How much is a fair reflection of costs?

[dave]

A pre-estimate for a breach is allowed in law as long as it reflects the true costs incured by the second party.

 

E.G. if it cost £33.76, then a £35 fee would not be considered a penalty.

 

How much do you think the banks should be allowed to charge if their true costs are reflected?

[Spiceskull]

Dave,

 

Thanks for picking up the suggestion. I would further suggest that rather than vote for pre-determined amounts, the poll reflects an average. I would personally say that £2.50 is fair and reasonable, but the option for this value isn't there...

[MondeoST24]

Dave it says "you may not vote in this poll"

[Spiceskull]

I think they all do - tried voting in something else earlier...same response.

[dave]

Dave,

 

Thanks for picking up the suggestion. I would further suggest that rather than vote for pre-determined amounts, the poll reflects an average. I would personally say that £2.50 is fair and reasonable, but the option for this value isn't there...

 

But that would mean I would have to collate them myself, and I just haven't got the time for that.

 

MondeoST24 - I have checked the security and you should all be able to vote.

 

Can you try again for me?

[ispartacus75]

Im not able to vote either

[Spiceskull]

Below the chart it says:

 

Voters: 2. You may not vote on this poll

[Spiceskull]

But that would mean I would have to collate them myself, and I just haven't got the time for that

Fair argument - perhaps a few more options? Increments of 50p to a fiver, then increments of £2.50 after that...?

[dave]

What options would you like to be able to see?

[monkey_uk]

I've been able to vote....!

[ispartacus75]

Im not able to vote either

 

Fixed now and voted

[monkey_uk]

Ok, own up, who voted for £5.00 ?!

 

Only kidding, it's a free world (except for bank charges!!!) and we're all entitled to our opinions. I think that this poll is a great idea.

 

It'll be useful to see what people's views are on this.

[Spiceskull]

It's purely theoretical - we are basing our votes on what we think the banks should reasonably charge. The reality may well be that true costs = £6...but then again, if the banks had been transparent about this to start with, we wouldn't be here...

[vix2000]

Just to play devils advocate I've always thought it should be a percentage of the breach. The same charge for going £5 over or £500 over doesn't seem fair to me. £2.50 is 50% of the former.

[Spiceskull]

Just to play devils advocate I've always thought it should be a percentage of the breach

Expect a few unfavourable replies to that...although it is a fair comment. If 50% was acceptable, would they bother charging if the breach was 50 pence? And what if the breach was £200? I think everyone would agree that a fixed cost is fairer, because they have to do the same work regardless...

[vix2000]

OK. a percentage, with a maximum amount maybe? I still think £2.50 is a lot for going over £1.00.

[Maxie]

A fair reflection is the exact quantum of the loss caused to the first party of a contract by a direct result of a breach by the second party that put the first part to work in rectifying the breach.

 

American banks have been able to work out to the dollar and cent how much a bounced cheque or DD costs. So why noy UK banks?? Because it makes then billions a year.

[vix2000]

What I find hard to grasp is how it costs anything, as, when you use your debit card in a shop, if there's not enough funds its rejected, but theres no charge. Surely its the same action to reject a dd or cheque?

[MondeoST24]

MondeoST24 - I have checked the security and you should all be able to vote. Can you try again for me?

 

Yes, fine now just voted

[Bookworm]

What I find hard to grasp is how it costs anything, as, when you use your debit card in a shop, if there's not enough funds its rejected, but theres no charge. Surely its the same action to reject a dd or cheque?

 

Hear hear.

 

A percentage would be wrong, as it then attributes a "fault" to the customer, when the charge is supposed to reflect the banks' cost.

 

Maybe I'm naive, but I still think that the additional interest accrued by the banks for every extra day, extra pound that we're in breach, added to the difference in interest between what they pay us when in credit and what they charge us when in debit, is in itself a more than fair and reasonable charge.

[vix2000]

but the interest is a percentage of how much you've gone over your limit. Surely that then reflects the fact that it costs the banks more if you go over £500 than £5? However I agree that the interest should be enough payment without an additional charge.

[gothicf0rm]

costs should be based on the loss. if you run up an overdraft of 100,000 you pay 30 quid, if you run up an overdraft of 1p you pay 30 quid. thats INSANE.

[Bookworm]

but the interest is a percentage of how much you've gone over your limit. Surely that then reflects the fact that it costs the banks more if you go over £500 than £5?

 

 

No, because it doesn't cost the BANK, it cost YOU. The bank actually profits more the more you borrow.

 

They're not actually advancing you their own money, remember. They are effectively letting you have the money someone else has deposited. They are paying that person a tiny % interest and charging you a much bigger one. Result = major profits for them.

 

If it cost them anything at all, do you think they would let us go over? Not on your nelly.

 

It is in their advantage to let us borrow more and more. The only time they'll pull the plug is when there's a risk that you won't be able to repay it at all, and that they'll end up having to swallow the debt. Then, they'll act.

 

The best customer is not someone who manages well and pays off his debts every month on time. It's the person on benefits, the person on low income who's struggling to make ends meet from pay cheque to pay cheque, and never quite managing. And that's even before they start lumping the charges. Beasts of burden all, that's what we are.

 

*Aaaaand deep breaths.....*

[Spiceskull]

I like Bookworm's philosophies and generally cynical take on life - it matches mine in many ways

[seylectric]

He's right, too.

 

Some interesting points here; my own personal bugbear with the level of bank charges is this:

 

Some organisations charge from around £1 to £3 extra on your account (Bt for example, or most mobile phone contracts) if you pay by cheque, or (for goodness sake), cash over the counter instead of paying by direct debit.

 

This, they argue, is because a manual payment costs them more to process. I'm not entirely au-fait with this, but it's a reasonable enough argument.

 

What this does prove is that it costs £3 or less to process a manual payment - obviously much less for a direct debit. How, then, can a bank possibly argue that it costs them £38 (RBS) for a rejected direct debit?

 

What I am getting at is that if various companies are happy with £3 or less to process a manual payment where on earth do the banks get their figures from?

 

Has anybody used this argument?