An Open Letter to the FSA

[alecmac18]

Dear Sirs,

 

Over the next four weeks you have some important decisions to make.

 

You recently gave the main UK clearing banks a wavier which allowed them to disregard your own complaint procedures and to put claims on hold for bank penalty charges. This might have flown but you (incredibly) allowed the same banks to continue charging while the OFT geared itself up for a High Court test case into the legality of these charges. When the very legality of these charges comes into question, how is it that you allow the banks to keep charging people? A sensible option would be to hold on ALL claims and charges pending the test case. Unfortunately this would have hit bank profits to such a degree that the angry phone calls from them would have been worse than the ones from CAG.

 

But now you're stirred up a hornets nest. The banks are still not happy (they see the writing on the wall). Customers are clearly not happy. What are you going to do?

 

 

 

Here are your choices:

 

1. Allow claims to proceed as before (and allow banks to keep charging at current rates)

2. Carry on with the current situation (e.g claims on hold, bank can still charge)

3. Put a hold on all new charges (but continue to keep current claims on hold)

4. As 2. but with clearer provisions for special e.g hardship cases.

 

 

Stakeholders reaction to this decision:

 

1. Both bank and consumers will play ball but the FSA will look a bit daft. Still its better to admit that you're wrong than to let the current situation continue.

 

2. Total loss of consumer confidence in FSA, FOS and OFT likely. Blowback will last years. Very difficult (and expensive) to rebuild reputation. Hovever banks will love the FSA and you will be invited to many more top tier events and dinners. A career enhancing move (or possibly not if Gordan finally decides he's had enough of sharp practice - not likely really but you never can tell these days).

 

3. Looks OK on paper - Hovever: Consumers with a claim will not be happy and banks share price will drop 20% overnight. You will make no friends and will never get that plush banking consultancy job when you leave the FSA in a couple of years.

 

4. At the very least you need to issue specific DIRECTIONS on this issue (not wishy washy guidence and 'Dear CEO letters, references to banking code etc..). However (as you will have already found) how do you define hardship? Much better to just make an accross the board decision. Which leads us to..........

 

 

So what do you do? Here is a solution that you might be able to swallow.

 

PRESS RELEASE: Issue EMERGENCY DIRECTIONS. Saying that after careful review and reflection etc.....the current situation is unfair to customers blah blah blah........in the interests of helping them the FSA orders the following.......

 

 

Immediately order all new charges to be no larger than £12 (ideally effective on OCT 1st but by 14th OCT at the latest. Any bank saying they cant implament changes within that timeframe is lying) and allow claims to proceed (e.g remove the wavier) for anything in excess of this amount. This would allow banks to keep the revenue rolling in, but at a reduced rate. It would also allow claims to continue (but at a reduced level of value as banks would seek to pay the difference charged between the old and new rates).

The beauty of this option is that the OFT has already done the legwork. (see: The Office of Fair Trading: Current credit card default charges unfair ) Remember. This decision was originally meant to apply accross the board. "These principles also apply to default charges in other consumer contracts such as those for bank overdrafts, store cards and mortgages".

Don't be tempted to keep the stay on claims. Its hardly fair that so many people have already claimed when others have been left hanging. Often it is those who most need the money who are currently stuck in the system. Set a deadline for claims to be finished (e.g similar to endowments but set the timelimit at 2 years). Allow banks to make offers to settle for the difference between £12 and whatever they have been charging. This is also a fit punishment for banks who have sought to profit from these types of charges. The banks that charged the most will pay the most back. You could also extend the time banks are allowed to take to process claims (suggest 12 weeks from receipt of claim to payout, not including DPA requests).

 

IMPORTANT: You must allow banks to ofer a 'full and final settlement' for claims. Trust me jam today is better than jam tomorrow for most consumers. Most people currently stuck in a claim would take the difference between £12 and whatever they were being charged quite happily rather than wait 5 years"

 

 

But wait I hear you say. The legality of bank charges is still in question. What if a court rules that the charges are fair? Well that is unlikely. And if a court does rule that they are fair then it will probably arrive at a figure of £4.50. Banks will welcome an FSA 'fair figure' of £12. All customers could be given a choice of accepting this settlement or waiting for the court case. That sounds like a fair choice to me.

 

Give directions for banks to proceed with claims in line with the previous OFT ruling (see above). State that the ulimate legality of charges decided in court does not matter as you are instigating these measures in the interests of consumers (I know TCF does not strictly apply to bank accounts, but it probably should and it probably will one of these days, and if you say it does it will). You know that the banks have been breaking numerous aspects of TCF, FSA regs and BBA regs in relation to retail banking. Unfair Terms and Contracts is neither here nor there really. If you are looking for ammo to back up the decision then you already have it.

 

This will fly with banks and consumers and will also restore consumer trust in the FSA (as an afterthough it might even help the FOS and the OFT). This is also what you should have done at the very beginning. Its the right decision. As a plus you'll even start getting those positive headlines that you love back again.

 

Adopting the above suggestions would allow banks to put a £ figure on liability and would also put a cap on the time it will take to ultimately resolve. This is in the best interests of consumers, banks and the financial markets. It will also draw a line under the matter. In addition it will also allow the OFT to spend the next 5 years in various courts arguing the toss on Unfair Terms and Contracts. By the time they have finished and a decision has been reached the matter will be over. Whatever the ultimate decision the market will have moved on by then, and so will the claimants, and so will the defendants. Whatever the outcome it will no longer matter and everyone will have time to prepare.

 

In addition what the UK retail economy could really use right now is an injection of liquidity. What better way than to use the banks to deliver it? If you want to keep balance sheets strong then people need to be able to pay their bills. This will allow them to do just that.

 

Neither banks or consumers will be overjoyed with this decision but it might be one that everyone can live with. And it will be a hell of a lot better than the current fiasco.

 

.

Remember: Consumer confidence is everything. The FSA is widely regarded around the world as a 'model' regulator. Don't throw away this position over an issue that has a palatable solution for ALL stakeholders.

 

 

You could also grow some balls. Remember - all you have to do is re-write the rulebook and/or issue directions. No one wants this dragged out for years. The FSA can and should be able to find a solution all by itself without the need to go running to the OFT or the courts. The market needs leadership and direction. The FSA has the mandate. But does it have the balls? We will have to wait until Sept 28 to find out.

 

 

 

 

Yours,

 

A Concerned Stakeholder

 

 

P.S

 

A NOTE TO THE CLEARING BANKS.

 

 

It costs an average of £50-£150 to attract a new current account customer through traditional advertising. At no time in UK retail banking history have you managed to **** off so many people so quickly. OD charges were a nice cash cow while they lasted but you didn't think they were going to last forever, did you? At the first sign of trouble you should have dropped them. Yet the lure of easy cash was too easy. Some banks even designed special software to maximise revenue based on payment dates. It was very clever (for a while) and you wanted to maximise shareholder profit (as is your job). Hovever the landscape has changed hard and fast. If you want the IFA market, if the retail distribution review is going to mean anything, if you want to cross sell, upsell etc then you are going to have to change. An oppertunity exists RIGHT NOW for one UK clearing bank to break the mould and stop charging. Together with the right ad campaign you will literally have people begging to bank with you. Treat them right and they might never leave. In a country where people are more likely to get divorced than change bank accounts you would think this is an oppertunity not to be missed. Now you know you've all drawn up the plans and arranged the creatives. So who's going to go through the looking glass first? Cause someone's gotta be.

[cromwell316]

The FSA decision is puzzling, allowing Banks a waiver in dealing with Complaints as to the legality of an action is ludicrous and completely irrational when they continue to levy charges and further send consumers into debt, perhaps everyone who files a complaint now should add that they are calculating interest at the rate set by the County Court. I'm about to deal with the Nationwide so when I get the documents I shall be filing a County Court claim as well as paying to proceed with a Judicial Review as to the legality of the FSA position (at the very least when the FSA / OFT case was filed there should have been an injunction on any further "penalty" charges).

[olden]

Hello everyone, I have just read this letter, and it is very good, but there are parts of which I would question, not in its content, but the language,i.e xxxxoff, and grow some balls etc. keep up the standard. !!

check the spelling, don't take this the wrong way please, I have copied this ready to send If you think thats what to do?

 

Also I don't think that the charge of £12 is acceptable. The Charter we have all been signing on MSE states that a maximum of £5 might be acceptable. ?

 

I have sent letters to MPs. the M O R, Rhodri Morgan, and the deputy minister at the National Assembly for Wales, as well as the application to uplift my stay and objections to the Cardiff County Court. Have you looked over on the other sites, Cardiff Directions Hearings, List of MPs MEPs written and Emailed, Urgent Info needed to confirm, and others??

QUOTE: from another site, " The OFT had stated very clearly that the £12 is NOT to be treated as a fair amount, and that only the courts can say what is fair or not. If you get charged £12 by your c/c company, you should still challenge it."

__________________

[PitmanTheBRAIN]

do we print this off and send it to the FSA? X

[alecmac18]

No No - Its meant to be a bit scarcastic - but also to give people an idea of the kind of thinking that will be going on at the moment within the FSA and banks and an indication (of what I think) the likely outcome will be.

[PitmanTheBRAIN]

No No - Its meant to be a bit scarcastic - but also to give people an idea of the kind of thinking that will be going on at the moment within the FSA and banks and an indication (of what I think) the likely outcome will be.

OH... HAHAHA Glad i never sent that then.. a blonde moment me thinks hehe!!

 

roll on this test case to finnish!! i want my money from clydesdale bank!! all £1600 of it!!

[alecmac18]

Within this thread you'll find the latest:

 

 

 

 

http://www.consumeractiongroup.co.uk/forum/general/113808-oft-may-compromise-bank.html

[alecmac18]

opps : I mean this one:

 

http://www.consumeractiongroup.co.uk/forum/general/113808-oft-may-compromise-bank.html

[alecmac18]

By the way: That link to reply to FSA is not a reply to this letter.......just a mistake by me..

[JOSH_IOU]

OH... HAHAHA Glad i never sent that then.. a blonde moment me thinks hehe!!

 

roll on this test case to finnish!! i want my money from clydesdale bank!! all £1600 of it!!

 

 

oh dear god

[Gez]

Here are your choices:

 

1. Allow claims to proceed as before (and allow banks to keep charging at current rates)

2. Carry on with the current situation (e.g claims on hold, bank can still charge)

3. Put a hold on all new charges (but continue to keep current claims on hold)

4. As 2. but with clearer provisions for special e.g hardship cases.

 

You forgot option 5, which seems to be the one they have taken..

 

5. Ignore people in genuine hardship, ignore the consumer completely, turn a blind eye to bankers disregarding the conditions of the waiver & allow them to continue to do as they please.

[Lokiy2j]

The reason the FSA would never listen to your pathetic letter is very simple. one of the FSA's guiding principles when dealing with complaints is this:

 

"treat customer's fairly"

 

this means that they the bank's HAVE to put all complaints regarding the court case on hold as any decision made before the court's final decision that would contradict the decision is seen as a breach of the FSA's rules and then you lot would be on your high horse about that too!

 

How ever the banks must keep charging the lazy people who just can't be bothered to sort their finances out. plus what would you fill your days with if the banks were to stop charging you? how would you cope??

 

you can't have it both ways.

[Guest vortex]

The bank's have breached the FSA on hardship claims, and that is what the FSA themselves have said, yet they have done nothing.

You have also missed one major major aspect of your argument.

The Bank Charge issue is not to STOP the charges because the bank HAS THE RIGHT to do so but it is the LEVEL of them that is at issue.

[alecmac18]

Dosen't matter anymore, they've missed the boat. This country is drowning in a sea of insolvency and debt. If they'd sorted bank charges six months ago it could have been postponed or avoided for a while - but it too late now. This is the second 1929.