What would be a fair charge?

[pcr1]

By guaranteed cheques bouncing, I mean they can bounce if both insufficient funds and the card has gone code 10. Retailers with Transax will be OK, but small retailers with an abused card (not stolen) gone code 10 will have no way of knowing and the "guaranteed" cheque could bounce. I've seen it happen. :-|

 

Just to clarify on Switch, I mean my "balance available for withdrawal" is reduced but main balance is untouched. Say I had £500 in my account and paid on Switch for £49.99. On checking the cash point, even on a mini-statement there'd be no Switch transaction, but machine would say "Balance £500.00 ... Balance Available for Withdrawal £450.01" or however the particular machine words it.

 

My guarantee limit is £100, yes. At the retailer I worked at, floor limits were set by starting digits of card (so issuer and type) and seemed to vary between £50, £100 and £250 which are the guarantee limits. Of course, I never looked in great detail, just passing, so might be completely wrong!

[Guest NATTIE]

I need to know what code 10 is, as the term is not one I am familiar with. A cheque guaranteed with a card cannot be bounced if it is within the card guarantee limit. There is no need for authorisation on that card. A guaranteed cheque can be returned on technicalities, ie not signed, guaranteed using a card not associated with the acount etc, etc,. I was unaware that retailers had set a floor limit based on cheque guarantee limit. When I use the term floor limits it is based on switch/solo cards rather than cheques(not sure if we had a crossed wire somewhere in my thread. What is your thought on the amount of a fair charge? As I said I didn't think we could discriminate between chq/so/dd as the same process was used

[pcr1]

For bouncing payments, I currently say I would not complain at £1 or less. If it turns out it costs the banks more, I'd be happy to accept that charge. Though I doubt it does! My view of how it should work is what I posted, or at least something towards this that is workable. I think the only charge on any unauthorised overdraft should be the increased interest. There may be an argument to put charges on problem accounts that need manual intervention (and if in line with costs this would be entirely lawful), but that would depend on how easy it is for the banks to actually track.

 

 

At the risk of going completely off topic (more so as a newbie!), on the retailer front:

 

"Code 10" is a retailer/authorisation code that means the bank wants the card back. It will be reported stolen, or will be "abused" (i.e. cancelled by the bank and customer has been asked to cut up and return). There is also Code 1 which means authorised (also then get auth code on top) and Code 4 means declined (but don't confiscate the card - just no funds).

 

Large retailers use Transax; they have a list of Code 10 cards and check the card against a hotlist and will flag if it's Code 10. (Transax normally guarantee cheques over the guarantee limit by insurance, but they also check the card itself for all transactions.) The retailer then confiscates the card on behalf of the bank (and the shop assistant gets £50 in return - £100 if they get the cheque book too). Small retailers would have no clue. They could check ID, but for a Code 10 abused card this is going to match. The cheque will generally bounce as far as I know as the card will be void and can't guarantee the cheque.

 

I'm not sure who sets floor limits - if it's the retailer or done by agreement with merchant services. I do know that cards below the floor will just be checked against a hotlist again of Code 10 cards then automatically approved if not found. Over the floor, they get normal authorisation (which will flag Code 10 anyway). I wondered why this "checking hotlist" and "please wait for authorisation" seemed to be random, so looked on the system, and found different cards had different floors. Going back, those limits seemed to tie in. Bear in mind this is based on one retailer I worked for over 8 years ago - things may have changed since then and other retailers may do things differently.

[Guest NATTIE]

I'm with you but when cheques have a lifetime of 6 months if the funds were there to process the guarantee, by the time the cheque is presented those funds may not be available but the retailer would not be able to know this in advance as the cheque is not debited immediately. My understanding on confiscation of cards still exists today,i believe. Thanks for clarifying the code 10.

[Andy999]

Talking of guaranteed cheques, I remember reading that in one country (possibly France?) it is a criminal offence to write a cheque without funds in your account, and you can be sent to prison if you do so. Whilst I agree that current bank charges are too high, if they do end up being relaxed, I would like to see a similar law passed in this country. Whilst anyone can forget about a direct debit bouncing, there is absolutly no excuse for writing a cheque knowing full well you don't have enough money to pay it. Maybe prison is a bit harsh, but it should certainly be a crime.

[Guest NATTIE]

Andy999- don't forget retailer responsibility in banking cheques. Some may wait a week to bank the cheques so maybe harsh on our overcrowded prisons.

[Andy999]

But when someone writes a cheque, they know full well it is valid for six months, and so should make sure there's money in their account to cover it for that length of time. With mini-statements from cash machines, and internet and telephone banking, it's not too hard to keep track of your money.

 

As I've already said, I do think the current bank charging system is unfair and the charges are excessive - but I also think that customers are responsible for making sure their account runs properly. If people can't keep track of Direct Debits, for example, then they shouldn't set them up on their account.

[DazNorthants]

It is an offence to write a cheque in this Country if you know or believe it might bounce etc. I can remember one retailer (business) post Court summons of all the companies that had issued bad cheques on the office where you paid. Pleasant reminder that if the cheque bounced they would go of it.

 

If a cheque is returned unpaid the company that supplied the goods or service could go the police and report it as 'obtaining goods by deception' up to 15 years imprisionment I think. If the police could prove you reasonably knew the cheque would bounce off to court you go. With a criminal conviction for a fraud offense would change job prospect.

[meagain]

It is an offence to write a cheque in this Country if you know or believe it might bounce etc. I can remember one retailer (business) post Court summons of all the companies that had issued bad cheques on the office where you paid. Pleasant reminder that if the cheque bounced they would go of it.

 

My understanding was that the offence was if you wrote a cheque that you knew wouldn't clear, as opposed to one that simply might bounce. There's always a risk that a cheque might bounce (I've been told more than once of cheques being returned RDRP simply because the bank is unavailable - it's even happened to me once*). Again, I may have understood this incorrectly, but my belief was that if you believed with good faith that the cheque would clear when presented (e.g. written on Friday, salary comes in on Monday) that there is no offence (as it lacks mens rea).

[Guest NATTIE]

Refer to Drawer Please Represent, the cheque goes back to the drawing bank and is then represented. If there is still insufficient funds then it is returned to the payee Refer to Drawer. I have to agree with meagian. Can you tell me which Law it relates to so i can have a look at it, because there may be a lot of people who have avoided court.

[sar011279]

I work in the customer care dept of an international retailer, we do use Transax with cheques. Every month we have dozens of cheques that are still returned by certain banks unpaid, even though a valid cheque guarantee card was presented for purchase. (not all banks but some).

We now have a new policy that states that, if you pay by chq, and require a refund you have to wait 14 days for the chq to be processed (the time it would take to bank chq and it be returned if applicable). The stores also get a weekley list of cheques that have been returned, they are told to check this info before issuing a refund on a purchase made using a cheque.

[ianonline]

1) Returning a Direct Debit or Standing Order should be £5.

2) Card misuse should be £7.

[thewifeandI]

All the rest - No Charge!

[Guest NATTIE]

I think that is too high. A thread I read from someone who gave a true cost of Lloyds TSB said £1.40 and an earlier survey prior to me coming on to this site said about £2. I think card misuse should not be any higher because there is no "real" cost involved only interest. I think all other charges for services, cannot be made free.

[thewifeandI]

Not free for services (no probs with that), free for penalties.

 

There should be no charge made for exceeding your limit, for late payment (CC), for paying when insufficient funds or not paying a payment generated from the account (online bill payment, standing order) as there is no cost involved other than possible postage - max 50p.

[Guest NATTIE]

I think we have to get this idea that a letter is what you pay for because that is rubbish. NW send 1 single letter on the first occasion any item is returned stating that in future nonotification would be given and the item returned. As I may have said, the issue was discussed on this forum before I joined and the idea of £2 was thought to be reasonable. I do agree with when the account goes over an agreed limit. Interest only.

[tamadus]

An example. My wife cancelled three direct debits. Two are accepted but for some reason the third, for £85 gets paid. She writes a cheque for £17 which bounces. £38 charge. It gets represented and bounces again, a second £38 charge. Due to the £161 that is now missing from her account (2 x £38 and the original £85) a cheque for £414 is returned, again twice and again another £76 in charges is debited along with £28 for an unauthorised overdraft. So in the space of a few weeks £265 has been taken and two cheques have been unpaid.

 

Hegenuk, the very same thing happened to me only last year. I opened an account with a new bank after repeatedly smashing my head against a brick wall with A&L. The new bank duly contacted A&L for a list of DD mandates etc and informed them of the date they were taking the mandates over and NOT to pay any more from that date.

 

A&L in their typical fashion failed to include 3 mandates which subsequently didnt get paid by the new bank and got hit for charges by the company concerned.

 

To make matters worse A&L then proceeded to make and return payments twice on those mandates despite having been told not to make any further payments and that my salary would not be paid into the account. ( this was obvious as the non payments and charges occured over a week after my salary normally cleared my account)

 

Obviously this was a breech of the direct debit guarantee but it still took 3 months of letters for A&L to rectify the matter, they also madea couple of paltry offers of settlement which came nowhere near the amount involved.

 

In total something in the order of £600 was eveentually credited back into my account.

[tamadus]

Talking of guaranteed cheques, I remember reading that in one country (possibly France?) it is a criminal offence to write a cheque without funds in your account, and you can be sent to prison if you do so. Whilst I agree that current bank charges are too high, if they do end up being relaxed, I would like to see a similar law passed in this country. Whilst anyone can forget about a direct debit bouncing, there is absolutly no excuse for writing a cheque knowing full well you don't have enough money to pay it. Maybe prison is a bit harsh, but it should certainly be a crime.

 

I know that in the USA knowingly writing a bad cheque is an offence punishable in some states by imprisonment and/or confiscation of your driving licence.

[tamadus]

Andy999- don't forget retailer responsibility in banking cheques. Some may wait a week to bank the cheques so maybe harsh on our overcrowded prisons.

 

hey with the seemingly current attitude of the police and court systems to ignoring REAL crime and chasing people for speeding or dropping a crisp maybe this will be the next section of the population to be criminalised.:o

[tamadus]

ok my thoughts while trying to remember so many good posts in this thread. Probably totally off topic but never mind.

 

1. Banks make huge profits while items are being cleared, hence the reason they are so slow in clearing cheques etc. There is NO need to send a cheque through the mail for clearance. When it is paid into an account it only takes a few seconds to key in the details and it can be cleared in minutes.

 

2. Most banks no longer send a letter notifying you of a pending payment failure, they just add the charge and wait for it to be represented so another charge can be added. This process is virtually always automated so the actual cost is negligable.

 

3. I recall the old days when most payments were made using that old system of CASH. Oddly enough (despite not having huge charges to boost profits) banks still made a decent level of profit. They also had higher overheads as bank branches actually existed and stood for something. How many people have actually met their current bank manager ?

 

4. I personally have had a cheque returned after using my valid guarantee card and with funds available so I know a guaranteed cheque can be returned. I just can't recall ever having a satisfactory reason for why it was returned. I do know the retailer has to put the card details on the cheque or the card use is invalid, so putting a guarantee card details on a cheque and then mailing it could warrant a refusal to pay it.

 

5. The move away from cash has been totally dictated by the banks, not the customers.

 

6. Many places now refuse to accept payment by cheque even with a guarantee card. Again something the banks are keen to encourage.

 

7. We, as consumers, now have the added problem of chip and pin cards. Again something started and enforced by the banks in the misguided guise of security. Despite what the banks say chip and pin is NOT a more secure method of card payment. It originated as a method of dealing with fraudulent transactions created by double swiping a card and cloning the data on it. In theory the retailer is NOT supposed to even touch the card. Consequently they have no idea even of the name that is on it. A 4 digit number does not leave many combinations. In reality my girlfriend /wife / anybody could aquire my pin number (without my knowledge) and use my card fraudulently. The banks response would then be that the transaction would be legitimate on the basis the correct number was used. This is the basis for their recent claims that fraudulent transaction have reduced. Also cards are still being swiped and data cloned. Surely it's time photo ID was included on a card along with signature ?

 

To my mind the last 30 years has been about increasing profits to obscene levels whilst minimising overheads and customer satisfaction. The profits banks record in this country are totally unjustifiable. This whole fiasco is more about the global economy (we have to be the biggest) than anything else.

 

As a final note, I recall in the early 70's several of the major electronic manufacturers drawing up a 3 stage plan (each stage was 20 years) to get the microprocessor into daily domestic use. The first stage involved things like video arcade games (remember ping-pong) and was completed inside 10 years. Virtually nothing we buy now doesnt include some form of microprocessor. The plan was to make us all dependant on it. Banks are doing the same thing, slowly they are making us dependant on them. These charges are a result of them profiteering on that dependancy.

 

I think a small and sensible charge of maybe £8-10 per month would be reasonable, considering that in most cases the banks would do next to nothing. Then if I borrow from them (via overdraft or whatever) I expect to pay interest Based on the base rate + a small margin. If they borrow from me (ie I remain in credit they should pay me the same rate of interest. Interest rates should have a maximum level of 2% (for example) above the bank of England base rate. NO bank can justify 30% with base rate at less than 5%

[sproggi]

Quote: you would know that a cheque is calid for 6 months from the date of issue

 

Sorry NWSM but have to contradict you on this point.

6 months from date of issue may be the case with NW (never banked with them so not sure) but it is not the case with all banks.

 

I wrote a cheque a few years ago at the begining of the month, 6months to the day later it had not been cashed and so I was under the ussumption that this cheque was no longer valid. I was wrong, 2 weeks later the cheque went through causing my account to become overdrawn and thus incurring charges.

I immediatly contacted the bank to complain only to be informed that cheques are valid for 6 calander months, in other words, if I wrote a cheque out on 1st January, it would be valid until midnight 30th June, technically giving the business 7 months to bank cheques!!!!

 

In cases like this, who should be held responsable and be made to pay? The bank for not clarifying the term '6months'? The retailer for not banking the cheque within a reasonable time frame? or the account holder for not checking with the bank before assuming the cheque was now invalid?

 

 

Another quick point that some people might not be aware of: A cheque with a cheque guarentee number written on the back by the account holder themselves, is not technically guarenteed.

 

Sproggi

[meagain]

As far as I am aware, cheques over 6 months old are supposed to be "returned for verification".

[Guest NATTIE]

I don't think I contradicted myself but it is 6 calender months. Any cheques that the cashiers spot over 6 months should not be accepted neither should post dated cheques. Exceptions are where the cheques cleary states it, for example dividend cheques are usually 12 months, and I think some cheques, cannot remember which organisation, is 3 months. In relation to other points re cheques and cheque clearance I would suuggest looking at the APACS website which has a diagram clearly explaining the cheque clearing cycle.

[Andy999]

What we may see is a policy of more account closures if banks cannot charge for people exceeding their limit etc. Maybe somthing like have 3 bounced DDs, and you can no longer set up DDs. Go over your limit for a certain period and the account is automatically closed if not brought back into credit.

 

Would people be happy to pay a small fee (say 5p) per transaction?

[Guest NATTIE]

I think we will have something like a service charge that will cover all costs or charging the same for businesses at the moment, ie charged for cash, cheques, withdrawals. That idea on DD's does sound interesting. The account closing bit could cause more problems than it solves