Written by John Kruse, one of the leading experts on Bailiff Law, this consumer friendly guide is essential reading for anyone who comes into contact with a bailiff.
The book is easy to understand and clearly explains the rights
a bailiff has, and also what they cannot do when collecting debts and repossessing goods etc.
It shows that Lloyds TSB charge £0.27p to process a cheque credit, £0.70p to process a manual credit (ie cash) and £0.30p to process a standing order or direct debit.
If it only costs this much to credit, why does it cost £30-35 to refuse a direct debit?
As I work in accounts I got the last set of filed accounts for Lloyds TSB (they are in the public domain and available from companies house online for a £1) and came up with the following:
The letters that are issued by Lloyds TSB in respect of charges are automated, as can be seen by the standardisation of their style and the printed signatures. Also, in various interviews members of the banking profession have stated that the banks now operate automated systems.
Therefore I intend to show what can be assumed to be the real costs of such letters, based on the latest filed accounts for 2004, and the costs of equipment and premises are £400,000,000 as shown in the accounts.
If I estimate that from the UK population they have 6,000,000 consumer accounts, then this represents some 10% of the population, a reasonable figure I believe for one of the leading banks.
Again assuming each account has a 2 page statement each month (the average may be higher), and some 20% of these accounts default resulting in 1 letter per month, then the automated system generates 216,000,000 pieces of paper each year.
As the bank holds £ 94,138,000,000 in customer accounts, if these were all consumer accounts then the average would be £15,000 per consumer. This seems high, and therefore if the average consumer account holds a credit balance of £ 3,000 then only 20% of the equipment and premises costs relate to consumer accounts.
On this assumption
Costs from equipment and premises for each piece of paper is £ 0.37
Add to this the cost of an envelope £ 0.01
and then the cost of postage (2nd class) £ 0.27
Total £ 0.65
But if we look at a more realistic model where 20% of consumer accounts are overdrawn in default then the average amount held by a consumer could more realistically said to be £ 1,000 then the costs would be as follows:
Costs from equipment and premises for each piece of paper is £ 0.12
Add to this the cost of an envelope £ 0.01
and then the cost of postage (2nd class) £ 0.27
Total £ 0.40
Against these costs for a default letter customers are charged £30 for notifying them that an automated process, ie the refusal of a direct debit, has taken place.
If this is considered a charge for a breach of contract then it should be regarded as a penalty as it more than covers any true cost to the bank. If on the other hand it represents a charge for a service, then it can not be deemed to truly reflect the costs of the services with even a 100% mark up and is blatant profiteering.
Lloyds Actual Costs
TSB charge £0.27p to process a cheque credit, £0.70p to process a manual credit (ie cash) and £0.30p to process a standing order or direct debit
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