Current account charging and Australia

[thoughtcriminal]

I'm right behind this campaign to get rid of penalty charges. The irony is that the poorest people are both most likely to get hit with the charges (because they keep low balances) and least likely to make effective complaints (because, in general, they have less access to resources like this website).

 

So, say through a combination of High Court declarations, FSA and OFT action, the banks, at some point in the future, can't make penalty charges. How are they going to make their money?

 

I've seen some commentators argue that the most likely outcome is a return to compulsory bank charges on everyday transactions. This could be a monthly fee for keeping your account, down to charges for taking money out of cash machines or making online bank transfers.

 

What's even more amazing - and I didn't realise this - is that, in many other countries, this kind of standard bank charging still occurs! My Australian friends were amazed that in the UK, you could use your bank account without paying. They have a mentality of taking, say, £50 at a time from cash machines to avoid the withdrawal charge, whereas I'm happy to take £20 at a time because I know I can go back for free.

 

So, ultimately, could we as consumers be shooting ourselves in the foot by campaigning for the abolition on penalty charges? In the long term, could we end up swapping occasional charges that we can at least avoid by keeping our accounts in good shape for regular charges that we can't avoid? The banks will find ways of milking us one way or the other!

 

I'd be interested to hear what other people think.

[thoughtcriminal]

I'm right behind this campaign to get rid of penalty charges. The irony is that the poorest people are both most likely to get hit with the charges (because they keep low balances) and least likely to make effective complaints (because, in general, they have less access to resources like this website).

 

So, say through a combination of High Court declarations, FSA and OFT action, the banks, at some point in the future, can't make penalty charges. How are they going to make their money?

 

I've seen some commentators argue that the most likely outcome is a return to compulsory bank charges on everyday transactions. This could be a monthly fee for keeping your account, down to charges for taking money out of cash machines or making online bank transfers.

 

What's even more amazing - and I didn't realise this - is that, in many other countries, this kind of standard bank charging still occurs! My Australian friends were amazed that in the UK, you could use your bank account without paying. They have a mentality of taking, say, £50 at a time from cash machines to avoid the withdrawal charge, whereas I'm happy to take £20 at a time because I know I can go back for free.

 

So, ultimately, could we as consumers be shooting ourselves in the foot by campaigning for the abolition on penalty charges? In the long term, could we end up swapping occasional charges that we can at least avoid by keeping our accounts in good shape for regular charges that we can't avoid? The banks will find ways of milking us one way or the other!

 

I'd be interested to hear what other people think.

[thoughtcriminal]

Thanks for replying!

 

I'm very interested in some of the points you raise.

 

UK banks are in a unique position of being 'self regulating' for a start - it's cheaper to do this for them than have to be audited every year.

 

In what way? Aren't UK banks heavily regulated by the FSA? And surely, as PLCs, they have to have a fairly comprehensive audit every year. I didn't know that regulation was much more lenient in the UK than it is in any other country, but I'd be very interested to find out.

 

they make huge, obscene profits already quite legally.

 

Obviously. But these banks have institutional shareholders (for which, read: other banks) pushing them to make greater and greater profits year on year. We see the profits and we say they're obscene; Barclays' Board of Directors sees the profits are down £500M on last year and can only think that their bonuses will shrink because they've failed to grow the business.

 

The actions of companies that big aren't determined by the absolute size of the profits they make but, rather, by the need to produce growth year-on-year. If penalty charges make up a large percentage of their overall profits, the loss of this revenue may mean they will take drastic changes to restore this revenue source. If it's a large absolute amount but a small amount relative to overall profits, it may well be that the abolition would be an all-out victory for the consumer, with no consequent ill effects.

 

I think the main argument against the likelihood of imposition of these charges is that the PLC banks wouldn't dare to be the first to introduce charges because it would result in an exodus of customers to other banks. It would be incredibly damaging to their competitive position in the marketplace.

 

In the long term, I guess other banks could follow suit and introduce the charges. The best defence here is probably the presence in the personal banking marketplace of 2 (are there more?) institutions that don't have to make a profit for shareholders and can afford merely to break even - Nationwide and the Co-Op Bank. As long as these offer a fee-free alternative to tempt customers, it's unlikely that the big banks will introduce fees.

[thoughtcriminal]

Thanks for replying!

 

I'm very interested in some of the points you raise.

 

UK banks are in a unique position of being 'self regulating' for a start - it's cheaper to do this for them than have to be audited every year.

 

In what way? Aren't UK banks heavily regulated by the FSA? And surely, as PLCs, they have to have a fairly comprehensive audit every year. I didn't know that regulation was much more lenient in the UK than it is in any other country, but I'd be very interested to find out.

 

they make huge, obscene profits already quite legally.

 

Obviously. But these banks have institutional shareholders (for which, read: other banks) pushing them to make greater and greater profits year on year. We see the profits and we say they're obscene; Barclays' Board of Directors sees the profits are down £500M on last year and can only think that their bonuses will shrink because they've failed to grow the business.

 

The actions of companies that big aren't determined by the absolute size of the profits they make but, rather, by the need to produce growth year-on-year. If penalty charges make up a large percentage of their overall profits, the loss of this revenue may mean they will take drastic changes to restore this revenue source. If it's a large absolute amount but a small amount relative to overall profits, it may well be that the abolition would be an all-out victory for the consumer, with no consequent ill effects.

 

I think the main argument against the likelihood of imposition of these charges is that the PLC banks wouldn't dare to be the first to introduce charges because it would result in an exodus of customers to other banks. It would be incredibly damaging to their competitive position in the marketplace.

 

In the long term, I guess other banks could follow suit and introduce the charges. The best defence here is probably the presence in the personal banking marketplace of 2 (are there more?) institutions that don't have to make a profit for shareholders and can afford merely to break even - Nationwide and the Co-Op Bank. As long as these offer a fee-free alternative to tempt customers, it's unlikely that the big banks will introduce fees.

[Dammam]

Thanks for replying!

 

I'm very interested in some of the points you raise.

 

UK banks are in a unique position of being 'self regulating' for a start - it's cheaper to do this for them than have to be audited every year.

 

In what way? Aren't UK banks heavily regulated by the FSA? And surely, as PLCs, they have to have a fairly comprehensive audit every year. I didn't know that regulation was much more lenient in the UK than it is in any other country, but I'd be very interested to find out.

 

Isn't the FSA full of bankers? (Not a spelling mistake by the way)

 

I see you point about making money in other ways. Although it's true they don't HAVE to do this, given their other income revenues, it's very likely that they will (whilst blaming the people who succesfully sued).

However, how much can they charge you for withdrawing your own money? Possibly not as much as the 30%+ of my wage I was paying out at a time when I was spiralling into debt. I'm through it now, but in spite of the banks not due to any help from them.

Maybe basic accounts are the way forward?

[Dammam]

Thanks for replying!

 

I'm very interested in some of the points you raise.

 

UK banks are in a unique position of being 'self regulating' for a start - it's cheaper to do this for them than have to be audited every year.

 

In what way? Aren't UK banks heavily regulated by the FSA? And surely, as PLCs, they have to have a fairly comprehensive audit every year. I didn't know that regulation was much more lenient in the UK than it is in any other country, but I'd be very interested to find out.

 

Isn't the FSA full of bankers? (Not a spelling mistake by the way)

 

I see you point about making money in other ways. Although it's true they don't HAVE to do this, given their other income revenues, it's very likely that they will (whilst blaming the people who succesfully sued).

However, how much can they charge you for withdrawing your own money? Possibly not as much as the 30%+ of my wage I was paying out at a time when I was spiralling into debt. I'm through it now, but in spite of the banks not due to any help from them.

Maybe basic accounts are the way forward?

[Dammam]

Sorry - I meant in a time where penalty charges had been outlawed. Perhaps banks would have several tiers of services, going from the free but limited basic account up to a premium account - whilst the consumer has the choice of if/how much they want to spend for the facilities offered.

I'd think that for many of us this would work out a lot cheaper and may even introduce a bit of competition into the banking market (I doubt that bit though - cartels find it hard to change their ways).

[Dammam]

Sorry - I meant in a time where penalty charges had been outlawed. Perhaps banks would have several tiers of services, going from the free but limited basic account up to a premium account - whilst the consumer has the choice of if/how much they want to spend for the facilities offered.

I'd think that for many of us this would work out a lot cheaper and may even introduce a bit of competition into the banking market (I doubt that bit though - cartels find it hard to change their ways).

[Bookworm]

I have a dream...

 

A dream of a true philantropist billionnaire who would read all this and other sites. He (or she, me no sexist ) would see the way forward and open a bank with no penalty charges, no fleecing the people who deposit their wages or benefits there, and make more than reasonable profits from using that as others banks do.

 

Soon, the word would spread of The Bank-that-doesn't-screw-us, and all the little people in the land would move their banking there, thereby causing the other banks to either follow suit or eventually collapse in their own mire.

 

Alas, where is that damn philantropist billionnaire just when you need one?

 

ML

[Bookworm]

I have a dream...

 

A dream of a true philantropist billionnaire who would read all this and other sites. He (or she, me no sexist ) would see the way forward and open a bank with no penalty charges, no fleecing the people who deposit their wages or benefits there, and make more than reasonable profits from using that as others banks do.

 

Soon, the word would spread of The Bank-that-doesn't-screw-us, and all the little people in the land would move their banking there, thereby causing the other banks to either follow suit or eventually collapse in their own mire.

 

Alas, where is that damn philantropist billionnaire just when you need one?

 

ML

[Bookworm]

You mean the 'Easyjet' of banking really - no frills, pretty decent customer service and not fleecing you.

 

Yeah, and without the toxic orange, I'm not gettign rid of the banking headache just to turn it into a migraine

 

xxx

ML

[Bookworm]

You mean the 'Easyjet' of banking really - no frills, pretty decent customer service and not fleecing you.

 

Yeah, and without the toxic orange, I'm not gettign rid of the banking headache just to turn it into a migraine

 

xxx

ML

[gothicf0rm]

islamic banking offers many of the advantages people here bang on about.

[gothicf0rm]

islamic banking offers many of the advantages people here bang on about.

[thoughtcriminal]

I've found Smile (part of the Co-Op Bank) friendly and responsive. Never had to hold more than a minute to get through to someone, and they always answer secure messages within a day or so. Never been charged by them, but I understand the Co-op in general isn't great at fleecing.

 

Nationwide are good too - go overdrawn by £100 for a couple of days and they charge you 70p in interest, with no penalty charges on top. It's not official - their computers just don't seem to enforce the charges like the banks do.

 

In my experience, you can see the difference in customer service in the banks and building societies which are owned by and run for the benefit of their customers. It's shareholders' demands for return on investment that drives the constant squeezing of service standards and slow but steady increases in charges that all the PLC banks suffer from.

[thoughtcriminal]

I've found Smile (part of the Co-Op Bank) friendly and responsive. Never had to hold more than a minute to get through to someone, and they always answer secure messages within a day or so. Never been charged by them, but I understand the Co-op in general isn't great at fleecing.

 

Nationwide are good too - go overdrawn by £100 for a couple of days and they charge you 70p in interest, with no penalty charges on top. It's not official - their computers just don't seem to enforce the charges like the banks do.

 

In my experience, you can see the difference in customer service in the banks and building societies which are owned by and run for the benefit of their customers. It's shareholders' demands for return on investment that drives the constant squeezing of service standards and slow but steady increases in charges that all the PLC banks suffer from.

[thoughtcriminal]

You have a point - my experience at opening accounts with them hasn't been great.

 

Once you're in, though, it seems to be plain sailing!

[thoughtcriminal]

You have a point - my experience at opening accounts with them hasn't been great.

 

Once you're in, though, it seems to be plain sailing!

[Bookworm]

In Australia, if you put a cheque into an account - you can walk straight up to the nearest cahs-point and draw on that money. This is the same with most transfers.

 

I can't believe I'm going to say something in favour of Barclays *hangs head in shame* BUT that's what they do on my current account. The money is instantly available even when deposited by cheque. Ok, so they charge me interest on the uncleared balance, but to me, THAT's a fair and reasonable charge. (mind you, it does give me a heart attack when Icheck online and see that I'm so much overdrawn over my limit, then realise it's because of uncleared funds, lol)

 

And to get the good points of Barclay all out in one post (all 2 of them lol), if I check online and see I have gone over my limit, I can go and deposit some money same day, and I will not get charged a fee. To me, this has been the uppermost reason that has allowed me to take back control of my finances.

[Bookworm]

In Australia, if you put a cheque into an account - you can walk straight up to the nearest cahs-point and draw on that money. This is the same with most transfers.

 

I can't believe I'm going to say something in favour of Barclays *hangs head in shame* BUT that's what they do on my current account. The money is instantly available even when deposited by cheque. Ok, so they charge me interest on the uncleared balance, but to me, THAT's a fair and reasonable charge. (mind you, it does give me a heart attack when Icheck online and see that I'm so much overdrawn over my limit, then realise it's because of uncleared funds, lol)

 

And to get the good points of Barclay all out in one post (all 2 of them lol), if I check online and see I have gone over my limit, I can go and deposit some money same day, and I will not get charged a fee. To me, this has been the uppermost reason that has allowed me to take back control of my finances.

[Stunned Mullet]

The banks are always making money on our wages the minute they go in the bank. Cheques take some 3 days to clear, the money automatically goes onto the international money market and makes them more money than we can guess.

 

The whole system is designed for them, not us. I would be acting fast to reclaim any monies they have ripped you off for. All of my friends in Australia will want to automatically retrieve what has only been (edit) in broad daylight.

 

It's time they were fully exposed for what they are. Particularly of the poor who suffer enough as it is.

 

I'm right behind this campaign to get rid of penalty charges. The irony is that the poorest people are both most likely to get hit with the charges (because they keep low balances) and least likely to make effective complaints (because, in general, they have less access to resources like this website).

 

So, say through a combination of High Court declarations, FSA and OFT action, the banks, at some point in the future, can't make penalty charges. How are they going to make their money?

 

I've seen some commentators argue that the most likely outcome is a return to compulsory bank charges on everyday transactions. This could be a monthly fee for keeping your account, down to charges for taking money out of cash machines or making online bank transfers.

 

What's even more amazing - and I didn't realise this - is that, in many other countries, this kind of standard bank charging still occurs! My Australian friends were amazed that in the UK, you could use your bank account without paying. They have a mentality of taking, say, £50 at a time from cash machines to avoid the withdrawal charge, whereas I'm happy to take £20 at a time because I know I can go back for free.

 

So, ultimately, could we as consumers be shooting ourselves in the foot by campaigning for the abolition on penalty charges? In the long term, could we end up swapping occasional charges that we can at least avoid by keeping our accounts in good shape for regular charges that we can't avoid? The banks will find ways of milking us one way or the other!

 

I'd be interested to hear what other people think.

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[thoughtcriminal]

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