What's unfair about charges?

[natwesttookmymoney]

"For any community to be balanced it needs an opposing view."

Hmmmm. I can grasp that, for any see-saw to be balanced it needs an opposing weight but I don't really get this 'opposing argument' argument.

Do the flat Earthers have to be given equal weight to balance conventional scientific wisdom?

I suspect you may have read only the tail-end of this exchange. Start from the beginning and you might get some idea of why this particular thread has got heated.

Legitimate argument is fine - have a look a the huge 'another way of looking at interest' thread and you'll see plenty of that. And it gets animated but there is a difference - and that's respect. This thread started out with much less of that and rather more contempt.

W

[Mindzai]

Agreed Westy that is a ridiculous assertion. Why does a community need to be balanced? Is your idea of perfection a world where half of the community are in favour of murder, child abuse, rape etc?

 

The reason this seems like you are in the minority is that you are in the minority. Most others (including the legal system) seem to be able to come to the conclusion that the Banks are at fault.

[GHM]

I prefer to be succinct, so I will just say that you are conceited.

Elsinore

 

The main thing is that you read it all and that you enjoyed it. The main thing for me is I learned a few things.

 

By the way, never one to assume too much I checked out "conceited" in the OED and the first three definitions are very complimentary so cheers.

 

I presume however you think I have a high opinion of myself. Hmm. Nothing quite like self loathing to improve one's esteem. You don't know me, I don't know you - that's why I don't throw judgmental statements around about people's personalities on the web (in the main). I guess you're a pretty good guy and I'll take that on the chin as it was meant.

 

I hope you check that out in the dictionary to see how the word evolved though unless you WERE being complimentary of course, but I'm not that vain to think you weren't.

 

Cheers,

GHM

[GHM]

The reason this seems like you are in the minority is that you are in the minority. Most others (including the legal system) seem to be able to come to the conclusion that the Banks are at fault.

 

You've misunderstood what I meant there. When I mentioned that the people here were in the minority I was referring to the sheer number of people claiming back their charges against everyone out there who could (and possibly just don't know they can). Clearly, those reclaiming charges are not in the minority on a site that evangelizes it and I have no problem with that.

 

I don't think I have stated that I agree with the banks' position. My question of "What's unfair about charges" was meant with the emphasis on the "What".

 

I was looking for information on what makes these charges unfair and how do we get to a fair way without removing the entirety of the banks' armoury to insist that people do run their accounts with the utmost integrity as far as they can: ie how do we get to a stage where we protect those who are the victims of circumstance rather than the cretins who don't give a damn and have no personal integrity or take any responsibility for the consequences of their actions.

 

Interestingly, I still haven't got very far on that particular point.

 

Perhaps if I'd worded it like that from the outset we'd have had a different discussion but I have a feeling it would have fallen flat like various other posts on this site have when members have tried to engage others in some discourse (not that that's true of ALL posts of course).

 

Unfortunately I find to get people talking you sometimes need to throw in a grenade and then walk backwards slowly - it works, it's not popular and you take a lot of flak but I've got thick skin and am excessively conceited and prepared for that.

 

If you prefer to think of me as a right wing fascist who'd have people on benefit shot at dawn then that's fine: it's just not true.

[GHM]

I suspect you may have read only the tail-end of this exchange. Start from the beginning and you might get some idea of why this particular thread has got heated.

Legitimate argument is fine - have a look a the huge 'another way of looking at interest' thread and you'll see plenty of that. And it gets animated but there is a difference - and that's respect. This thread started out with much less of that and rather more contempt.

W

 

And importantly, I'm not surprised it got heated (as explained above) but I do get a tad annoyed at people who want to deny me the right to say what I want when it's lawfully done. Seems you have good moderators on the site though.

 

Also, I didn't come here for an ego boost or "respect" I came here for facts and answers. Rough and smooth. You know what they say about Yorkshiremen (I hope).

[anon1]

GHM nothing is wrong with charges and I think no one on this site would disagree if the exceeded their overdraft and had charges or had a cheque bounced and a charge was levied. The fairness of a charge or the bank charging for a breach of a contract is not the issue. However, if the charge is not a true reflection of cost then it is profiteering and unfair. If the cost was say £1(which you stated in reply to myself) then there would be no legal challenges to charges but they're not. The charges exceed the cost to return them. The BBC2 programme, which i didn;t see, seems to have stated £4.50 is a fair-ish charge(not wanting to misquote them), so that would be a fair charge. I think it is a good debate on this thread but do you see where people are coming from? To reiterate the bank charging for a breach is not unlawful but the level of that charge is, do you see?

[GHM]

To reiterate the bank charging for a breach is not unlawful but the level of that charge is, do you see?

 

I do, but a quid (or even £4) is not a deterrent is it. Clampers have been advised that charges like £250 are not reasonable so they've had to reduce theirs to something more reasonable. I suppose they can justify theirs on the grounds that a chap has to come out and do some work whereas banks have automated systems but the clamping fee is as much about a deterrent as breach fee isn't it. Perhaps banks will have to send an agent to come round and reclaim people's cheque books and debit/credit cards charging them a clamping fee (I jest but you get the poorly made point).

 

I suppose the only thing left in the banks' armouries will be to increase the interest they levy on unauthorized ods and to find its customers in breach and start closing accounts etc. I just think it's going to go from expensive to something just as bad/ugly. I just don't know the ins and outs of the appropriate legislation to know whether the banks can do these things.

 

GHM

[PhantomReclaimer]

I do, but a quid (or even £4) is not a deterrent is it. Clampers have been advised that charges like £250 are not reasonable so they've had to reduce theirs to something more reasonable.

 

The charge is not alowed to be a deterrant - see the point I made above about being charges being used "in terrorem" of the other party. The only lawful reason for a clause like this to be used is to enable one party to recover it's actual losses from another in the case of the others breach of contract. A genuine pre-estimate of loss may also be used but it has to be what it says it is - genuine.

 

On the subject of clampers (and firms who issue "penalty" tickets). If they are operating on private land then the charge is similarly unenforcible, just as the charges levied by the banks are. They are just another charge for your breach of contract which are penalties as they do not represent actual loss. See my thread here; http://www.consumeractiongroup.co.uk/forum/parking-traffic-wardens/47349-parking-enforcement-agency-parkforce.html

 

Perhaps banks will have to send an agent to come round and reclaim people's cheque books and debit/credit cards charging them a clamping fee (I jest but you get the poorly made point).

 

They are entitled to ask for them back as they are the banks property.

 

It's very easy to prevent most of the breaches of contract mentioned here without having to use unlawful charges. The most obvious one relates to unauthorised overdrafts. The bank simply should not let you get into that situation at all. If they didn't pay cheques or authorise DD's, etc, beyond your limit it would simply never happen.

 

In all other cases if you are repeatedly breaching the terms of your banking/credit card contract they have, as you correctly point out, the entirely lawful options of cancelling your cheque book and cards and, ultimately, closing your account. They won't though, not because they are conccerned about you but because they want to continue to make money out of you and they shouldn't be able to have it both ways.

 

Also, they could remind customers that it's actually a criminal offence to issue a cheque they know won't be paid. Perhaps cheque books should only be issued to customers of good credit worthiness.

 

P.

[Bookworm]

I think you're missing the point about this.

 

1) The banks are not allowed to use a deterrent. Not just the banks either. Penalties are unlawful in contract law, full stop. If I hire you to build me a shop, and you go over by 2 weeks, I could charge you a genuine pre-estimate of my loss, but would need to substantiate it. So I could charge you for loss in revenue from customers, because your breach of the contract between you and me means that I have lost x amount, and my figures projections can reasonably establish this. What I can not do is fine you, or make you pay more than that, because it will hopefully teach you not to do it again, regardless of the reasons why you didn't complete in time. And what I can not do is charge you a huge amount without showing you what it potentially cost me in lost revenue.

 

b) The banks are not our moral guides, judges and counsellors all rolled into one. Quite simply put, it is not up to them to decide whether you are more deserving of exemption from charges because you had to bury your gread-grandmother, while I simply had to have that giant Dr Who cardboard cutout. All they have to do is NOT allow the payment to go through. Yes, some people will moan about it to start with, but hey, call it tough love. ;-) They soon will learn that there is no flexible friend there.

 

As for the subsidising part, well, the charged ones aren't really, are they? They are lining up the shareholders' pockets (4.7 billion last year!), but you are subsidising yourself by lending the bank money at a very low rate of interest (current account, savings account), and they're lending it back to you at a high rate (overdraft, credit cards, loan). They use the money you have lent them to play on the stock market, and of course lend it at high interest to your neighbour, and vice-versa. The profits from the charges, weeell, that's one big bonus, isn't it. One BIG bonus.

But it is a bonus to which they are not entitled, and never were. And of course, they are not hapy about having been rumbled. And yes, we are hearing how the great unwashed revolution is going to affect everybody's rates... Let's be careful about not apportioning the blame where it doesn't belong... The banks and their relentless search for more and moreprofits are the ones to blame, not the people who are only reclaiming what should never have been taken in the first place.

 

You said something about the banks reclaiming the reclaims (!) once they've found a way. Well, that can't happen, because they invariably refund as "goodwill gestures" or words to that effect. You can't take back goodwill, now can you. ;-) And even if that were not the case, as for what it really costs them being reclaimable once they have paid out 100%, well, a charge which is deemed unfair is unenforceable in its entirety. So there is no comeback there either.

 

I have tried to answer most of the points you raised, but if I have missed any, ask away.

[Glenn UK]

GMH

 

I nearly posted on day one, 'Keep off the grass and don't feed the troll'

 

How wrong was I?

 

 

 

FWIW

 

Whatever kind of society you think you/we live in or want to live in, there will be rules, imposed generally by the masses on the individual. we could argue the toss about anarchists but even there they have 'the rule' that your actions don't impact detrimentally on others, or some such i believe.

 

In this society, contract law only allows the party which suffers to recover its liquidated damages, those are the 'rules' of this society currently, end of. whether you think this is unfair on either of the parties in question is irrelevant.

 

The infrastructure set up by the banks to administer accounts is i believe set up to run all aspect of the accounts in question, not just penalty charges.

 

So whilst you assert, correctly in my view, that the costs should be attributed to the penalty charges and take account of the staff etc, by the same token some of the cost should be attributed to every action of the system, whether the account in question is in some way in breach or not.

 

Whether the charges are unfair or not, as others have said, the law is being broken, and its naive to think the banks are in someway frightened off by the cost of court attendance. notwithstanding the costs of appeals, the cost benefits potentially are huge for the banks.

 

If they could defend they would on any cost benefit analysis.

 

Ultimately they do not seem to have a defence and prospects for them are relatively bleak in the short term on this issue. Although you argue that those claiming back bank charges are in the minority, something i would agree with in the context of society as a whole, it would probably not be unfair to say that many popular campaigns have been started in this way and ended up with the defeat of some powerful body. Poll tax, endowments etc.

 

It may be that I'm now being naive, but it seems to me that the movement against unlawful charges for banks is growing, the issue for the banks is not how to stop claims, but how to safeguard profits.

 

If they can stop the claims and maintain or increase profits they will do, this would seem potentially difficult because they risk upsetting those customers who have had their banking in part paid for by the penalty charges.

 

To suggest that the cost of operating the system for bouncing a dd or whatever is of the order that is imposed, stretches the bounds of credibility, bearing in mind the size of the profits generally understood to be made by the banking industry as a result of the charges.

 

Perhaps they will find a way of dissuading customers from reclaiming th unlawful charges but it would seem they have to step into court to do that, something they have singularly failed to do to date.

 

Interesting thread, oh and a word for those who don't like the content, you may disagree with the original posters views, thats your entitlement, but don't spoil the fun for the rest of us sad fools who like to argue a little.

[anon1]

GHM- the banks ARE already raising the levels of overdrafts and interest on credit cards. and the balance transfer fee levied know, wasn't like that before eh? First Direct have gone further to a degree and more changes will happen

[Fish_man]

the reason I would want to claim back my charge is simple 90% of the time my charges are incurred because the DD came out a day before a cheque was cleared ... the bank knew the cheque was in the system and close to being cleared but they witheld the dd payment AND charged me £30 when they could have just rang me and said you have insufficient funds in your account would you like to wait until that cheque has cleared or rushed the cheque through so it would be in in time for the DD ... or just cashed the dammed DD and charged me interest on the 12 hours I was overdrawn.

 

It dosent cost the banks anything to bounce a DD or cheque yet they still feel the need to charge US £30 for doing it.

 

As for your comment about people staying in there limits Ive never been out of my limit the bank simply bounces dd and cheques when Ive not got the funds ... I then have to run about repaying everyone who's money hasn't arrived (sometimes they charge me as well) this is what keep me as close as possible to staying within my OD limit.

[anon1]

On this one fish man I have to disagree because the Direct Debit provider has asked for the money not the bank and the agreement on the DD is between you and the provider. They do incur a cost and I am sure if it was a fair charge and reasonable you would be happy to pay it but the level is profiteering plain and simple.

I believe in individual responsibility but the question of paying money when cheques have been bounced would have been easier if the charges were fair which they are not.

[Fish_man]

On this one fish man I have to disagree because the Direct Debit provider has asked for the money not the bank and the agreement on the DD is between you and the provider. They do incur a cost and I am sure if it was a fair charge and reasonable you would be happy to pay it but the level is profiteering plain and simple.

I believe in individual responsibility but the question of paying money when cheques have been bounced would have been easier if the charges were fair which they are not.

 

I don't see how it can cost anything for a computer which would have been turned on anyway to decide that there isn't funds in my account and cancel the payment then charge me I very much doubt an actual person gets involved at any point they don't send me or the person the DD was going to a letter explaining what happened so where are the costs coming from?

[anon1]

the electricity to power the computer

[Fish_man]

the electricity to power the computer

 

But that would have been turned on anyway ... its part of mine and others banking service if there going to charge me for banking then they should charge me for banking. They don't just turn a computer on specifically for me every time I make a Direct debit payment ... do they?

[anon1]

I understand where you are coming from but the bank at the moment do not charge you for paying in, having a cheque book, having a card or taking out cash. In other countries they do and on business accounts they do and in other coutries. There is a cost involved in returning a Direct Debit but the level of it, the money programme that included those that had worked in the higher echelons of a bank calculated £4.50 as a likely cost return a DD. A cost is incurred to do such a task.

[Glenn UK]

The cost of operating the system will be shared by all of its operations not just one aspect of the system.

 

Bouncing dds or whatever is arguably part of the operation and therefore there is a cost associated with it.

 

The transmission of data is similar in the sense that all data costs money to transfer.

 

Whilst the costs may be trivial per transaction in terms of these costs, they are there.

 

JMHO

 

Glenn

[Fish_man]

I understand where you are coming from but the bank at the moment do not charge you for paying in, having a cheque book, having a card or taking out cash. In other countries they do and on business accounts they do and in other coutries. There is a cost involved in returning a Direct Debit but the level of it, the money programme that included those that had worked in the higher echelons of a bank calculated £4.50 as a likely cost return a DD. A cost is incurred to do such a task.

 

Thats what Im saying If they are going to charge me for banking then they should charge me for banking I would rather pay £30 a month for banking costs then £30 each time a DD bounced for costs which should be included in my service.

[anon1]

what I am saying is that charging for returning a DD is not unlawful but the level is, and that if the bank had charged you a true cost then you would have been able to pay people money if you had a cheque or DD bounced. But WE both know they don;t. I think personally that First Direct is the water tester for monthly charges(although there is already packaged accounts out there that do have a monthly charge). I am going to throw a date in the air when I think changes may happen, not from any info I have but from a gut feeling. November 2007

[Hammersmith]

Hmmmmm,

 

I'm going to try and be open minded here and see both sides. People dont value things that are free. I'm old enough to remember that when Midland bank introduced free banking it set in motion a trend that all the other banks took up so as not to lose market share and profit. In most of the world banking is not free and we, the public, have to pay for having an account. Sounds strange but its true as I remember it well. Up until 5 years ago I was living in Canada and the banks there charged for everything.

 

Now, I'm not for one moment trying to justify the obscene amounts of money that penalty charges add up to in many cases and dont believe that it is either fair or moral to charge someone £100's of pounds month in month out without either:

1) freezing the persons account and getting to the bottom of why they cant manage their finances, forcibly if needs be as in the long run they are doing you a favour by stopping you living beyond your means or

2) limit the amount you charge to a reasonable sum each month.

 

Now, whats reasonable? We all want something for nothing but in the real world anything of real value (apart from the love of your family etc) comes at a cost. Its no point saying that if it costs them only £2.50 to bounce a cheque why should they charge £37 because no-one complians about buying a YSL shirt for £50 which was made in a Hong Kong sweat shop and sold to the UK retailer for £4. We have got value and cost mixed up here. It might only cost them £x pounds to pay me over my limit but thats worth a lot to me when I'm in a restaurant eating with my girlfriend and didnt realise I'd gone over my limit but the bank paid the bill for me rather then refuse payment and so made me look like a dickhead in front of her. On the other hand, why dont they just increase my overdraft automatically if they think I'm good for the money rather then just wack more charges on?

 

Where are all these claims and OFT enquries etc going to lead us? If it turns out that the charges have all been unlawful then we will all probably ask for our money back, costing the banks billions of pounds? This will then be offset against profits and the Government will take a bit hit in tax revenue. What will Gordon (or whoever will be in number 11 next year) do? Probably claw some or all of it back through higher taxation or reduced spending on social services. What will the banks do then? Either change the small print so that the charges are no longer penalties, end free banking and make the money up by charging for everything (think about it, having to pay for every cheque, switch transaction, direct debit, cheque book and card, statement etc) or simply bounce everything and not let anyone have any excess overdrafts, calling in guarantee cards for those that cant or wont control their account. Maybe they might do all of them!

 

Its a nightmare scenario for everyone in the short term but the banks will profit in the long term by being handed the excuse they need to get rid of free banking. Can you see them giving up the chance to make more money?

 

What if they decide that because they cant charge penalty fees any more they might as well stop paying people over their limit and rigorously enforce their terms and conditions (no excesses etc) so as to reduce bad debts AND get rid of free banking? What if they lobby for making overdrawing a crime like it is in some States? In many parts of the world overdrafts are very different to what they are here. Just check out Google and have a look what people have to pay abroad.

 

What am I leading up to here? I'm not too sure myself, but from whats being said on this website the banks will lose if taken to Court and that the alternative to what we have now will be a lot worse if we are not careful. We have been put on notice and the future is in our hands.

[Glenn UK]

Hammersmith

 

What i dont understand is why you think your banking is free?

 

You may not pay a specific amount a month, but you DO pay, you pay ionterest if you borrow, you pay by way of the time it takes your cheques and bank transfers to clear.

 

THe penalty charges are not used to fund your free banking their used primarily to make profit for the bank and its shareholders.

 

JMHO

 

Glenn

[Guest ian cognito]

Yes I agree Glenn, going back a long time I did a business studies course at college and remember them telling us about the amount of interest collected by the banks in the days between cheques being taken out of accounts and clearing to the payee, and that was in the days before computers!

[Lilacj]

I can really see your point as we just got into a pickle caused by a bounced cheque of £10.00 then the bank paid the next one of £24 then went over overdraft, £217.00 later we reclaimed and they offered us £150.00. we accpeted as it was partly our fault anyway. What I resented was being treated badly and talked down to when I went to the bank to ask for help. My son's girlfriend has the right idea, once the bills are paid every month she gradually draws out cash each day and leaves a piddling amount in bank just to keep account open.

[Fish_man]

what I am saying is that charging for returning a DD is not unlawful but the level is, and that if the bank had charged you a true cost then you would have been able to pay people money if you had a cheque or DD bounced. But WE both know they don;t. I think personally that First Direct is the water tester for monthly charges(although there is already packaged accounts out there that do have a monthly charge). I am going to throw a date in the air when I think changes may happen, not from any info I have but from a gut feeling. November 2007

 

 

Looks like we got off on the wrong foot I was trying to explain why I though the the charges were unfair not whether or not there lawful.