of monopolisation and legislation we have been forced into buying a third party service.

    I think the banks have opened themselves up to a whole lot more than just a bank charges issue.

    Corruption, EU laws, monopolies, price fixing...the list goes on.

    Even if they have friends with funny handshakes here, I can't see defending these sorts of claims being very cheap to do.

    Of course, for some reason, the QCs in the current case keep bleating on about how they will have to start charging every customer if they lose etc...

    !!!!!!??? What has that got to do with the legalities of their current charging regime? Nothing. So why bring it up in a case about it. Why? Simply to garner public support from the people that don't have these charges.

    So, if they lose this case, they will have to make a commercial decision as to what they do with their 'banking model' - so what? What has that got to do with whether or not the UTCCR is relevant?

    Their other argument was that a law passed in 1999 supersedes existing CASE law. Nothing can do that - another mis-direction.

    Their whole argument seems based on half-truths and mis-direction.

    If the Wages act reverts to it's pre-mid 80's state, then the whole issue of bank charges becomes moot. People who are being ripped off will simply not use a bank any more.

    If I don't like the price I pay in Dixons for a DVD player - I simply don't buy it. We need that choice back when it comes to THESE services. Only that way can we have true competition back in the banking sector.

    At the moment, all a bank can do is to poach customers from other banks. There are very few new bank accounts that they can make money from, and they all operate in much the same way - (substandard service - it's cheaper that way, and usually mistakes will end up with them having more money from you as it's so much hassle to fight to get that 20 or 30 quid back due to the aforementioned substandard service.

    With that in mind, they really don't have to compete as the same old customers are being passed around from bank to bank slowly realising that they are all as bad as each other - and yet, when all banking options are exhausted - there is nowhere else to go. You HAVE to have a bank account as your employer has said so - despite the fact that legally the money is yours - you earned it, yet you do not have the choice of how you receive it, and thus are pushed into buying a substandard service that you may not want.

    This situation is exactly the reason that particular clause was put in the ECHR Act; and as usual it's ignored by our government (when it suits them), and like most other laws, ignored by British banks.
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