Bank Charges Campaign Continues

[caro]

Just noticed this thread. http://www.consumeractiongroup.co.uk/forum/showthread.php?294895-4th-April-2011-Protest-march-against-the-banksters

[determindator]

What do you mean by that exactly?

 

The amount it costs to return a paymnt, and no more. I believe figures iro £2 was a figure to work with. Ask the banks what it actually costs.

[Aequitas]

The amount it costs to return a paymnt, and no more. I believe figures iro £2 was a figure to work with. Ask the banks what it actually costs.

 

Let's look at this according to the way the world is, that is that businesses, however large or small, operate to make money.

 

Whilst there may sometimes be a sound business reason for operating to the contrary, any business expects to make a profit from all its different operations. The provision of banking services is one of the things banks do. They expect to make a profit out of it. To expect otherwise is like saying (as indeed a friend of mine maintains!) that restaurants should only make their profit from selling food and not from wine. Since there is no control on the profit that any business makes, it is difficult to justify controlling bank profits. I think it is also important not to be too misled by the level of bank profits; large businesses make large profits because they do a lot of business and not necessarily because they are overcharging. I hasten to add here that I think that bank charges are excessive. I also think that a lot of other charges are excessive.

 

Accordingly I cannot see how the actual cost of providing a particular service is any more relevant in banking than in any other service.

 

What is unique about the banks when it comes to bank charges is that not every customer pays. The deal is simply: stay in credit and pay nothing. That deal is only on offer because it was what consumers demanded years ago. The deal means that those who do not manage to stay in credit pay for those who do. Is that unfair? It seems like it when the charges rack up. Just because the arrangement is unique should not blind us to the fact that there is essentially no difference between the way banks operate and the way supermarkets operate.

 

In any event what it costs the banks is entirely irrelevant in law because the courts have held that bank charges are not penalties and that under the UTCCR they are "the price or remuneration, as against the goods or services supplied in exchange".

[caro]

I think the cost of £2, or possibly even less is extremely relevant.

 

The supermarket might buy a can of beans at cost price of 10p, and charge us 20p - or even 25 or 30p, so mark up might be up to roughly 200%. Of course not all of this is profit, as there are overheads and taxes to take out of the price, but the profit is likely to be extremely healthy for the supermarket.

 

Put a generous 200% mark up on a £2 cost for a transgression on a bank account and it's up to £6.

 

The word penalty means punishment and it certainly feels like a punishment when all this money is taken from your bank account at a time when you can least afford it. Indeed it feels like daylight robbery, and in many cases is entirely disproportionate.

 

Profit is one thing, but the profit on bank charges is nothing short of immoral, and there can be no justification for marking charges up from roughly £2 to £30, or further charges per day while overlimit for "monitoring".

[Aequitas]

I think the cost of £2, or possibly even less is extremely relevant

 

It may be relevant to answer the question: Are bank charges a rip off? but not to answer the question: Is there a legal basis for getting bank charges refunded?

 

The point is that whilst the law provides many safeguards for the consumer, it draws back from interfering with the market and allows a man to drive a hard bargain. That is effectively what regulation 6 (2) (b ) of the UTCCR says:

 

[...] the assessment of fairness of a term shall not relate [...] to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.

 

The courts have decided that bank charges are not contractual penalties and that they come within regulation 6 (2) (b ). That does not of course mean that the terms and conditions relating to contracts for banking services made between banks and non-business customers are not otherwise subject to the UTCCR. However, it does mean that if you agreed to pay price x for service y, that you have to pay it. The way the court analysed contracts for banking services ruled out the possibility that any standard charge was anything other than the price payable for a service. It is difficult to see therefore how any of the charges banks customarily make can be challenged under the UTCCR.

[caro]

I'm not denying anything you say, but just because charges have been ruled untouchable now doesn't mean that they have to be in the future.

 

I don't know if you saw the recent programme about the workings of the Supreme Court, but the judges seemed to be saying that although they had to rule as per the law, they didn't necessarily like the decision they had to make regarding bank charges.

 

The law isn't always right, and if it isn't right then it should be changed. That's where campaigning comes in.

 

All the main party leaders seemed to support the consumer where bank charges were concerned before the election. We mustn't let them forget about the issue now.

[determindator]

You are spot on Caro:-) From Aequitas's point you could say why not charge £60 or £100 for a returned payment, where do you draw the line? We have no choice but to have our wages credited to Banks which is there for them to play with daily and they make plenty from that. Keep taking and they'll be no more to take. What then? Who bails out a customer?

 

We are pioneers to question and debate the law and see what is best for society. There is such a thing called society.

[jdes26]

What gets me is why they like about it

firsty a penalty charge many years ago

now a part of core buisness

lies lies lies

[caro]

What gets me is why they like about it

firsty a penalty charge many years ago

now a part of core buisness

lies lies lies

 

Absolutely. What Clydesdale Bank said in OFT v Banks is not what they said in their defence to my bank charges claim. They couldn't both be true.

[determindator]

Yes again I say banks claim not to make profit from charges, why can't they just be truthful and say 'yes we do make profit from charges because we can'.

Edited February 28, 2011 by determindator

[elsinore]

The Highest Court in the Land: Justice Makers

 

BBC4 Midnight tonight

 

Worth watching for Lord Phillips' take on OFT v Banks case

[caro]

Thanks Els. 8)

 

Good news too that Govan Law Centre have managed to get legal aid for their bank charges cases. http://govanlc.blogspot.com/2011/03/unfair-bank-charges-update-from-govan.html

[citizenB]

The Highest Court in the Land: Justice Makers

 

BBC4 Midnight tonight

 

Worth watching for Lord Phillips' take on OFT v Banks case

 

Did anyone watch this ?

[elsinore]

It's now available on BBC iPlayer

[caro]

Did anyone watch this ?

 

Yes. It would appear that their lordships don't always like the judgements that they have to make, and in the bank charges case I got the impression that they might have liked to have liked to have ruled on broader issues than the OFT investigation.

 

It's been on before but gives no more clues to their thinking on how we might be able to fight charges in court.

[citizenB]

Yes. It would appear that their lordships don't always like the judgements that they have to make, and in the bank charges case I got the impression that they might have liked to have liked to have ruled on broader issues than the OFT investigation.

 

It's been on before but gives no more clues to their thinking on how we might be able to fight charges in court.

 

 

Thanks Caro, I did see it previously, I thought perhaps it had something new to say

[caro]

'fraid not CB.

[Peterbard]

HI

I have been trying to catch up with all this, I claimed some charges when I first joined the site and really then got side-tracked onto the deb t threads and lost touch.

Seems to me that the only remaining legal challenge is section 140 of the CCA, this of course is virgin territory as it has not been in existence for that long so it could go either way, personally I do not have high hopes.

From what I read and simplistically, the charges are now considered a fee for services, so the court when considering the fairness under 140 would have to consider if the fee was applied fairly as an individual commercial transaction.

A problem here is that each case would turn on its own evidence. I can see individual cases being successful using this, when for instance a bank issues a £30 charge for bouncing a £5 cheque, but I do not see how this could roll out to create any sort of precedent that would affect the whole bank charge scenario.

From what I have read it seems that the idea was to show that all charges that did not directly mirror the actual cost of administrating the default were legally flawed, as Bank Fodder says, I think that particular boat has sailed.

So where do we go from here?

I think we should get back to before the legalities of the situation became involved, and think about the fairness of the charges in a social context.

What we need to do is highlight that this practice is unfair, not unlawful, although it may be , but that it is not acceptable In a fair society.

We condemn the sections of the financial industry that prey on the less well off in the society by charging outrageous interest rates to those who have no option but to accept, here we have major national institutions doing the same thing with charges.

When someone’s business or finances start to fail the first thing that happens is that it is reflected in your bank balance, cheques start being issued that perhaps should not be and what happens, the banks instead of helping the situation or even just refusing to honour the payments actually accelerate the slide into debt by issuing exorbitant charges. It could be said cashing in on the decline. I think this is the unfairness that needs to be raised in the public conciseness.

I know some frown on the idea of petitions and letters to MPs but I can say from expereance that this is sometimes quite an effective tool in getting things changed, and if you have a couple of people in high places giving your cause the leg then all the better.

I do not know what has been done in this area already but I would like to if anyone could fill me if.

Peter

Edited March 26, 2011 by Dodgeball

[caro]

Thanks for your thoughts Peter. I must admit that this has not had the attention that it really needs.

 

From what I can make out I think you're probably right regarding the fairness issue, but the problem I have with that is knowing how a judge will view this. Of all people I don't need to tell you that the courts have taken a dim view of people apparently (in the courts' opinion) trying to evade their debts, when in reality they are in a position of can't pay rather than won't pay. I worry that the most vulnerable, in a financial sense, may end up worse off than before if they go to court. Assessing fairness seems to me to be a subjective thing depending almost entirely on your point of view.

 

If you don't have the money in your account don't write cheques seems an obvious approach, but it can depend who's knocking at your door and if you need to feed your family or some other necessityl. If your kids need the essentials you're going to do what you have to to provide for them and hope like Mr Micawber that something will turn up to put things right.

 

I agree entirely that the way forward for long term change to be effective is to get legislation and regulation changed, and this needs to come from the top. The difficulty is getting people to act. People can contact MPs on an individual basis but we need people to get involved and make the powers that be take notice and I don't know why, but people often seem apathetic when asked to take action.

 

The TUC march today is encouraging, and shows that a large organisation with decent membership can mobilise the troops. Unfortunately CAG doesn't have the same impact on its members it seems.

[caro]

in due course.[/i][/font]''

 

That's the bit that worries me. For over five years CAG and others have been fighting charges, and although this is encouraging there is still no end in sight. Pressure needs to be kept up IMHO.

[Peterbard]

From an oral question in the House of Commons earlier this week:

 

 

House of Commons Written Answer: Bank charges

Gordon Banks (Labour Ochil and South Perthshire) asked HM Treasury if they will take steps to prevent excessive bank and financial transaction charges on unauthorised overdrafts. Responding, Mark Hoban stated:

 

''The Government have committed in the coalition agreement to introduce stronger consumer protections including measures to end unfair bank and financial transaction charges. This commitment is being taken forward as part of the joint Department for Business, Innovation and Skills and HM Treasury Consumer Credit and Personal Insolvency Review. Following a call for evidence, the Government are now considering the available evidence and will come forwards with specific proposals in due course.''

 

HI

Thanks for this, i wonder do we have more information on the individuals within the coalition that recommended these changes, and is there details of what form evidence they will be viewing will take, and who will provide it, OFT?

Has anyone on here been in contact with any of the parties involved?

Peter

[caro]

Some info here Peter. http://www.bbc.co.uk/news/10296669

 

Vince Cable is a strong advocate of bank reform.

[Peterbard]

There were 2 consultations. The first was this:

 

http://www.bis.gov.uk/Consultations/consumer-rights-directive-assessability-unfairness?cat=closedwithresponse

 

And then this (the current one):

 

http://www.bis.gov.uk/Consultations/consumer-credit-call-for-evidence?cat=closedawaitingresponse

 

I don’t know which individuals were responsible for recommending any changes, but possibly Vince Cable was one as Caro suggested. But the ending of unfair bank charges was a Coalition pledge and was a manifesto pledge of all 3 parties.

 

The OFT were a consultee to both consultations but it is a joint BIS/HM Treasury consultation

 

Many thanks

Peter

[Peterbard]

HI

So if I have this right, we are now in a situation where the charges on a current account are regarded as a core term of the contract and thus not challengeable as to their fairness, they will be controlled by the same “market forces “that control the pricing of the rest of the product.

In reading the mountain of literature about this issue and trying to catch up, I get the impression that the way the various bodies are going is to say that the charges whilst being core terms are not part of the credit bargain. This to me seems to make sense (the last bit anyway) no one really looks at default charges when choosing an account.

Maybe this is the first step to re- structuring the whole idea of “free banking” and charges.

I cannot see that it is beyond the ability of the banks to come up with a costing for the running of an individual current account, and I do not really see why that costing should be significantly different no matter what the balance in that account is.

So are the banks saying that the money generated by charges when these accounts go over the line subsidise the accounts that stay just the other side of that line? It seems to me that what they are saying is not only does it subsidise the other lower depositing customers but also that it a source of income for the ones at the top of the scale, this cannot be right can it

Isn’t the truth simply that these charges should just cover the costs incurred by the bank for providing the extra work involved for providing the additional service. This of course was the initial argument.

So how then would the bank restructure its business in order to operate without the additional income provided by the charges?

Well of course it has to be funded out of the legitimate profits of the bank. This has to be calculated without the income of the bank charges, and if this means a reduction in income to the more affluent investors or even downward subsidy from the larger accounts then that is just the business the banks are in, and these are the running conditions of that business.

I think at the end of the day they will still find that they are in profit.

Peter

[caro]

HI

So if I have this right, we are now in a situation where the charges on a current account are regarded as a core term of the contract and thus not challengeable as to their fairness, they will be controlled by the same “market forces “that control the pricing of the rest of the product.

Some say that they can still be challenged under fairness, but it will be dependent on individual circumstances.

In reading the mountain of literature about this issue and trying to catch up, I get the impression that the way the various bodies are going is to say that the charges whilst being core terms are not part of the credit bargain. This to me seems to make sense (the last bit anyway) no one really looks at default charges when choosing an account.

They do if they're in difficulties, but then they may have problems getting more than a basic account that can't go overdrawn anyway.

 

Maybe this is the first step to re- structuring the whole idea of “free banking” and charges.

I cannot see that it is beyond the ability of the banks to come up with a costing for the running of an individual current account, and I do not really see why that costing should be significantly different no matter what the balance in that account is.

So are the banks saying that the money generated by charges when these accounts go over the line subsidise the accounts that stay just the other side of that line?

Any that stay in credit, although I guess those with higher balances will be having their money used for the banks profit - after their minimal interest has been paid.

It seems to me that what they are saying is not only does it subsidise the other lower depositing customers but also that it a source of income for the ones at the top of the scale, this cannot be right can it

Profit from misery. I guess it depends if you have a conscience - but unfortunately that's not a legal argument.

Isn’t the truth simply that these charges should just cover the costs incurred by the bank for providing the extra work involved for providing the additional service. This of course was the initial argument.

It seems not. I can even see that a SMALL profit might be acceptable, but it needs regulation IMHO.

So how then would the bank restructure its business in order to operate without the additional income provided by the charges?

Well here's a thought for you - they could get rid of their immoral bonuses which would more than cover the loss of revenue.

Well of course it has to be funded out of the legitimate profits of the bank. This has to be calculated without the income of the bank charges, and if this means a reduction in income to the more affluent investors or even downward subsidy from the larger accounts then that is just the business the banks are in, and these are the running conditions of that business.

I think at the end of the day they will still find that they are in profit.

Peter

 

Of course they would.

 

Now all that needs to be done is to convince the Government and/or courts to see things the same way.

 

Even the Supreme Court judges seemed to have some sympathy but were only ruling on a very narrow argument that the OFT couldn't investigate. They even gave us a clue but no-one yet has been able to work out how to solve it.