What would be a fair charge?

[thewifeandI]

Doesn't the Banking Code require 14 days notice of a charge before it is debited? I know Halifax only give 7 days for payment-related charges and between 1 and 30 days notice over OD Exceeded charges (it is taken at the end of the month that the breach occurred in).

[Guest NATTIE]

That may be the case with Unarranged Borrowing Fees and debit interest, NatWest do send pr-advice of charges 14 days prior to it being debited

[Andy999]

I would like to see bank charges reflect the cost to the bank for providing the service, with a reasonable profit margin on top. I suspect, if banks do lose the income from penelty charges, we shall see them introducing tariffs for personal customers similar to those paid by business customers. Somthing like:

 

Cheque issued: 50p

Direct Debit/Standing Order paid: 30p

Withdrawel from other bank ATM: 30p

Counter transaction: £1

 

etc.

 

I would also expect to see all payments that take the account over the limit being returned.

[Guest NATTIE]

I agree with you(but I think others may want to know what you mean by a "reasonable profit margin on top" , but I don't see that banks would refund charges to anyone other than those who have already claimed.

[thewifeandI]

I would like to see bank charges reflect the cost to the bank for providing the service, with a reasonable profit margin on top. I suspect, if banks do lose the income from penelty charges, we shall see them introducing tariffs for personal customers similar to those paid by business customers. Somthing like:

 

Cheque issued: 50p

Direct Debit/Standing Order paid: 30p

Withdrawel from other bank ATM: 30p

Counter transaction: £1

 

etc.

 

I would also expect to see all payments that take the account over the limit being returned.

If this is what they are charging business customers, then there's no reason to charge any higher for a personal customer who has exceeded their limit.

[Guest NATTIE]

ThewifeandI, you're missing the point of what Andy999 is saying. He's saying that he would like everyone to have to pay for all types of transactions which would reflect the true cost to the bank. That would effectively see the end of free banking(by that I mean paying in and taking out money without charge. In terms of charges for going over the limit, I would say the interest in itself should be sufficient

[elizabethchpmn]

But what about the following situation:

 

Every Friday, by a Standing Order set up in my main (Abbey) account, £60 is transferred out of that account to another I have with the BoS. That money disappears and is unavailable to me on Friday. It does not appear in my BoS account till Tuesday (sometimes Wednesday). If I go overdrawn in that time it is because the BoS - whilst in possession of my money - has not credited it to my account. BUT THEY STILL HAVE IT!

 

I can understand waiting for a cheque to clear, but why the clearance period on electronic transactions? Furthermore, if the amount is confirmed, why isn't the availability backdated to Friday and the penalty removed? Please don't say it would need Big Brother banking. Surely it would just need a couple of lines in computer software. Oh! But then they'd lose the charges - and have to pay me 3 days per week extra interest on the £3000 they get annually. Surely that wouldn't make a difference though? ;-)

[thewifeandI]

ThewifeandI, you're missing the point of what Andy999 is saying. He's saying that he would like everyone to have to pay for all types of transactions which would reflect the true cost to the bank. That would effectively see the end of free banking(by that I mean paying in and taking out money without charge. In terms of charges for going over the limit, I would say the interest in itself should be sufficient

I fully understand the point that Andy made, but just wanted to point out that if the bank can charge 30p for a Direct Debit/Standing Order paid in normal conditions, why should they be charging in excess of £30 just because the account is over limit? I'd be happy to pay fair charges rather than the blatant raiding of accounts for pure profit. Of course, once (and if) these types of charges are established they will escalate the costs as quickly as possible so they won't be fair either.

[Guest NATTIE]

ThewifeandI- fair point. What i had intended on the thread was to try and say what a fair charge would be because I agree with you that a DD for say £2.00 can be returned for £38 which is absolutely ridiculous because the differential is -£36. I personally feel that there should be a sliding scale albeit some would say why treat a DD for £2 differently to of of £1000+. I'm not sure how far it will go once we reach the £1miilion for a financial institution or even £10million as a whole for refunded charges.

[thewifeandI]

I wouldn't think that the cost to a bank changes according to the amount of the payment - in fact the higher the value, the more they make in the transit period between banks, so the true cost is lower, and for a large sum they could easily make more than the cost...

[Guest NATTIE]

As the payouts and claims rise surely a financial institution or the banking industry as a whole will have to do something as consequently, profits would then go down. I think Halifax is leading the League table so to speak so either a class action or some cases already in the courts for example, seminole, will bring information out that will have to change the charging policy as a whole

[hagenuk]

I think at present, if the figures we have speculated about are even remotely accurate, the refunds in relation to the profits are so small as to be immeasurable.

I remember reading some years ago an annual return for Sky and commenting at the time that this company turned over so much that, for convenience the financials were rounded off to the nearest £1 Million.

I am sure the banks do care about profits and do count every penny but less than £1.2 Million returned on profits of several billion pounds is insignificant and it will have to increase by a considerable amount before it becomes important enough for them to do anything about it.

Bear in mind also that the profit on these charges is made almost from thin air, there is no “cost of sales” involved in creating a charge for returning a DD for example or bouncing a cheque, particularly as many banks do not even write letters anymore.

[Andy999]

But what about the following situation:

 

Every Friday, by a Standing Order set up in my main (Abbey) account, £60 is transferred out of that account to another I have with the BoS. That money disappears and is unavailable to me on Friday. It does not appear in my BoS account till Tuesday (sometimes Wednesday). If I go overdrawn in that time it is because the BoS - whilst in possession of my money - has not credited it to my account. BUT THEY STILL HAVE IT!

 

No they don't - BACS have it on a Monday. If you want it to be there instantly, it can be, by using a CHAPS payment but unfortunatly this costs money. The interest generated on money in the BACS system is what keeps the system free for personal customers.

[Guest NATTIE]

Andy99 3 working days is Tuesday,surely, Friday Day 1 Monday Day 2 and Tuesday Day 3

[Andy999]

Yes, but on Tuesday, the customer has his money in his HBOS account (it will be there at the start of business). So on Tuesday he gets the interest. On Friday Abbey have his money, and on Monday BACS have it.

[Guest NATTIE]

Am with you. If people use the CHAPS system they are then faced with charges when say,an online transaction has no fee. So while I agree with what you're saying about an immediate payment, the cost may outweigh the amount of the transfer. Should a CHAPS payment be lower as well. Does is cost £20-£23 to process it. Would that conceivably be unlawful?

Just read on the APACS website about new technologies. It would appear that phone, internet and Standing Orders will become quicker by the end of 2007 so that payments should go into the other persons account within a matter of hours.

I would like to ask for an opinion on CHAPS transfers and the lagality of the bank to charge £20+ for that. Is that excessive for the work involved? Can keying date then sending it be that costly?

[octron32]

Ok heres the scenairo:

 

you have an authorised overdraft of 100 pounds, you have spent 50 pounds of this and have 50 left while out and about you see something you like and write a cheques for 50.01 you thought in your last statement you saw some odd pence so this should clear fine.

 

turns out your wrong there is only 50.00 left you are going to be overdrawn.

 

now the person that you wrote the cheque for goes to his bank and gives to teller. he belongs to say NatWest she looks at the cheque and sees its for abbey (my bank). she puts it in an envelope and puts stamp on it. cost 0.32 stamp 0.02 envelope.

 

abbey receive the letter opens and finds cheque starts imputting account number the computer shows that account will go overdrawn. now theres two options

 

option a. they pay the cheque now this will show on your statement: your cheque xxx for 50.01 was paid when there is not enough money in your account charge 30.00

 

now because you are overdrawn now you will also get this: you went over your overdraft limit 20.00

 

not bad the bank has made 49.99

 

option b. they dont pay the cheque so this will show on your statement: your cheque xxx for 50.01 was returned because there was not enough money in your account charge 35.00

 

and you will get this: you went over your overdraft limit charge 20.00

 

the bank has made 55.00 for doing NOTHING.

 

so lets look at what the bank says they say the charges are for ringing people no one rang me to let me know there was not enough money in account cost 0.00

 

they say its for chasing debts no one came and saw me cost 0.00

 

they say its for collecting debts again no one came and saw me cost 0.00

 

so the actuall cost to bank is NOTHING

 

so my normal statement comes through the post and now were starting to cost the bank which is the cost of stamp 0.32 cost of envelope 0.02 so lets add up the total cost to banks 2 x stamps 2 x envelope = 0.68

 

and this is the reason why people will win back there money. this is the reason why they are too scared to admit in an open court what they do with the money.

 

so fella you tell me WHAT WOULD BE A FAIR CHARGE

[Guest NATTIE]

That's what I'm trying to ask. I don't say I know the answer.Earlier in this thread was posted a figure of £2.00. I'll re say one thing. The cost involved. The system is automated so, electricity used+letter also automated+stamp=cost. If electricity goes up will cost go up? If suppliers of paper and envelopes put price up does it go up? My additional question I await your response.For a same day electronic payment,should the cost be £20+?

[octron32]

ok what would be a fair charge.

 

ive had a think about this the bank has already bought all the table and chairs and pc's and everything in the bank so the money they need is for phone line and electricity to make the bank work. so heres what you do you take the months phone line and electricity bill and divide that by the number of customers who use that bank.

 

i have been living in Germany for 10 years and i am charged quarterly for using the atm they have a machine you put your card in and prints statements from the last time you put it in (very handy if you could do here and save on sar letter)

 

now there charges are applied even if you dont use them.

 

do you want to know how much.

 

6 pound a quarter 24 pound a year yet in the uk im charged 35.00 for the bank not to cash my cheque.

 

so what would be a fair charge work out what the phone line electric bill is divide by number of customers charge for using atm even if you dont use it charge in advance for going over drawn (ok some people dont). I think you would find if the bank charge 20 per quarter ie 80 a year this would be fair.

 

as for interest rates i borrowed 7000 euros and was made to pay back 7100 and germany have some of the richest banks in the world and they dont shaft people.

 

infact i dont think theres a german equilivant to this site.

[Guest NATTIE]

I agree to a point but I throw something else into the equation. As the contract is between me(the customer) and the bank, why would I pay a percentage of all customers, if say I had no charges per year and Mr Spndthrift,for example, has 200 charges? Can I ask you what you would be charged in Germany for a DD or cheques returned?

[octron32]

the bank is NOT ALLOWED i will say that again the bank is NOT ALLOWED to charge you the company would add to your bill in my case i had a phone bill bounce and i was charged NOTHING by the bank but 2.50 euros buy the phone company which is 1.70 uk pounds

 

this came in effect about 3-4 years ago due to european court deciding that they cant charge for a service they have not provided ie they didnt do anything. only a matter of time people before it applies here.

 

so going to mr spendthrift it doesnt matter the bank doesnt charge him a thing however the company that wanted the money would add to his bill not yours. you are only paying 20.00 a quarter to be able to use the atms use the bank statement machine and every other service the bank offers if however you decide not to use them well thats down to you so there is no extra cost to you for someone going over drawn or bouncing cheques a 1000 times a day.

[pcr1]

Back to the original question: my 2p worth.

 

I don't think any unauthorised overdrafts should be allowed, full stop. Insufficient funds = payment bounced, end of story. The bank charges a true administrative fee for bouncing the payment - I think this should be 50p for automated payments; though I would not complain about anything £1 or less. The charge should not be immediately applied - it should be accrued, and notified to the customer and charged on a set date the following month.

 

If insufficient funds are available on that set date, the charges are automatically held until funds arrive in the account. Any funds arriving get apportioned fully to the bank charges first; the rest then becomes available balance.

 

Bounced cheque payments I would accept a charge of up to £5 for (on the assumption this is a true cost; if not then it should be higher or lower as appropriate) as this is a more manual act on behalf of the banks and a more knowing act on behalf of the customer.

 

I take natweststaffmember's comments that unauthorised overdrafts could then still occur by (a) guaranteed cheques and (b) retailer floor limits. My answer to this is simple: withdraw the cheque guarantee scheme. It serves no useful purpose as far as I can see with the now wide acceptance of debit cards and the ease of electronic payments online and using ATMs. In fact, withdraw cheques altogether and use bank transfers in their place. This is more secure as well as there is no risk of fraudulent cheques being returned months later as bank transfers are guaranteed. You can't transfer funds you don't have too.

 

Remove retailer floor limits. I've worked for large retailers in the past where their floor limit was as much as £50. Their card payment systems are always online, so obtaining authorisation for all transactions would not increase their costs. Smaller retailers with floor limits that natweststaffmember suggested as £5 (not sure if this is true or an understandable guise to hide real floor limits to prevent abuse) should stop accepting payments for less than that amount. I wouldn't dream of using my debit card for small amounts unless online (in which case authorisation is easy) - I couldn't be bothered to keep track!

 

This "no money = no pay" system would also prevent people spiralling out of control as they both try to catch up with the banks charges and the missed payments; the charges would be negligible (and entirely lawful) and the customers would just have their missed payments to catch up on. If they can't, that's their problem.

 

All this from someone who has incurred lots of bank charges in the past and currently claiming £3,808.90 from HSBC. I would much prefer not to have been doing this and for the system I describe above to have been in place.

[Guest NATTIE]

A few points, 1) unless switch payments are real time then there is a problem with the no unauthorised point. From the threads a lot of people have gone over their overdraft and the payment has then been taken incurring yet more charges. I do think that charges for the unauthorised overdraft should not be applied at all. 2) I don't think you can differentiate between automated payments and cheques being returned because the process is the same. In terms of what is charged, I read a thread that stated the real cost to Lloyds TSB was £1.40 for returning an item. 3) I agree with your point about a letter saying these are your charges for say the last month. However, there are people whowould simply stopusing their account, so the bank would be holding back charges potentially for years. 4) Banking should be for everyone, not just for those who use debit cards and cash because it offers the retailer no protection. Until cheque useage is 0, then cheque guarantee cards will be around.

My example of floor limits was just that because I'm aware of transactions being authorised for a couple of quid so I guessed at a floor limit of £5 which I have no knowledge as to whether or not this is the case for any retailers

[pcr1]

Thanks.

 

My thinking about people not paying any money in without charges outstanding would be to default and close the accounts. This, in my mind, is a perfectly reasonable thing to do. Besides, the charges in most cases wouldn't amount to much more than a few pounds, so to have to keep abandoning bank accounts just for this would be a nightmare!

 

I don't understand your point in 4? I've understood cheques to be the least secure method of payment for a number of reasons (even guaranteed cheques can bounce).

 

My Switch payments are realtime with HSBC. As soon as I make a Switch payment, my "available balance" at the cash machine appears to be reduced. I haven't tried this immediately after the transaction, however, but have tried it a couple of hours later. (Only first noticed it because it didn't add up, then realised the difference was an outstanding Switch payment that hadn't yet been taken from the account.)

 

 

Also, what is the difference between Switch and Solo (other than Solo not having cheque guarantee)? I understood Solo to always check the balance, whereas Switch (or Maestro) to have a bit more leeway.

 

On the floor limits point, in my experience (though I haven't worked in retail for over 8 years), they tend to be set at cheque guarantee limits (possibly out of coincidence, or possibly on the thinking that you'd might as well let it through, as they could just write out a guaranteed cheque anyway).

 

I guess it wouldn't be easy but I think it could be tightened up a lot more than it is now. It's far too easy to go overdrawn or beyond your limit in my opinon.

 

I also disagree with waiting for cheque payments to get to 0. I know millions are still used and they are very much a favoured form of payment, but better and easier forms are available so I don't see why we should keep them! At least guaranteed cheques. The only place I'd use on of those is at my local takeaway if I can't be arsed to go to the ATM; not having one wouldn't be too much of a pain (he says now... wait till it happens ).

[Guest NATTIE]

Guaranteed cheques CANNOT be bounced as they are guaranteed by the card. I don't think that floor limits are in relation to cheque guarantee limits because NW, for example, have a £100 cheque gurantee card(incorporated into the maestro card). If cheque guarantee cards are withdrawn then there is no protection for the retailer. Why give out goods to the value of £100.00 and then the guaranteed cheque bounces and you lose the money and the goods. Banks do charge card misuse for cheque paid when guaranteed which have to be paid even if the account is overdrawn.

In response to switch payments, it does vary from machine to machine as to how quickly the funds are taken. Many companies do take the funds immediately,however, I am aware of payments taken of up to 2-3 months later after the payment has been done