H.O.L Test case appeal. Judgement Declared. ***See Announcements***

[alanfromderby]

Just to add my 2p's worth - I believe the bank has a right to cover its costs of bouncing a DD etc.

 

It is also worth noting that none of this would ever have happened if the banks had simply charged a fee of maybe £5 - maybe even £10 would have gone unchallenged. But, of course, the banks got greedy as they realised that these charges were an easy way of padding out their balance sheet and meeting the spiralling annual bonuses.

[car2403]

Your only possible argument is that the bank had standing instructions not to let your account go into the red.THIS WAS THE SITUATION....

problem arose when they returned a cheque i had paid in with a single line statement account terminated and returned with it was the cheque i had paid in on the previous friday.....

patrickq1

 

My issue with this is that the Bank chose to pay these cheques, when they know the funds were not available and the agreement had came to an end, thereby putting themselves in a very silly position if you choose not to repay that amount.

 

They could have just returned the cheques refer to drawer - the fact they've paid it, to increase your indebtedness to them, is irresponsible lending.

 

Lets not forget that any decision to pay/or not pay is a lending decision, based on an algorithm designed to enrich the bank as much as possible with profit.

 

It's this that surely makes the system unfair - after all, a common definition of insanity is to do the same thing over and over again and expect to get a different result, yet each time a payment is presented, the Banks apply differing lending reasoning on whether to process it - and charge - or whether to return it - and charge. It's win-win for the Banks, lose-lose for the consumer.

 

What we're losing track of, in this technical discussion surrounding the legal reasoning on whether they can/cannot do what they do, or whether it is/isn't fair, is the damage done to the reputations of this institutions - whatever the outcome, public perception of what they are trying to achieve is firmly swinging against their favour. The legal mumbo-jumbo will be the price they pay and if the Lords are at all in touch with public opinion, they will get a serious spanking to boot - if they don't, they still can't carry on as they have been doing so far. If only this was France, we'd have blocked the ports and brought the Government to it's knees, by now!

[patrickq1]

my sentiments excactly car....

If only this was France, we'd have blocked the ports and brought the Government to it's knees, by now!

we are a nation of cowards afraid to rock the boat......we allow other nations to trod all over us yet we can go to afganistan and iraq and bomb defencles countries only because we got the americans backing us....

different story when the goverment cowers to the likes of iran and north korea double dealing goverment standards....it makes you wonder wether pressure on the law lords will be brought to bear on them by the goverment bankers after all half the banks belong to the nation...or should i say to Mr Brownstuff

i will get of my chair lol

patrickq1

[InformedSearcher]

D/D's & S/O's & O/D's are automated as are the charges that are levied. Depending on what type of account you have determines the levels of automation. Banks have paid literally many millions for bespoke software to operate it all. Inbuilt into the software are levels of access for staff of varying categories.

Staff normally employed overseas (who are more often than not) take the brunt of 'un-nice' calls. They are trained to be impervious to reasons and excuses and normally have little access to change anything. One should consider that a single fee by a bank is normally more than they are paid in a week! Their normal question after you have lost your temper and in total despair is 'So how much will you be paying today sir (or) madam?'

Most overseas calls are actually listened to later so that means two people per call. If like me you keep 'em going for an hour a time it kinds of gets frustrating to them - Meaning a good job I love the phone! hehe

Banks also probably have levels as in UK or overseas calls dependant on 'potential loss'. In my case with HSBC I'm almost 4 months with no payment and £22k+ still outstanding. My words such as 'I have no money' might as well be 'I am a multi millionaire' for all it does. After 6 full points (as in 6 full paysments consecutively unpaid) it'll go to collections and default. Currently one must understand that nothing can stop it, all the arguments and whatever is irrelevant and the clock continues to tick!

Phew I could go on but all I can say is I hope they lose big time!! I have tried every way of being exceptionally business like to downright p***ed off to no avail. I hope in the end the OFT does not do the vountarary thing of like let 'em charge £12 but more like £2.50 which will allow for their systems to be paid and leave some profit. One serious point is that AFAIK all banks have monthly ceiling of charges - This I hope will be reduced to say £25 per month - This is just a personal view. I hope the banks do have problems in refunding monies as their IMHO (Edit) it all so easily. It's simply not our fault that they tried 'sneaky' tactics to get out of things by both terminology and their blindness to what should be the inevitable. I guess the OFT thought it wise to say they would fight on if they lost however I think 2 years to get to a decision is absolute stupidity - Having said that it took long enough for Poll Tax to be changed (and not for much better).

Michael

Edited July 5, 2009 by ukaviator
Libellous word removed

[MARTIN3030]

Does the bank have the right to levy a charge for returning a DD/SO unpaid?

My answer is Yes the bank does have the right.

 

 

* please note that I have not indicated what a fair fee is or commented on the current state of play in the OFT test case.

 

 

So since you have asked the question and had a few replies....maybe you can also tell why you asked the question and what is your thinking ?

 

On a different point-you spoke about posters on MSE and about them taking rubbish?

You should know that on public forums you will get a wide range of opinions-they merely write what they think.

They were not privy to the information that you had.

[Bookworm]

Can't believe I am siding with YB on this one, lol.

 

That thread on MSE is purely about: "the charges system is fine the way it is, if people looked after their money better they wouldn't get charges, why should I pay for their carelessness?"... It's got nothing to do with inner knowledge, it's got to do with total ignorance (in both the lack of knowledge and the bad manners senses). ;-)

[the_shadow]

I too agree with YB's assertion that we should be charged... but only when provable and quantifiable COSTS occur.

 

I really dont think HSBC charging me £125 when I went overdrawn by £5 was justified and a true indication of their costs. However if it cost them say £1 to process this information and send me a letter then fine, I would pay that £1.

 

S.

[Bookworm]

Do you think the bank has the right to charge for returning a standing order or Direct debit?

 

I too agree with YB's assertion that we should be charged... but only when provable and quantifiable COSTS occur.

 

I really dont think HSBC charging me £125 when I went overdrawn by £5 was justified and a true indication of their costs. However if it cost them say £1 to process this information and send me a letter then fine, I would pay that £1.

 

S.

2 different situations, I think.

 

The question YB asked is much more specific, he only mentions returning a s/o and/or d/d.

 

To that question, I would (after thinking about it for the last couple of days) after all say NO.

 

The process is automated, and if they just bounce the payment, they have incurred no costs, they have provided no service to yourself. Therefore, they have no justification for a fee. It goes to the heart of what I have been going on (and on and on and on) about the need for zero tolerance. Set the limit at £0 above your existing agreed overdraft. If you go over, it automatically bounces. If it embarasses you at the supermarket you or the pub, tough, you should have thought of that before, it most certainly isn't the bank's problem, they're not your guardian angel or your moral guide (thank goodness for that!). You wouldn't do it with cash, what makes you think it is ok to do it with a card? I'll tell you what does, the bank does. It has allowed you to go over time and time again until you have become accustomed to it and expect it every time. But then like any drug dealer on the make, once it got you hooked on it, it exacted the price and it got higher and higher until it took precedence over everything else. Sounds familiar?

 

Getting away from main point here (I'm a bit on a rant'n'roll this morning, lol), but in conclusion, I'd say that no, the banks don't have the right to charge you for bouncing something. My response might be different if you expand the query. ;-)

[Bookworm]

Oh, for goodness sake, YB, now you have got me started again on MSE, and I had been sooo good at staying away from those morons!!!

[Stornoway]

The process is automated, and if they just bounce the payment, they have incurred no costs, they have provided no service to yourself. Therefore, they have no justification for a fee. It goes to the heart of what I have been going on (and on and on and on) about the need for zero tolerance. Set the limit at £0 above your existing agreed overdraft. If you go over, it automatically bounces. If it embarasses you at the supermarket you or the pub, tough, you should have thought of that before, it most certainly isn't the bank's problem, they're not your guardian angel or your moral guide (thank goodness for that!). You wouldn't do it with cash, what makes you think it is ok to do it with a card? I'll tell you what does, the bank does. It has allowed you to go over time and time again until you have become accustomed to it and expect it every time. But then like any drug dealer on the make, once it got you hooked on it, it exacted the price and it got higher and higher until it took precedence over everything else. Sounds familiar?

 

;-)

 

I'm waiting on about £12k in refds which are stuck at court or with the FOS. I could really do with the cash but I guess we could be looking at waiting for at least another year.

 

I do actually think that a charge is justifiable in principle (albeit maybe not in law!) and I dont have a problem with this being say £5 but any more is just ripping us off. The charging system just sums up for me how greedy the banks got in the last few years. I've paid off a lot of debt in the last couple of years but in the bad days I had a half dozen credit cards near their limit and if you miss payments one month then each would charge you £25 for the missed payment plus £25 for over limit and if you then have a couple of indiscretions on your current account you could be looking at another £100. It was just absolutely crazy and I really hope the banks get a proper "shoe-ing" now.

 

On Bookworms point above this doesnt quite work in all situations because many shops have floor limits where debit card payments arent checked for funds - so the payment would go through automatically and could result in an O/D.

[Stornoway]

PS: I accept YB was only talking about S/Os and DDs...

[JonCris]

I'm waiting on about £12k in refds which are stuck at court or with the FOS. I could really do with the cash but I guess we could be looking at waiting for at least another year.

 

I do actually think that a charge is justifiable in principle (albeit maybe not in law!) and I dont have a problem with this being say £5 but any more is just ripping us off. The charging system just sums up for me how greedy the banks got in the last few years. I've paid off a lot of debt in the last couple of years but in the bad days I had a half dozen credit cards near their limit and if you miss payments one month then each would charge you £25 for the missed payment plus £25 for over limit and if you then have a couple of indiscretions on your current account you could be looking at another £100. It was just absolutely crazy and I really hope the banks get a proper "shoe-ing" now.

 

On Bookworms point above this doesn't quite work in all situations because many shops have floor limits where debit card payments aren't checked for funds - so the payment would go through automatically and could result in an O/D.

 

Why is it justifiable? it costs them little about 41p if that Also the 41p I quote is for manual intervention so the cost of electronically rejecting payment must be infinitesimal & hasn't enough damage been done defaulting the payment without adding further to the consumers woes.

[kennyh]

Hi JonCris,

it costs them little about 41p if that Also the 41p I quote is for manual intervention so the cost of electronically rejecting payment must be infinitesimal

It's been some years since the beans of the Yorkshire Bank were spilled- is this figure from that exposure or from another source?

[JonCris]

Competition Commission investigation of NI banks

[noomill060]

@YB

[gillypam]

for goddness sake we all except that we have to pay something but not £38 a time.they wont to get it sorted out once and for all.

[Aretino]

My bank charges a monthly £12 fee for running my account, I cannot go overdrawn, if an unexpected payment is presented to them and there are no funds in the account they refuse payment but there is no charge to me for doing that, and why should there be, it has cost them nothing, just a computer program that says "yes" or "no" to a payment being made. All transactions are immediate so if I buy something off the internet or at the local supermarket, the payment is immediatly taken from my account, none of the 3 day overlap that lets you think you have money that you don't lol

[InformedSearcher]

I too agree with YB's assertion that we should be charged... but only when provable and quantifiable COSTS occur.

 

I really dont think HSBC charging me £125 when I went overdrawn by £5 was justified and a true indication of their costs. However if it cost them say £1 to process this information and send me a letter then fine, I would pay that £1.

 

S.

 

With respect can you show us all details of this? HSBC charges are £10 for under £10 and £25 over that. Their limit is £150 per month in total (plus oddments). Whilst I have great objections to HSBC I cannot believe they did that to you.

Michael

[InformedSearcher]

Gentlemen (and ladies),

I am the first to dislike charges - I am expecting over 3k from their eventual payouts. I know there s a cost for even automated procedures. I am surprised that someone knows that it is 41p? However it is actually more than that in reality as in the paper, envelope and postage will wipe that out. Okay, I would ask why tell/send this and I think this reflects the CCA of 1974 (amended so many times). Banks are not registered charities although I know they wish they could be!

The real cost is nearer £1.25 baring in mind that the software is not free. IMHO a charge of £2.50 would seem adequate. I know the banks would argue that cumulative costs of investment of various other incidentals would suffice a larger charge however making a profit is not the same as 'ripping people off'.

Michael

[yourbank]

For comparisson to the Ireland investigation there is also The South African Competition Commission report which gives an overall cost figure of 30p for bouncing a direct debit.

 

Nevertheless, on savings accounts, FNB reported a transaction cost of R1.80 per successful debit order, while Nedbank reported a cost of R1.42 per successful debit order, compared with the cost of a rejected debit order of R4.18 and R4.88 respectively. These values bear no evident relationship to the fees charged per debit order and rejected debit order on, for example, the FNB Smart and Nedbank Transactor accounts.

 

SACC visited our OFT in March 2006 whilst working on their report.

[Bookworm]

But surely, part of that cost is down to stationery, franking etc? Is that necessary?

 

We need to have a better grip on our accounts, no doubt about that, and I don't think it is up to the bank to nanny us. I don't believe there is the need for a letter telling you your DD has bounced (which you'll receive at least 3 days after the event anyway) when anyone who checks their account daily will know this anyway. For a lot of people, an automated e-mail if anything would do it, more and more people are opting for paperless bills anyway. Yes, I know not everyone is on the Internet, but regardless, is there anyone here who thinks those automated letters fulfill any actual need? Get rid of them, and most of that 30-41p cost is gone.

 

And what would be so wrong in absorbing the rest of those few pence in the general overhead costs? The bank absorbs far more in trying to entice us as customers. Glossy leaflets, new uniforms, giveaway pens. I tell you what, Barclays, scrap the DD charge and keep your pens! ;-)

 

But it doesn't work like that. It is a two-pronged thing: the charges are there to make them a substantial profit, which is deemed both unlawful and unfair, and used to prop up the "free in credit" scheme (although there ain't such thing really), which is the principle of the poor subsidising the rich, which is immoral. Either way you look at it, the system is not defensible, and the banks know it.

[Conniff]

But surely, part of that cost is down to stationery, franking etc? Is that necessary?

 

We need to have a better grip on our accounts, no doubt about that, and I don't think it is up to the bank to nanny us. I don't believe there is the need for a letter telling you your DD has bounced (which you'll receive at least 3 days after the event anyway) when anyone who checks their account daily will know this anyway. For a lot of people, an automated e-mail if anything would do it, more and more people are opting for paperless bills anyway. Yes, I know not everyone is on the Internet, but regardless, is there anyone here who thinks those automated letters fulfill any actual need? Get rid of them, and most of that 30-41p cost is gone.

 

And what would be so wrong in absorbing the rest of those few pence in the general overhead costs? The bank absorbs far more in trying to entice us as customers. Glossy leaflets, new uniforms, giveaway pens. I tell you what, Barclays, scrap the DD charge and keep your pens! ;-)

 

But it doesn't work like that. It is a two-pronged thing: the charges are there to make them a substantial profit, which is deemed both unlawful and unfair, and used to prop up the "free in credit" scheme (although there ain't such thing really), which is the principle of the poor subsidising the rich, which is immoral. Either way you look at it, the system is not defensible, and the banks know it.

 

That is a cruel post bookie, you are attempting to reduce pensions and bonuses for the top men when you know (because you have been told by them), that to attract top men you have to pay top wages.

We need these top men, who else could have brought about this crash.

[Bookworm]

*Bookie hangs head in shame*

[photoman]

The initial question of whether the banks have a right to charge for returning an S/O or D/D is also intertwined with the question of whether they have a also right to charge if they do clear them?

 

If the clearing of such is done at no cost to the consumer, and the two go through much the same process (i.e. the same resources and infrastructure), then the refusal should be without charge too.

 

On the other hand, if you agree that there is a right to charge for refusing, (even just at cost), then the argument then raises the issue of whether the clearing of such should also be charged.

 

You see where I'm going here?

 

There should be a parity of cost for two.

If you feel that there is a right to charge for one, then the same applies to the other.

Likewise if you feel one should be free, then the other should be too.

 

Agree that there is a right to charge for refusing one, with no clearly demonstrable additional cost over the other, only leads to the question of whether the other should be charged for too ?

 

Thus raises the ogre and threat of an end to "free" banking.

[Bookworm]

I'm not so sure, PM. After all, we don't get charged for a cheque clearing without problems, yet see what happens if it bounces.

 

Likewise, it could be argued that a payment that is let through then generates additional borrowing, and therefore costs the bank more (Yes, I know that it isn't the case, I am just going for devil's advocate here) and that they do at that point in fact provide a "service", for which there could be a reasonable charge made, whilst bouncing a DD provides no service at all. That is why I made the distinction between boucing, for which I don't think there should be a charge, and letting through.

 

What it boils down to is my old warhorse, which I have been trying to explain on MSE with no great success: zero tolerance on overdrafts. If you have it, it goes through (at no additional cost, as now) if you don't, it doesn't, at no cost. You don't have the money? Not the bank's problem, it never was.

 

Yes, there'd be kinks to be ironed, such as delayed payments (from abroad for instance) etc, but I don't believe that in this day and age of electronic communications, it would be such an issue. After all, up to last year, the banks insisted that it took 3 days for electronic payments to reach their destinations until they were made to introduce APACs and faster payment and now, the money is transferred instantly. If it can be done from bank to bank, I would imagine it can be done through the whole financial infrastructure.