The Bank Charges Reclaiming Charter

[muggyno1]

I have started this thread here to provide a single visible point for all CAGers to comment on this second draft, especially since the CAG is mentioned as supporting it. All comments or suggestions welcome, negative or positive

 

From Martin Lewis' Moneysavingexpert site

Quote:

The Bank Charges Reclaiming Charter

MoneySavingExpert.com, ConsumerActionGroup.co.uk & PenaltyCharges.co.uk

 

The regulator, the FSA has suspended bank charges reclaiming awaiting a court decision based on the Office of Fair Trading’s agreed test case with the banks. This decision was taken without any consultation with the consumer groups who have been championing bank charges reclaiming.

 

The three campaigning groups behind this charter, have or are helping between them well over 1.5 million people reclaim and ask all politicians, decision makers, bank customers and shareholders to consider the following.

• Five pounds is a fair maximum amount for bank charges. Banks have been charging around £30 for penalty charges; this is totally disproportionate to their actual costs. Even generous estimates suggest £2.50 is an appropriate cost, so a five pound maximum is a more than generous limit.
  
• Penalty charge structures leave finances irrevocably damaged. Often penalty charges occur in batches, a simple shopping trip and miscalculation of how much is left in an account, can result in £100s in charges. This then snowballs, as people don’t have the resources to pay the charges and are thus charged more. The banks make over £1 billion a year from these charges, which often irrecoverably destroy peoples finances.
  
• Bank accounts are obligatory & there’s no competition. In the modern age, there is little choice but to have a bank account; both employer and social security offices rarely accept an alternative. Yet there is no competitive market for bank charges, all banks charge similar amounts.
  
• Bank should not be allowed to levy charges during the stay. Banks have already paid out over £500 million to reclaimers; a sum indicative of the fragility of their case. The consumer has not been served by putting a hold on reclaiming cases, meanwhile banks continue to levy these charges, which continues to debilitate people’s finances. The hold on bank charges reclaiming should be lifted, but if not the levying of charges by the banks should also be put on hold.
  
• Any agreed new charge levels must apply to past as well as current customers. The OFT credit card ruling in 2006 indicated a maximum £12 charge, yet omitted to infer that those who had previously been charged more should be allowed to reclaim it. When a new settlement figure (of no more than £5) is reached, customers must be allowed to reclaim all amounts above that for the prior 6 years.
  
• Payouts should be made automatically, without request. Banks have taken money from their customers without asking; when the Courts rule these charges are unlawful, they should be made to pay them back without the need for customers to request it. If this does not happen, there’s been little benefit to consumers of this test case and moratorium.
  
• Repayments should include 8% statutory interest. Repaid charges should include interest at 8% the rate applied to successful reclaimants in the Courts. Interest should also be compounded.
  
• All credit file defaults resulting from unfair penalty charges must be deleted. Banks must agree that all default records that have been placed on credit files due to unathorised overdraft charges/penalty charges should be wiped.
  
• There should be an immediate moratorium on all default entries. During the period of the OFT litigation we require there to be an immediate moratorium on the placing of defaults on the credit record of any customers in respect of any sum which is comprised either wholly or substantially of charges.

I commented on the original draft but any changes have been largely cosmetic. I particularly object to point 1 because it undermines the argument that penalty charges are unlawful. Is ML really speaking for us?

 

Muggy

[jules1973]

I agree, if we allow them to have the £5.00 mark up then it will creep up again and again and we will be back to where we are now. It should be taken out as the banks should not even be making a 1p profit. they should be charging us the pennies that it costs them each time and no more.

 

I hope there are more of us that feel this way,

[muggyno1]

The Bank Charges Reclaiming Charter

 

(Signatories to be confirmed)

 

The regulator, the FSA has allowed the banks to suspend bank charges reclaiming awaiting a court decision based on the Office of Fair Trading’s agreed test case with the banks. As a result the Finacial Ombudsman Service has ceased investigating bank charges complaints. This decision was taken without any consultation with the consumer groups who have been championing bank charges reclaiming.

 

We ask all politicians, decision makers, bank customers and shareholders to consider and act on the following:

• Penalty charges unfairly target the most vulnerable. Redundancy, illness and bereavement are often the triggersof financial difficulty. Far from helping in these situations banks add to the spiral of debt by imposing unnecessary and unlawful penalty charges.
  
• Banks must never profit from penalty charges. Banks have been charging around £30 for penalty charges. As their actual costs are in most cases pennies, this is an abuse of their position of dominance over the consumer.
  
• Bank accounts are obligatory & there’s no competition. Consumers have no choice but to have a bank account; both employer and social security offices rarely accept an alternative. Yet there is no competitive market for bank charges and no ethical bank has come forward to challenge the high street.
  
• The FSA waiver should be rescinded as soon as possible. The FSA waiver is anti-consumer and is weighted unfairly in favour of the banks. The waiver should be lifted and complaints directly to the banks, via the Financial Ombudsman Service and through the courts allowed to continue.
  
• Bank should not be allowed to levy charges during any moratirium. Banks have already paid out over £500 million to reclaimers; a sum indicative of the fragility of their case. The consumer has been penalised by putting a hold on reclaiming cases. Meanwhile banks continue to levy these charges, which continues to debilitate people’s finances. Until the hold on bank charge reclaims is lifted, the levying of charges by the banks should be put on hold.
  
• Any agreed non-profit charge levels must be applied retrospectively. The OFT credit card ruling in 2006 omitted to order that those who had previously been overcharged should be allowed to reclaim. When new non-profit figures are reached, customers must be allowed to reclaim all amounts above that for the entire period of their relationship with the bank.
  
• Payouts should be made automatically, without request. Banks have taken money from their customers without asking; when the Courts rule these charges are unlawful, they should be made to pay them back without the need for customers to request it. If this does not happen, there’s been little benefit to consumers of this test case and moratorium.
  
• Repayments should include 8% statutory interest. Repaid charges should include interest at 8% the rate applied to successful reclaimants in the Courts. Interest should also be compounded.
  
• All credit file defaults resulting from unfair penalty charges must be deleted. Banks must agree that all default records that have been placed on credit files due to unathorised overdraft charges/penalty charges should be wiped.
  
• There should be an immediate moratorium on all default entries. During the period of the OFT litigation we require there to be an immediate moratorium on the placing of defaults on the credit record of any customers in respect of any sum which is comprised either wholly or substantially of charges.

 

 

 

 

 

This, for what it's worth, is a first stab at what might be a more acceptable document. Still not really hard hitting enough but maybe we should try to produce something that CAGers would be happy with?

 

ML probably wouldn't take any notice, but what the Hey?

 

Muggy

[Robdblynd]

Better than the orginal proposal anyway .... I'm with you all the way .... they should not profit by so much as a penny from their charges .... that's what the law says and they should abide by it.

[jansus]

I agree with healthy debate on this forum - but in respect of the charge comment

 

is not this guidance relevant

Case guidance notes - bringing your case to court

 

there are two arguments that we all have to be prepared for and I think that is why the wording is not as bad as you infer?

 

In the real world we have to face the fact that the banks are in business for a profit - if they dont make it in these penalties/service they will charge elsewhere and as it is a monopoly we will all have to pay in some way in the end. surely the main point is that the charges should be proportionate and not hit those in a less fortunate position i.e those who struggle each month to stay within budget. If it means that all customers will have to pay a small ( as it is spread over millions of customers) monthly admin charge - And those who go over their limits are charged admin and a small profit margin then I think that is fairer?

 

civilised comments?

 

jan

[muggyno1]

I agree with healthy debate on this forum - but in respect of the charge comment

 

is not this guidance relevant

Case guidance notes - bringing your case to court

 

there are two arguments that we all have to be prepared for and I think that is why the wording is not as bad as you infer?

 

In the real world we have to face the fact that the banks are in business for a profit - if they dont make it in these penalties/service they will charge elsewhere and as it is a monopoly we will all have to pay in some way in the end. surely the main point is that the charges should be proportionate and not hit those in a less fortunate position i.e those who struggle each month to stay within budget. If it means that all customers will have to pay a small ( as it is spread over millions of customers) monthly admin charge - And those who go over their limits are charged admin and a small profit margin then I think that is fairer?

 

civilised comments?

 

jan

 

Hi Jan,

 

I agree with you up to a point. However, the original charter that I have amended is supposed to be a response, prepared by Martin Lewis, by the three main web sites including CAG to the OFT test case and FSA waiver on charges complaints.

 

As such it needs to put forcefully what we have always contended. That is that Penalty charges are penalties for a breach of contract and therfore the banks cannot make a profit on them. Indeed this is the first legal point to be argued in the test case.

 

The document as originally drafted played into the banks' hands as it undermined that argument and gave the impression that we had conceded the banks' claim that these are not penalty but service charges. Concede that point and we will be left with arguing under competition law and discussing mark-ups. There are enough peoplw giving up this fight without us doing it as well.

 

Cheers.

 

Muggy

[jansus]

point taken

 

the last thing we want is to help the banks

 

its just that I feel that those responsible have been trusted to do the right thing so far and have done a brilliant job. I am sure they have thought about this very carefully

 

Jan

[muggyno1]

Jan,

 

Yes, a lot of good things have been done. This time, however, they may have thought carefully about it but still got it wrong!

 

Cheers.

 

Muggy

[jansus]

in your opinion.

 

Whoops better watch myself see you live in oxfordshire too !

 

You may be a neighbour!

 

 

jan

[muggyno1]

We could have an even healthier debate then!

 

Not just my opinion Jan, thousands of us.

 

In any case, why are the site owners not entering any of the debates on this subject. It would be nice to have some sort of response somewhere.

 

Muggy

[jansus]

We could have an even healthier debate then!

 

Not just my opinion Jan, thousands of us.

 

.

 

Muggy

 

gosh you have amassed your army in record time.

 

dont worry you will get a reaction- no shrinking violets here.

 

I just think reading Bill65 thread that sometimes there is an overload of contradictory evidence that takes a while to sink in.

 

Most people just want clear guidelines in one area that they can act on in good faith.

 

jan

[ohoh4312]

Hi Muggy

 

Well, you know my opinion on this, and my opinion of Bill65's copy post from mse is even lower.

 

Things like this cause fighting in the ranks - oh boy, how the banks would love to know that!

 

We are supposed to be united in a common goal, but recent events and loads of speculation have led to, erm, struggling for an analogy here, militant factions is a bit strong, but it's the only description I can come up with at the moment.

 

I am NOT digging at anyone on this thread BTW, merely stating my point of view in a democratic forum!

 

Jo xx

 

[muggyno1]

I will look at the bill65 thread.

 

Muggy