Treasury Committee - Bank Penalties

[diddled]

Select Committee on Treasury Minutes of Evidence

 

Examination of Witnesses (Questions 180 - 199)WEDNESDAY 9 JULY 2003 NATIONWIDE, BARCLAYCARD AND THE ASSOCIATION FOR PAYMENT CLEARING SERVICES

 

 

 

Mr Hoffman: Well, we do not make any profit on charges and other penalties. Two years ago we had a charge for everyone, an annual fee, which was £10. We had lots of complaints about that because customers were saying, "It is unfair that we are charged even though we are running our account properly", so what we have done is replaced that annual charge for all customers to a charge for some customers who either go over their limit or are late in paying. We make it crystal clear, and there is a booklet here, Clear as Crystal, which says to customers, "These are the charges and actually we do not want you to pay these", and we give them guidance about how to avoid these charges

 

. Q183 Angela Eagle: But do you want to give us the answer to the question?

Mr Hoffman: To the amount?

Q184 Angela Eagle: How much money did you collect in charges and penalties and how does that compare with your annual fee income now defunct because of—

Mr Hoffman: I am sorry I cannot give you that because we do not disclose that information publicly to our shareholders, to our owners, so there is a commercial sensitivity around that.

Q185 Angela Eagle: But you do know that information yourself?

Mr Hoffman: Of course, of course.

Q186 Angela Eagle: Could you send it to the Committee in confidence?

Mr Hoffman: I think I can send it to the Committee in confidence. I am not sure about the form of that. I do not disclose this to our shareholders, so we need to be careful about that.

[diddled]

Select Committee on Treasury Minutes of Evidence

 

Examination of Witnesses (Questions 180 - 199)WEDNESDAY 9 JULY 2003 NATIONWIDE, BARCLAYCARD AND THE ASSOCIATION FOR PAYMENT CLEARING SERVICES

 

 

 

Mr Hoffman: Well, we do not make any profit on charges and other penalties. Two years ago we had a charge for everyone, an annual fee, which was £10. We had lots of complaints about that because customers were saying, "It is unfair that we are charged even though we are running our account properly", so what we have done is replaced that annual charge for all customers to a charge for some customers who either go over their limit or are late in paying. We make it crystal clear, and there is a booklet here, Clear as Crystal, which says to customers, "These are the charges and actually we do not want you to pay these", and we give them guidance about how to avoid these charges

 

. Q183 Angela Eagle: But do you want to give us the answer to the question?

Mr Hoffman: To the amount?

Q184 Angela Eagle: How much money did you collect in charges and penalties and how does that compare with your annual fee income now defunct because of—

Mr Hoffman: I am sorry I cannot give you that because we do not disclose that information publicly to our shareholders, to our owners, so there is a commercial sensitivity around that.

Q185 Angela Eagle: But you do know that information yourself?

Mr Hoffman: Of course, of course.

Q186 Angela Eagle: Could you send it to the Committee in confidence?

Mr Hoffman: I think I can send it to the Committee in confidence. I am not sure about the form of that. I do not disclose this to our shareholders, so we need to be careful about that.

[BankFodder]

Mr Hoffman: Well, we do not make any profit on charges and other penalties. Two years ago we had a charge for everyone, an annual fee, which was £10. We had lots of complaints about that because customers were saying, "It is unfair that we are charged even though we are running our account properly", so what we have done is replaced that annual charge for all customers to a charge for some customers who either go over their limit or are late in paying. We make it crystal clear, and there is a booklet here, Clear as Crystal, which says to customers, "These are the charges and actually we do not want you to pay these", and we give them guidance about how to avoid these charges

 

this is an ambigous statement because it is intended to give the impresson that we do not make any profit out of each charge we levy. This of course would be the lawful answer.

In fact it can equally mean - and is intended as such - that the charges which we levy in total from all of our customers pays for the costs of dealing with them and providing srvices a a whole. This would be the unlawful answer.

 

It seems to me that Angel Eagle failed to pick up on the ambiguity.

[BankFodder]

Mr Hoffman: Well, we do not make any profit on charges and other penalties. Two years ago we had a charge for everyone, an annual fee, which was £10. We had lots of complaints about that because customers were saying, "It is unfair that we are charged even though we are running our account properly", so what we have done is replaced that annual charge for all customers to a charge for some customers who either go over their limit or are late in paying. We make it crystal clear, and there is a booklet here, Clear as Crystal, which says to customers, "These are the charges and actually we do not want you to pay these", and we give them guidance about how to avoid these charges

 

this is an ambigous statement because it is intended to give the impresson that we do not make any profit out of each charge we levy. This of course would be the lawful answer.

In fact it can equally mean - and is intended as such - that the charges which we levy in total from all of our customers pays for the costs of dealing with them and providing srvices a a whole. This would be the unlawful answer.

 

It seems to me that Angel Eagle failed to pick up on the ambiguity.

[diddled]

Printed 10th December 2003

 

Treasury - First Report

 

Here you can browse the report together with the Proceedings of the Committee. The published report was ordered by the House of Commons to be printed 10 December 2003.

67. Flat fees impact particularly badly on poorer customers. While many lenders claimed that their charges represented a fair recovery of the costs involved on any breach of contract, none supplied any figures to support this assertion. Barclaycard refused to provide us with data concerning the amount of revenue raised from penalty fees We are therefore not convinced that these charges are reasonable. To reassure us and the general public we call on all lenders to place information on the amounts raised from penalty fees and the costs involved in the public domain. The DTI should investigate this issue. We encourage consumers to question the application of penalty fees and to switch providers if they believe they are unreasonable.

[diddled]

Printed 10th December 2003

 

Treasury - First Report

 

Here you can browse the report together with the Proceedings of the Committee. The published report was ordered by the House of Commons to be printed 10 December 2003.

67. Flat fees impact particularly badly on poorer customers. While many lenders claimed that their charges represented a fair recovery of the costs involved on any breach of contract, none supplied any figures to support this assertion. Barclaycard refused to provide us with data concerning the amount of revenue raised from penalty fees We are therefore not convinced that these charges are reasonable. To reassure us and the general public we call on all lenders to place information on the amounts raised from penalty fees and the costs involved in the public domain. The DTI should investigate this issue. We encourage consumers to question the application of penalty fees and to switch providers if they believe they are unreasonable.

[Bookworm]

Mr Hoffman: Well, we do not make any profit on charges and other penalties.

 

So they do admit they are penalties then.

 

ML

[Bookworm]

Mr Hoffman: Well, we do not make any profit on charges and other penalties.

 

So they do admit they are penalties then.

 

ML

[diddled]

This topic was closed on 03/05/19.

If you have a problem which is similar to the issues raised in this topic, then please start a new thread and you will get help and support their.

If you would like to post up some information which is relevant to this particular topic then please flag the issue up to the site team and the thread will be reopened.

- Consumer Action Group