How much is a fair reflection of costs?

[Spiceskull]

And what about public bodies? I realise that it is our own money anyway, but consider someone like the local council - Penalties for late payment of council tax? No. Penalty to send a reminder letter for this? No. Payments for reminder letters for renewal of resident parking permits? No. etc.

 

These things all require manual intervention, and no doubt have to be 'signed off' from a senior manager. And the word penalty doesn't even get mentioned (unless authorised by a court or by law...)

 

And before someone mentions 'ahhh, but the ts & cs' - you have to remember that a public body would be more than willing to prove its case in a court, and to demonstrate that their rules were lawful...

[seylectric]

DON'T get me going on local councils! In my fight against (it seems) just about everything these days, the council are enemy number one.

 

Just got my Residents Parking Disc renewal notice. 10 quid. OK not a fortune, but I have several questions I need answered by the council.

 

1. Five years ago when the scheme started it cost 4 pounds. We were told at a public meeting that it was to cover the cost of the signage and line painting.

 

Five years on, parking fines are now in council, not police as was then, control. EVERY council in the country are making a profit from parking fines.

 

So why do we now have to pay 10 pounds for our parking permit?

 

2. Other roads in the town are free-to-park (and so they should be). I pay the same council tax, why should I have to pay a premium to park outside my own house?

 

3. "Purchasing a parking permit does not guarantee you a parking place", so say the council's T&C's. HUH? So I'm paying for a service they can't guarantee to provide? Isn't that a bit like walking into Currys, paying 500 quid for a new TV, then the salesman saying, "Yeah, but we can't guarantee you are going to get your telly..."

[cheddar]

A reminder or summons for non payment of Council Tax doesn't require any manual intervention (not where I worked anyway). It was purely automated. And the only extra charges you got were the summons (approx £50), court costs (£3) and if you couldn't pay in full before the hearing a £10 Liability Order which means the courts give the council permission to get the money back via deductions in benefits/wages or bailiff action.

[Che]

My gripe with charges is the cost of them, in most cases those who incur charges are probably in some financial difficulty whether it be short or long term and personally speaking I think rather than kicking a dog when its down and putting excessive charges onto an A/C which in turn gets people in a cycle of charges, a charge that covers the cost of the banks informing customers of the problem should be levied and thats it.

 

Surely happier customers will in the long term provide more business and money for banks if they are happy with the level of service etc?

[Snorkerz]

costs should be based on the loss. if you run up an overdraft of 100,000 you pay 30 quid, if you run up an overdraft of 1p you pay 30 quid. thats INSANE.

 

 

The interest incurred takes account of the difference between the two amounts - and interest is legal.

 

1p or £100,000, the letter, stamp etc still cost the same. I recon a pound per letter but maybe allow the banks to send out these 'reminders' at a set frequency.

[seylectric]

My gripe with charges is the cost of them, in most cases those who incur charges are probably in some financial difficulty whether it be short or long term and personally speaking I think rather than kicking a dog when its down and putting excessive charges onto an A/C which in turn gets people in a cycle of charges, a charge that covers the cost of the banks informing customers of the problem should be levied and thats it.

 

Surely happier customers will in the long term provide more business and money for banks if they are happy with the level of service etc?

 

Agreed. I have several issues with the banks. For example the Banking Code, (voluntary but apparently followed by all the major banks) states, "14.1 We will consider cases of financial difficulty sympathetically and positively.", and "14.2 If you find yourself in financial difficulties, you should let us know as soon as possible. We will do all we can to help you to overcome your difficulties."

 

So what part of charging you £38 for a failed direct debit due to insufficient funds is "doing all they can to help..."

 

It becomes a total farce when the direct debit was for less that the actual bank charge, or you were only a few pence short. It certainly doesn't tie in with the banking code, that's for sure.

[Che]

Agreed. I have several issues with the banks. For example the Banking Code, (voluntary but apparently followed by all the major banks) states, "14.1 We will consider cases of financial difficulty sympathetically and positively.", and "14.2 If you find yourself in financial difficulties, you should let us know as soon as possible. We will do all we can to help you to overcome your difficulties."

 

So what part of charging you £38 for a failed direct debit due to insufficient funds is "doing all they can to help..."

 

It becomes a total farce when the direct debit was for less that the actual bank charge, or you were only a few pence short. It certainly doesn't tie in with the banking code, that's for sure.

 

As I said in my thread re the halifax i spent 40 mins on the phone to them this morning and I asked them why they had applied a charge without notifying me they send letters are ONLY sent out as a courtesy and they don't need to do it, Isaid applying yet another charge to my account when it was finally in credit albeit by £10 is a joke, I'm trying to stop the cycle of overdraft charges and they are firing them on faster than you can say magic!

[seylectric]

It's also ridiculous that you must be given 14 days notice by the company concerned of an outgoing direct debit, yet the banks can add charges without prior warning. Talk about double standards!

 

They insist on filing all your details including your phone number, is a courtesy call too much to ask? Obviously it must be.

[gumbodave]

"14.1 We will consider cases of financial difficulty sympathetically and positively.", and "14.2 If you find yourself in financial difficulties, you should let us know as soon as possible. We will do all we can to help you to overcome your difficulties."

 

I know certain banks do the exact opposite, fobbing off any customers that are in financial difficults and taking advantage of them. In my work (a debt charity) a see examples on an hourly basis of how banks have exploited people with no regard for their 'difficulties', from Lloyds charing £10 a month to keep people on their Gold accounts for months or years after the accounts have been effectively frozen, to breaches of Data Protection laws and harrassment. When they say they will do all they can to help overcome difficulties, what they mean is they will do all they can to make sure they get as much money as possible out of people before they go bankrupt.

 

The OFT seems to have at last taken some steps towards at least reducing the charges banks etc may charge, but they seem to be looking at a figure of between £12 and £15... still not really a fair reflection of the costs I am sure.

[Nads]

I read an article in the Sun yesterday which stated that the banks have been given until 31 May to decided whether £12.00 is acceptable to them.

 

Factly, it's not acceptable to me, that is still to high. Exspecially when you are being telephoned and written to constantly about your account being overdrawn and charged for the priviedge even though you have informed then of your situation in person, by phone and in writing. £12.00 is definiately to much!!.

[seylectric]

Agreed. And how they can justify charging you for sending a letter to tell you what you knew already is beyond me.

[thegoodsamaritan]

ok own up who said £20 lol!

 

At RBS we only send a letter for the 1st charge ever on the account. Therefore assuming that everything else is actually automated the total charge to the bank in future would effectively be ZERO! (Unless you take into account costs involved in setting up the charging systems in the first place and split them equally between chargees but even still there are that many charges the cost to each person would be minimal)

[fallen404]

I got an "advance notice of charges" in the post yesteday. Of course, none of the instantaneous charges were on there, but another £28.00 charge for being over my o/d limit was. £28.00 for my going £10.54 over my limit, and them sending me 2 sheets of statement paper second class to inform me of that. I don't think the stationery and postage even cost 28p. I'd probably be happier if they were only charging £12.00 a time, as well as following the rules about 14 days' notice, since I would then have incurred about £50.00 of charges this month, and wouldn't have been charged the over limit fee, or the "card misuse" fee that they slapped me with on the 10th/11th.

 

I'm pretty sure that I remember some banks saying they wouldn't charge you if it was their charges that put you over your limit. I'm not sure how they work this, but presumably it's only if the final transaction that kicks you over your o/d limit is a bank charge, rather than the fairer and more logical way of subtracting the charges from the last 30 days from your balance, and using that as your "actual" balance.

[Spiceskull]

If the charges have not yet been applied, you could try this:

Dear Sir/Madam,

 

I find myself in the position that your actions require my intervention for the [HOWEVER MANY] time in the space of a few days. I am seriously reconsidering my view that [bANK] has the capacity to act as my fiduciary in a responsible and lawful manner, as implied by the terms and conditions between both parties.

 

This morning I received a statement from [bANK], stating their intent to unlawfully apply penalty charges to my account on [DATE]. These charges are to the sum of £XX, as well as an interest penalty of £X.XX for the 'privilege' of this unlawful action being undertaken.

 

As you are aware, I have asked you to demonstrate to me that these punitive charges are fair and just, that they are lawful, and that they are being lawfully applied. You have failed to demonstrate this to date, and therefore it is implied by your refusal or inability to supply such demonstration, that these penalties are, indeed, unlawful.

 

Therefore, I would draw your attention to the following point: you have stated that these charges will be applied on [DATE]. If these charges ARE applied, then you will be required to explain why you have, in my view, committed a pre-meditated breach of the law, and I will be reporting such breach to all of the relevant authorities.

 

However, as this has not yet happened, I require that you take action forthwith, and cancel this transaction prior to its execution. Furthermore, I require confirmation, in writing, that this transaction will, indeed, be cancelled.

 

I shall be checking my account on [DATE], and if I see that the penalty charges, plus interest, have been unlawfully applied to my account, I shall lodge a claim at the county court to recover these charges, plus my costs and interest calculated at 8% APR, without hesitation. Furthermore, I shall require that you confirm whether these unlawful charges have resulted in a default notice against my record with credit reference agencies, and if so, I will seek appropriate action to have this notice removed.

 

In view of my first paragraph, and considering your apparent incompetence to act as my fiduciary in a lawful manner, I will start to consider a course of action whereby I may seek redress for all the inconvenience you have caused me.

Whilst the bank was not able to to prevent the charges going through, capitulation was instant after the event...good luck.

[Movingon]

I have noted that the interest rate on "borrowing" goes up astronomically when you exceed your overdraft limit. So from 14.9%pa it goes up to 28.9%pa for instance. This to me is a fair and reasonable pre-estimate of loss, and I have no difficulty paying it. However, I'm still extremely confused as to how it is possible to INCUR an "unauthorised" overdraft. Errm - in what way is it unauthorised? YOU PAID THE ITEM!! If it would exceed my limit, re-try the item when there are funds in the account. If necessary write me a letter to advise me of this; and I reckon £2-£5 would be a fair charge for this advisory service. Let me clarify: an item (be it cheque, direct debit, standing order) cannot be paid without exceeding the o/d limit. This item is then flagged up to a person who diarises a "watch" for funds going into the account and kicks off a standard automated letter. Once sufficient funds enter the account, he pays the item and issues the charge. If sufficient funds do NOT enter the account, further action - i.e. "Manual Intervention" is then required which can be charged as a further service but which the defaulter is invoiced for in full - including details of all parts of the service provided and their costs.

 

An authorised overdraft limit should be just that - a limit - NOT a threshold.

[thewifeandI]

Surely if all the banks are issuing roughly the same schedule of charges, and those charges are known to be unlawful then there must be a cartel in operation otherwise one of them would break ranks and undercut the others. :o

 

I'm in agreement with Bookworm on the charges - I think that the premium they make on the excess overdraft interest more than covers the miniscule cost of processing. I'd still be happy to pay a £1 - £1.50 charge for stopped payments to cover the bank's costs - this still gives them a profit margin and helps to offset the cost of providing 'free' banking services. I would be far happier as well if the bank just stopped the payment without charges when there were insufficient funds and left it to me to sort it out.

 

I also agree with the opinion that if the bank allows a payment out of your account (whether it is making a payment that exceeds your limit or deducting a charge) when it is already overdrawn, then the overdraft on the account once the payment has been made IS authorised. By letting the payment go out they are authorising the new balance.

 

Cheers.

[BigFatGreedyBanker]

IMO opinion with the level of automation involved the cost of the actual breech itself is absolutely tiny and the excess OD interest would more than pay for this.

 

They would have fine tuned the process to such a level (as with everything else they do) that it would eliminate virtually all cost.

 

Whats more interesting is what will happen when they can no longer over charge for this and can only charge what it costs them. The incentive to "optimise" the process to make it as cheap as possible will no longer be there for them as they will be making no profit from it.

[seylectric]

Good thread to bring back up. my vote, had it been possible, would have been NIL. Why? Well how about the interest they make on YOUR money e.g. 10 days (in some accounts) to clear cheque - why does a Gold type of account clear them in a couple of days and a basic bank account take 10 days? Are they seriousl;y trying to suggest that in reality it takes longer to clear a cheque depending on the type of account you have paid it into? You pay a cheque out and it can show as clearing your account in as little as 48 hours but it mysteriously ALWAYS takes 10 days to clear when you pay it it.

 

So you pay me a cheque for say £100 and I pay it in immediately. It clears your account in 2 days but takes another 8 days to clear mine. Where's the money for those 8 days then?

 

Transfers between accounts (even those held at the same branch) taking 5 days - where's the money - MY money - inbetween then?

 

So the banks are making vast profits in interest on OUR money by NOT crediting it to our accounts until the time they stipluate it will take the cheque to clear, NOT when they actually get the funds. Why then, should they charge us when we are using their funds? Should it not at least be offset against the profits they have tactically made from OUR money? This in my opinion would bring the cost down to zero, or less...

 

Remember in the case of a failed direct debit they are charging up to £39 when you may have only been pennies short in your account (and might not have been short at all had they cleared that cheque sooner). So a £10 d/d fails because you only had £5 in your account. But you go £34 overdrawn because they charged you £39 for the failed d/d. Then they charge you excessive interest on that!

 

So OK, you have incurred a charge. Why not leave the £5 in the account and send you a seperate bill for the £39? They would then have to go through the court process to claim it back if you didn't pay, NOT automatically be allowed to take it out of your salary or benefits - no other business is allowed to take money out of your wages without an Attachment of Earnings order or something like that so why are banks allowed to do it? After all, it's not money (in this example) that they have borrowed you, it's charges that they have imposed on you - their choice to do it this way! Surely it can't be legal especially in the case of state benefits where the law determines how much you need to live on and grants you that money.

 

They take the money from you without a court order, they have made billions over the years much of which will not be claimed back, so why should we pay anything for the next two decades at least?

 

Don't forget that there are fat cat directors out there on private yachts, and we've been funding it for years. Now we are talking about fair charges? How about we all work out how much we have lost in time, lost interest for long clearance times - and profits made by the banks with those funds, stress trying to make ends meet while the banks were fleecing us, the only "fair charge" would be to have them all locked up for THEFT while we all struggled to get by, with free banking for us and a decent compensation package.

 

We should even have to fight this, they have been charging us ILLEGALLY for years and EVERYBODY should AUTOMATICALLY be compensated.

 

Sorry about the rant but the whole thing disgusts me.

[joneshousehold]

Did anyone notice the little aside mentioned in the news reports about the BACS system failure over the weekend. It was to do with the fact that some people didn't get their salary on Friday as expected. The banks said they would try to honour all DD that would have ordinarily be refused for lack of funds. According to the news report I read it said the banks are working hard to make sure the payments are honoured.

 

Now to my mind this is further evidence that the refusing of a DD instruction is a wholly automated process. If there was any manual intervention at all then there would be no extra work involved for the banks. It would be a simple tick in the 'pay' box rather than the 'refuse' box.

[dave]

This topic was closed on 03/07/19.

If you have a problem which is similar to the issues raised in this topic, then please start a new thread and you will get help and support there.

If you would like to post up some information which is relevant to this particular topic then please flag the issue up to the site team and the thread will be reopened.

- Consumer Action Group