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Winners and losers

Stephanie Flanders | 17:41 UK time, Wednesday, 25 November 2009

Who are the winners and losers from today's surprising bank charges ruling from the Supreme Court? Colleagues have been exploring the nuts and bolts of the decision and its implications for customers. But here's a brief economic take.

It's been a good day for the banks, and a bad day for campaigners, and customers hoping for an easy refund. But when it comes to everyone else - the answer's not so clear.

According to the FT, it's "only a black day for those in the red". Banking isn't free, and it never will be. But thanks to Britain's unique free banking model, many of us like to think we enjoy free banking, by keeping in the black, and being savvy enough to shop around.

That's the theory. In practice, the OFT's research says [1.19MB PDF] that more of us pay fees than we might like to think. In a single year, the regulator found that nearly a quarter of all accounts paid a penalty for going overdrawn - and only 6% of customers actually switched banks in search of the best deal. Very few people had any idea of the difference in charging policies between the major banks.

It's not hard to see why the banks like the free banking model - studies suggest that retail banks make more money per customer in the UK than in most of the rest of Europe. A report by the European Commission (referenced on p49 of the OFT's study mentioned above) found that average revenues per customer were the fifth highest in the EU, after Luxembourg, Italy, Austria and Holland.

Many frugal consumers will be glad to see free banking live to fight another day. But if there is one resounding conclusion of the OFT's work in this area, it is that free banking doesn't come cheap.

Comments

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  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    It was a good day for people who could add and subtract.

    It should concern us that there are so many people in this great country of ours who are unable to do simple arithmetic and think it is the fault of others that they are so deficient in the management of their own affairs.

    Of course the banks are going to feed the nonsense into their market-place that they are caring institutions rather than grasping businesses, but you don't have to believe them.

  • Comment number 3.

    Personally I hate bankers, but I would have to preface this by saying that when I say bankers, I actually mean Investment Bankers as I regard them all as a bunch of bloodsucking parasites. However, when it comes to your deposit taking, car loan high street bank, I actually have to say that on this subject I probably agree with them. After all a bank is nothing more than an easyaccess/secure place to hold your own money, as opposed to having the cash stored underneath your mattress. But say that you chose the latter and upon lifting up the mattress to obtain some lucre found nothing there, well it's simple, you can't have whatever it is that you wanted to buy. Get used to it. So why should a bank be any different? Just sloppy financial management if you ask me and those spending money that they don't have deserve all that they get. Perhaps the financial penalties will actually serve as a discipline for future behaviour? Although thinking about the type of people that we are talking about, probably not.

  • Comment number 4.

    It concerns me more stanilic that you believe that it is justifiable for our newly formed Supreme Court not only to overrule previous judgement without sufficient comment but find it acceptable for banks to charge for money that they haven't actually "loaned" and sadly you agree with them. If you don't understand this then you don't understand what this case is about.

    This isn't about fair charges, it isn't about personal finances or people that can't add up. It's about more systemic support for a banking system that has lined it's own pocket with other peoples money, again.

    I can add and subtract, I also know that if I can't afford what I put in my shopping trolley then I have to put something back. I don't expect the supermarket to charge me for NOT buying somthing.

  • Comment number 5.

    A requirement that banks be honest would be a good start. It is difficult to develop regulations for criminal activities. Fees, charges, account debits, transfer allocations, whatever names they decide to call them all add up to a costs for the consumer. As we have seen that even though the bank misrepresented almost eveything they were doing regarding loans, they insist on maintaining their abuse of the small depositor. Saved by public funds the reward is to further abuse the public. Let them eat cake attitude is still the mantra of the banking industry and this is usually followed with....what are you going to do about it. If only the people had a legislative body that they could go to or a political party that might represent them. Some day there may be a form of government that is based on representing the people.

  • Comment number 6.

    It's not the notion of being charged for an unauthorised overdraft which is obnoxious - if you flout your banking conditions, that's fair enough. But what is unfair and obnoxious is the inconsistency of treatment and the deliberate cumulative charging, where 10 or 12 direct debits can each be "bounced", each costing £30. Surely a single charge of £30 and a phone call to the customer would suffice in such circumstances ? Caledonian Comment

  • Comment number 7.

    People like me are the winners - never been seriously overdrawn in my life and and I 'go without' rather than go into debt/be regularly overdrawn on a current account.

    The 'silent majority' should not subsidise the idiots who choose to live on the wrong side of zero! Accepted, that some people are struggling like students and need some help with charges.

    The banks provide vitually free banking to most who stay in credit - that must be a good deal. The other issue is the loss of the traditional bank manager who was approachable with this kind of issue - but the banks are not and should not be a 'charity shop'.

    The banks are partly to blame for hiding the bank details in their small print - the charges should be printed in bold red type on every bank statement and shown to every customer in their bank, on every transaction.

  • Comment number 8.

    I can't believe that the banks got away with consumer money. The reasons they give for charging customers approximately 35-60 pounds each time is ridiculous!!! a few pennies overdrawn in my case. It is a disgrace and they should not be allowed to just walk away scot free. The banks are supposed to be providing a service for the people but this service has outraged many hence the court case. I can't believe the majority opinion didnt get considered. What a waste of time.

  • Comment number 9.

    'According to the FT, it's "only a black day for those in the red".'

    So Stephanie, DOes that include the bankrupt banks?

  • Comment number 10.

    7 nautonier,

    They already charge us by way of the difference between the interest they PAY you on your savings and the interest they CHARGE you for any outstanding loans (including mortgages).

    To suggest that they should CHARGE us for access to our money (that was EARNED and not CREATED from THIN AIR) is outrageous!

    You have taken your eye off the ball, these institutions are both morally and financially bankrupt. How DARE they charge US, after WE bailed them out.

  • Comment number 11.

    Folks,

    Want to HURT the banks?

    Simples....................NEVER take out ANY credit and you have beat them, for they cannot ever grow ;-)

  • Comment number 12.

    What's up Steph? Three blogs in one day (is that a song?)

    The economic ones getting a little too hot to maintain with your 'rosy view of the world' argument? Ah - the problem with propaganda....

    Also, ask yourself why is the economics editor talking about bank charges? A case of misdirection perhaps? (none of the contributors so far seemed to have spotted this....

    If you were going to report on banks today there was a rather larger story of the covert lending and misinformation to go with it which was worthy of debate surely? (Can you imagine the insurrection if we had discovered The Treasury covertly funding a £60 billion operation in Iraq/ Afghanistan? Mmmm)

    And what about the economic story of BBC Worldwide being floated on the back of taxpayer license fees benefitting another bunch of (soon to be ex-) public sector employees. Discuss.

    Pretty poor show.....

    Of course, the title of this blog entry 'winners and losers' is rather apt. Because what do you gain with a change of government? I can only see losers..........

  • Comment number 13.

    So the Supreme Court judges judged that the Office of 'FAIR' Trading (OFT) does not have jurisdiction for ruling whether the banks are charging 'FAIR' charges from their customers.

  • Comment number 14.

    What concerns me gestalt is your misunderstanding of the ruling today. The Supreme Court hasn't, as you've suggested, found it 'acceptable for banks to charge for money they haven't 'loaned''. What they have done is determine that the legal basis on which the OFT had challenged these charges was flawed. In other words, they've done exactly what a Supreme Court should do, which is interpret the law and ensure it is correctly applied.

    Your comment highlights a disturbing trend I'm observing: that people think 'moral' or 'natural' justice (entirely subjective) should be applied, irrespective of what the law actually is. In a democratic society, if we have an issue with the laws in place, it is our collective responsibility to ensure our elected representatives address them. You can't demand reparations from banks / corporations / government (delete as applicable) on the basis that you feel it's 'the right thing' - that's just mob justice.

  • Comment number 15.

    It's amazing how many people are missing the point here. By lending the money to people beyond the overdraft limit, it is the banks that have agreed to lend the money. They could choose to prevent people withdrawing money over their limits; They don't. They don't because they calculated they could make lots of money by charging outrageous fees for people that stray, quite often pennies, over their limit. Let's face it, it's not difficult to do with direct debits, etc, these days.

    My current account has a £200 'arranged' overdraft facility and a £2000 'unarranged' overdraft limit (at a ridiculous APR). When I log on to my account online it tells me what I have available to spend - if I have a balance of £0 it says that I have £2000 to spend. I didn't ask for these overdraft facility and despite their best attempts to persuade me to go overdrawn, I have strangely resisted so far.

    As for free banking: It was always free before these charges came along, so what's different now? Oh, I see, the banks have an entitlement to take as big a margin as they see fit now, regardless of their own massive inability to lend money sensibly and their own inability to provide a service to the consumer - I'm talking about retail banks here - not investment banks. It is the retail banks that are the scum of the earth. Only in this Country would we put up with this outrageous behaviour.

    Like every aspect of life in this Country now, banks try to maximise their profits by deception and abuse of their most vulnerable customers.

    Why Steph do you fall for the false spin argument that the ruling would end free banking? The idea of a bank is they make a profit by lending money at a higher rate of interest than they pay on deposits.

  • Comment number 16.

    a) Force banks to lower interest rates on all existing and new loans to individuals and businesses
    b) Keep the repayment rates almost as high as they were prior to the drop in interest rates so that the principal of debt is repaid more quickly, dropping the ratio of private debt to GDP
    c) Raise income tax to take some of the extra income gained from the slight drop in monthly repayment rates to cover recent government expenditures, reducing ratio of public debt to GDP
    d) Ensure that credit extension is properly regulated and that leveraged asset speculation is prohibited

  • Comment number 17.

    We need some new banks so we can pull out of the old ones, shut them down and get rid of their management.

  • Comment number 18.

    I'm not exactly in the black but I do read letters that arrive concerning my accounts very carefully leading to me ditching Halifax for Co-op earlier this year. Until this morning I hoped that the banks would lose this case, however, I actually changed my view after hearing some of the emails and interviews on BBC Breakfast this morning, especially the comparisons with French personal banking. In the light of that, the rules seem fair enough to me.

    What does not seem fair and what should be investigated is this: HBOS is perhaps the bank most responsible for the decimation of many people's 'financial situation'. It has recently increased its authorised overdraft charge from a 15-20% apr (on the account where people make themselves into ladders to give £5 a month to customers paying in over £1000 a month) to a £1 charge for each working day on authorised overdrafts under £2500. They have also added about 5% to at least one of their credit card rates.

    These actions can only exacerbate the problems of people who are not well-off enough to respond by ditching the bank or card, assuming that they notice or understand the import of such changes in the first place. They are continuing to wreck the lives of the very people whose taxes saved them from collapse last autumn.

  • Comment number 19.

    #18 thebicyclethief

    and hence post #16

  • Comment number 20.

    (7) nautonier "The 'silent majority' should not subsidise the idiots who choose to live on the wrong side of zero!"

    So you think it's fair for "the idiots" that go overdrawn to subsidise your 'free' banking?

    I'm sure the majority of overdrawers do so by mistake, for a very short duration and by a very small amount. That's not irresponsible banking. But to be automatically charged £40 by a computer (no human intervention) for going overdrawn £30 for a couple of days is certainly disproportionate & punitive.

    Personally, I'd like to see an end to all the 'hidden' ways that banks make money out of us and an introduction of regular account fees; perhaps per month and per transaction.

    The banks provide a service. We should not expect that to be free. If a bank charged, say, £5 per month and 10p per transaction then it would be simpler to compare banks and shop around for the best deal. In return, they remove their hidden charges such as interest margins, delayed deposits, punitive charges

  • Comment number 21.

    The only losers are the people of the UK. Specifically - all of us who've been injudiciously paying our portion of the bailout! Add up the known bailout from earlier this year to the hidden bailout from a year ago, and you can see that we have collectively given the banks far more than they deserve!

    Whether or not the whole system would have collapsed is debatable - but the fact that Sir Fred and his minions got away "Scot-free" is absolutely criminal. He should be forced to pay for all the fees for every RBS member at the very least.

    And I do agree that going overdrawn is almost always due to poor planning and presumptuous spending. The only charges I've ever had from my UK bank are down to their seriously obnoxious fees for ATM withdrawals whilst abroad.

    As to "unique free-banking" - the same facilities for "free accounts" exist in the States, as do the same overdraft charges, not to mention the corrupt investment bankers ... is there a pattern here??? Thanks for the report.

  • Comment number 22.

    Since this is a blog, it's been a bad day for internet forums, the wisdom of the crowd and template letters. Millions of downloaded template letters and forum posts all agreeing with each other, egging each other on were simply sewpt away in two minutes by the supreme court's judgement. Harsh but reassuring that decisions are not taken by the mob but democratically. A good day for the professions.

  • Comment number 23.

    ''A German bank employee who secretly transferred money from rich to poor clients has been given a 22-month suspended prison term.

    The 62-year-old woman, dubbed the 'Robin Hood Banker', moved more than $11m (£7m) in 117 transfers.

    The court in Bonn was told that the employee, who has not been named, took no money for herself.

    The bank made a loss of more than $1.5m (£1m) when poor customers were unable to pay back unauthorised overdrafts.

    The employee was accused of allowing overdrafts for customers who would not normally qualify for them.''

    http://news.bbc.co.uk/1/hi/world/europe/8376532.stm

    In view of the fact that - as usual - banks re coy about giving data out lets look at the above, it is actually quite a big sample. That experience, granted in another country, gives some indication of the risk of a unauthorised overdraft, nothing like the fees charged, even though the bank account holders are using somebody elses money without negociation. Less than 15% default given time. Here - Strange how elasticity in the system is denied account holders but 60+ BILLION is advanced to overdrawn banks if it suits the BoE. I agree accountholders very much have responsibility but I thought this was about not charging excessive fees.

    BTW it is the first time I have hear of people in credit being called 'rich' is this a new definition, sounds a bit rich to me.

  • Comment number 24.

    nautonier, I think you are misreading the situation. None of us want to subsidise the 'idiots who chose to live on the wrong side of zero' but what you fail to realise is that many of the people who fail into the red CAN do so by no fault of their own.

    You haver heard of the recession, you have heard of rising unemployment, you have heard of rising fuel costs, you have heard of investment income being slashed by paltry interest savings rates?

    If, God forbid, you fall foul of any of the above and then fall 25 pence in the red to be then penalised £35 by your bank, and then another £35 because your budget is shot and then another £35 because you aren't paid until the 25th and the charges are deducted on the 24th, I wonder if your disparaging remarks will come back to haunt you.

    Consumers charged thousands for minor infractions and shortfalls of pennies, the self-employed seeing their overdrafts withdrawn and seeing hundreds and then thousands in charges added to their accounts, small businesses driven to closure by the cessation of their credit facilities and overdraft rates increased tenfold, all of these people are facing misery and despair by the money grabbing of the banks.

    And you with a sweeping statement condemn them all. Think and look around at your family, friends and colleagues if they are being charged deserve your comments.

    As for 'free' banking, the bank holds our money and uses it as an asset to lend more money. They pay us .5% and charge their borrowers 10-25%. They are using our money to make their money. Why on earth should we pay for them to use our money to make outrageous profit?

    The banks are lending our 'bail out' money, which costs us in extra taxes and we are not seeing any benefit from, back to us and charging us interest!

    The banks have robbed the populace for years and this judgement condones it. If the banks had any dignity, any conscience and vestige of honesty left they would cap their charges at £12 as the credit card companies have done. But just wait for higher charges and the return to the huge bonus culture.

    God preserve us.

  • Comment number 25.

    Just a brief story that may be of interest to some of you with maxed out credit cards.

    Last week I was fortunate enough to be able to pay off my last credit card balance in full.

    The credit card was a Barclaycard Platinum Visa card and the balance on it was approximateley £5,000. The day I paid off the balance, I coincidentally received a statement from Barclaycard in the post that very morning. In the statement Barclaycard advised that they had increased my credit limit from £11,300 to £12,000 on the card! (they unilaterally did this...and you had to look carefully to spot the advice note on the statement)

    I phoned the telephone no. for account queries on the statement and got through to their Indian call centre (trust me, I know it was an Indian call centre). I told the the lady on the phone that I wanted to pay the £5,000 balance off in full and that I wanted to cancel the card. I was promptly put through to a UK call centre whereby a rather gruff sounding Northern woman spoke to me. I again stated to her that I wanted to pay off the balance in full and cancel my card. She said are you sure you really want to do that...

    I know I'm rambling...but anyway, to cut a long story short....she tried every trick in the book to persude me not to cancel the card. It was all scripted.

    However...the first thing she offered when I asked for the card to be cancelled was an instant 2% discount on the APR.

    Be careful...there are legalised loan sharks out there.

  • Comment number 26.

    7 nautonier

    Sorry mate, you are not a winner you just think you are. You still have the possibility of your credit being abstracted out of your account illegally, theft I think its called. Then the fun really starts. And they dont go after a fiver. And they can be outside the bank or bank employees. Like everything else its a percentage call. The biggest advantage of nothing in a bank, is that you have nothing at risk. I am just waiting for the latest idea of using mobile phones to pay at checkouts to go pear shaped when it comes in, seeing as viruses are now sprouting on mobiles. Anybody for a quick trojan. I can't see any really safe place for liquid cash.

  • Comment number 27.

    Banking is like a funkfaaair....oll up roll up ,then rollover your winninks and losses[is there a difference anymore?]before being taken for aaa ride to inkfinity and beyond or

    Until the day the music dice and the banksters kneed their crystaaal sinurgeayesed baaalls sewn back on by the fiat lady of the laaampound of threadneedle st who says "grit your teeth, the fairy is coming aswell" and"it aint over till i singk,plaaay it again uncleshasaaam]

    Well gentlemen bankers which kind of stitch up would you like... BLANKet , perhaps zigzag or crotchet....oh dear we've run out of laughing gAAA's ,NO MATTER, THAT WONT AFFECT YOU Chaaaps...just lie back and think of inkland and the sack.

    Life's a baaawl of chairease

  • Comment number 28.

    STEPHANIE,

    Loan shark gangs charge huge rates of interest on small, short term loans made to vulnerable poor people. Our courts find this activity criminal and punish these lenders with a hefty fine and a spell in jail. Banks charge huge rates of interest on small, short term loans mostly to vulnerable, poor people and the The Supreme Court gives the banks their blessing. This shocking case of double standards should make everyone in this country fear for our future.

  • Comment number 29.

    It is not the banks right to fine it is the unreasonable , punitive cumulative nature of them that is so objectionable.

    What i find even more objectionable is that some posters here seem to delight in the fact that they benefit from the ruthless exploitation of the easily manipulated in society in the form of 'free' banking.

    This seems to be justified by labelling the exploited as 'chavs' or similar and on the presumption that these people are inherently 'bad' as oppose to being the result of poor leadership generally in the nation in the last decades.

    I wonder if they would be so quick to judge if the hand they were dealt in life involved.

    Enjoy your 'free' banking off the back of the suffering of others..you guys surely deserve it.







  • Comment number 30.

    The Peoples Union

    I being the membership secretary of The Peoples Union whose members having being carefully checked and found to number three.

    Say as follows: You are invited to join our union

    I advise any new prospective members that the necessary credentials you need to join this fine union are:

    Firstly you must be a person and secondly you must have a pulse.

    If you are a person but do not have a pulse, you can in fact be an honorary member, but you will not have voting rights. However you can still vote, subject to being in direct contact with a conventional electric supply cable, or other unearthed live device.

    The Peoples Union provisional objectives are:

    To promote a fair and transparent system of banking, so that the people of the United Kingdom are not laden with debt due to a reckless and/or negligent act by a financial institution.

    To stop the mis-selling of financial products, such as pensions, personal equity plans, endowment policies, payment protection insurance and the like.

    To ensure that Members of Parliament and the House of Lords, do not use their position for their own financial good and fairly and honestly, represent the people of this country.

    To hopefully be smeared by a leading politician, think tank or other noted person, for our views.


    If you are a person and have a pulse, or even if you are no longer the land of the living and have access to mains electric, and believe in the above, please let us know.


  • Comment number 31.

    imagine the boost to the economy if they had made them pay back the charges. I, for one, would have had a much better christmas with a bit of extra cash coming my way. Oh well. I guess it is back to the lottery for me!

  • Comment number 32.

    They are just nagging the money out of us. If you don't pay one way you pay another. It's not as though you can even pick your poison.

    Strange things have happened. years ago you go to a bank with your loose change in bags and and get the coins turned into notes for free.

    Then as the years went on they were moaning about it saying oh it costs us to handle coins and now the only way you can get any quantity coins turned into notes is to use the machines which also ask if you want to give to charity.

    Oops pressed wrong button. Silly me!

    At the end of the day the service you get depends on what kind of mood people are in. Just can't be denied the pattern of behaviour is classic absolutely textbook.

  • Comment number 33.

    27 Still awaiting forensic examination by them oderaters using a shorter oxford

    It'll do no good .

    They'll need the shorter 400 volume smartyraaa'sian dictionary ,the original of which will b 4[2b+not2b] sale on ebay

  • Comment number 34.

    Accidental overdrafts generally happen to the relatively poor. Moreover, for the very poor, they only happen because banks allow them to happen, knowing they will thereby earn fees. I know people who have acquired small overdrafts by an error, but found themselves getting deeper into debts they could not handle (by virtue of their basic poverty) just because of a single foolish mistake. The relatively well-to-do should realize how difficult it can be to manage money when one is poor.

  • Comment number 35.

    The banks may have got things wrong but the ruling is right in my opinion - some people in this country still need to be taught how to manage their finances...

  • Comment number 36.

    re 27 Comeon mod chaps ,stop keeping the board in sirspenders

    moderate or forever hold your p's

  • Comment number 37.

    I went to my bank earlier today and the bank teller handed me a note...it said 'this is a robbery!'

  • Comment number 38.

    Recently I wrote to the OFT about my Credit Card company charging me £12 for overspending on my Credit card by £1.40. I was surprised to receive this charge as the payment was approved. However they told me that in order to avoid my embarrassment they agreed to the £1.40 extra on my account. What a fabulous earner at their call. I was told by their representative, when I asked about the approval of payment process and checking my balance she told me they did did not always consider the availability of funds - I wonder what they are checking when you are awaiting approval I learn't something that day.....

    Today I hear in the news about un-aproved over drafts and the court siding with banks. I must be naive about all this business as I do not understand how you can have such a thing as an unnaproved over draft - how do you get cash from your bank account if it is empty unless the banks release it. I do believe the banks are quite willing to allow cash to flow without their agreement as it is nothing other than a great earner for doing little. Accepting banks T&C's is given and by doing this perversely releases the bank to take it specified amounts without checking availability of funds - seems to me this the banks behaving poorly (even deviously).

    The person taking cash should also play their part and ensure the bank will support the supply of cash - however the bank as I see it s there along with many other things make sure people do not get into difficulty. If we were discussing Health and Safety as apart from money the banks would need to execute duty of care to ensure a person did not get into difficulty and become hurt.

    It is imperative the banks are profitable and make cash however - may be we are at the time when we should legislate against allowing unnaproved overdrafts from current accounts - credit cards and if cash is released then it is at the risk of banks.

  • Comment number 39.

    re27 Comeon moderatorologists step forward livelylads and up to the mark, put your blindfold on and make a last request then bring down your index onto the random moderation button and letit decide yaye or neigh. it can't be much simpler .

    Stop treating me like a queuer.

    Surely i should have the same rights to be scene and not herd as the high aye queuers in parlament

  • Comment number 40.

    I have a fee-based current account which benefits me, and I think we should look at this from a broader perspective- The question is does this unique "free banking" system in this country increase or decrease the rich poor divide ? I believe that the current system may well penalise those irresponsible,who use too much credit, however it also prevents good honest people from escaping a continual cycle of charges because of their low incomes. I would be happier with a fee system to prevent the increase of a them and us society- it brands too many good minded people with the bad ones.

  • Comment number 41.

    Talking of overdrafts I see Dubai World has run into externalities, or should that be realities. 35Bn gbp neg. Wants a standstill for 6 months. Pause for thought.

  • Comment number 42.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 43.

    The OFT research states they believe the Personal Current Account market is NOT working well for consumers. The key reasons for this are a combination of...complexity, (ever read those terms and conditions in full? Thought not,) AND a lack of transparency, meaning in competition terms that consumers can only realistically focus on the more "visible" fees and not the less visible ones, such as overdraft charges and forgone interest, (the near zero percent interest on current accounts.)

    In 2006 the OFT estimated (and the banks have not denied it,) that they earned £8.3billion in income by way of current account fees and charges. The banks have clearly taken the view that constantly moving the goalposts, wrong-footing customers and keeping them in the dark, is THE only way to make money!!!

    In addition to this (and IMHO the most irritating issue,) as the OFT comments, is the invisibility and deliberate complexity of their fee structures, provides banks with little incentive to compete!! So yes, there are all sorts of bank branches everywhere and you can walk into a dozen different ones tomorrow if you want to - but just having loads of bank branches is NOT competition! Many may find this idea one that they struggle to accept. Because in the past research has suggested that the personal finance market, by being saturated with branches, postal and internet banking accounts etc, meant there was plenty of competition, right?

    In fact what true competition actually is, is not branches and the internet, it's the terms and conditions and whether these are markedly different from one bank to the next. In other words are Barclays, Lloyds, HSBC, Royal Bank of Scotland etc ANY different from each other if their terms and conditions are almost identical? Where basically if your one-off financial infringement means you were charged £55 by Barclays, but had you been with a "competitor" you would still have been charged something very similar? Been looking to fix your mortgage recently? Noticed how most banks wanted to charge fees of around £499 for a 2 year fixed rate? Doesn't look like competition to me.

    So how can the market be "fair" and the charges be "fair" if, a)the work involved does not cost the banks more than £2.40 to bounce a cheque - yet they charge £35 and b) you cannot move to a cheaper operation, because all the banks are lazy and have no incentive to compete and can increase prices on a whim knowing their customers won't have a clue what's happening?

    The banks are operating a Cartel. Up to now it is the FSA that has supported, even guided the banks into behaving like this! The FSA would check proposed terms and conditions over, but then allow all banks to use the same ones. Because having consented to a set of conditions for one bank they could hardly prevent another using the very same conditions that they had already approved!

    "Without competition in current accounts the banks have little incentive to create new and innovative services," says the OFT. But with a present system generating £8.3billion a year in income for the banks, why change such a lucrative situation unless you are forced to?

    Time for the Government to step up and do something!

  • Comment number 44.

    Why do Bank's pay items that take customers overdrawn? Not to make a profit on charges but on TRUST. Customers have asked the Bank to honour a payment on their behalf simply by performaing the transaction - be it direct debit, a cheque, a debit or credit card payment. The Bank trusts the customer to pay the money back that they don't have and honours the request. If your account is not well conducted a cheque or DD will most likely not be paid. Either way the bank will charge you for the extra work involved because you do not have funds available.

    Some think the Bank's should not pay these items - so what are you going to do when you have filled your car up with £30 of petrol and your card is declined because you have no money - siphon it back out? Wait for the police to arrive? Or your shopping comes to £70 and you only have £50 available - put £20 worth back?

    I have been charged in the past due to my own error - no complaints from me - that is part of the terms and conditions of my account.

  • Comment number 45.


    I am an averge working Joe
    I have drunk two glasses of Bailey's
    But I do believe that this website gave me a voice.
    So to Ms Flanders and the BBC.... Thank you


  • Comment number 46.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 47.

    I'm completely unsympathetic to the people who feel hard done by when they receive charges from their bank. As has been mentioned many times above, staying in the black means you can hold and mantain a bank account for free in this country.

    The overdrawn, failed direct debit or bounced cheque charges that banks apply are agreed by the consumer when they sign the account application. it's not the banks fault that the customer doesn't read the small print.

    The responsibility to avoid going into the red is entirely the customers and not the banks. it's not difficult to check an account balance or to make sure there's enough money in the account the day before a direct debit is due and budgeting so that one doesn't spend beyond their means.

    I'm not suggesting that bank charges and fees are representative of the true cost to the bank but you would think the sheer size of the largest fees would act as a deterrant to consumers. If charges were minimal then people would just take them on the chin so that they can satisfy their impatient spending desires, wrecking their credit score in the process.

    A £60 speeding fine doesn't reflect the true cost to the police yet it acts as a deterrant towards people speeding. the same goes for banks charging processes.

    the blame lies with consumers that are desperate to blame anyone but themselves for being too irresponsible to bother checking their accounts on a regular basis. end of story.

  • Comment number 48.

    Money is created aaa's debt THERE4 it is an IOU

    How did the banksters run out of IOU'S

    We import goods and give johny foreigner an iou [£'s]

    Now Johny foreigner cannot spend it because we make nothing and have already sold it to him

    Government feeling sympathy for johny foreigner and seeing him dejected says "hey johny foreigner weve got something better than that iou that we sold you" its a new improved iou[guilts] that produces the patter of little feet "trust us we have your lazer printers now"

    We get our iou's back from johny f and then seeing johny f dejected due to cash shortage and feeling pity we buy something from him, he goes puts same moneygoround money in hubble bubble toil and trouble pot which seems to get much much bigger than the ammount put in [not realizing immediately that taking it out produces reverse effect ]

    etc etc etc



    How is 3 [rubricked] cubed coming along mods


  • Comment number 49.

    27 moderate that if you can

  • Comment number 50.

    Banking whaaats it all about Allfee

  • Comment number 51.

    The problem with this so-called 'free banking' model is that it isn't free at all - it's subsidised by those who pay overdraft fees, who are often among the poor and those who have difficulties in making ends meet.

    But it's fine that those who are worse off subsidise banking services for the rest of us, eh?

  • Comment number 52.

    @j@yyOQyy& o o o oooooooo oooooooooooooooooooooooo


    The problem is that no one can see the elauphant in the room after they get a pAAAt on the head

  • Comment number 53.

    13+14=

    a]48

    b]2


    c]i dont know


    d]This post is a]waaaiting moderation

    b]waaiting moderaashun

    c]waiting


    AAAnswers on a postcaaard please addressed to Gaerballs,room 101,ministry of hole truth, boaaardcasting out house wc1

  • Comment number 54.

    There's nothing 'free' about our banking system. The people who brought our economy to the brink of total instability have been protected by our government because they are too large to fail. We all of us have paid for their actions.

    Credit rating?

    Well maybe HBOS, LLOYDS, RBS etc. can get on to Equifax, or experion and see what credit score they get. Because they have messed up the whol country's finances as well as their own. Money is sewn up. We pay huge amounts of tax in Britain while the highest earners pay (relatively speaking) some of the lowest taxes in the country.

    The office of FAIR TRADING doesn't have the right to assess the banks fees? Well then the law needs to be changed.

    Our banks have laughed at us through out this financial crisis, and well they might. I for one, am disgusted...

  • Comment number 55.

    10. At 7:40pm on 25 Nov 2009, JavaMan1984 wrote:

    7 nautonier,

    .......
    'You have taken your eye off the ball'
    >>>>>>>>>>>>>>>>>>>>>>>
    That's a good one! Ha Ha Ha!

    I think the rate charging is a different issue - What are we discussing here? The principle of those going overdrawn regularly being bailed out by the prudent majority or the overcharging of those who go overdrawn regularly being ripped off by the banks with excessive charges - there are different issues here.

    I have been overdrawn once in the last 10 years, by accident, and the bank charge for being overdrawn for about a week was more than the amount overdrawn. I think the banks need to allow any customer to go overdrawn by a small amount at least, say, once a year and not be ripped off on bank charges. I haven't changed my account as the banks are all as sick as the rest and are carefully managed to be that way - that's the culture. There is also inconsistency I think in how different situations are being dealt with viz-a-viz different banks and unfairness as to how some customers are being treated.

    I think that the banks are too eager to levy the maximum charges they can possibly get away with - that's part of their culture.

    If you accept the notion that in a cash economy that we need banks then we have to be realistic and accept that those going overdrawn persistently need to pay charges for that privilege and not expect charges to be levied on all customers when some customers choose to go overdrawn when they feel like it and in any amount.

    If banks were required by law to state their overdraft charges properly and clearly - more people would shop around and this would encourage competition - what the current array of sick greedy banks need is competition from new ethical banks. The problem is that there are too few smaller co-operative style banks and most of the banks that we have got to big and need smashing up.

    My concern is that by the time the government/FSA have finished with this I can see all current account customers paying a charge for the privilege of holding an account - so that the protagonists can keep going overdrawn whenever they feel like it. The banks will ensure that some or all customers will somehow and somewhere, pay for these overdraft facilities.


  • Comment number 56.

    At once upon a time, the weakness in/for bankstering lay in the fact that depositors could withdraw their money and cause a run on a bank which could also in turn lead it to be taken over by other "soylvent banks", that is no longer the case ,depositors powers have been further sidelined by the fact that any money money money removed by panicked depositters shifting themselves can and WILL now be replaced by central bank electronick fiat in order to paper over the quack quacks in an instance .

    Evolution is over, fossillyayesation and sedimintation have begun in the western world with the unenqecumbird flying east to get away from the diddle do do inkubus on heat flapping about the place with its putative horn of plenty before it leaps onto the QE'rs to produce the next generation of clownes that can fly by the seat of their pants and get tooth fAAAiry [s]miles

  • Comment number 57.

    Once upon a time again the banksters have demonstraaated the AAArt of Brinksmaaa'tmanship with a neat little ha haul for an afternoons wirk and no need to plug in their obsolete thermal laaances....another Iconick moment in COMPUTER BANKING

  • Comment number 58.

    While mainland Europe continues to improve, there doesn't seem to be a bottom for the UK.

    While Europe reduces its debt, the UK seems to have completely missed the point on what their economic problems really are.

    The UK continues to decline because no-one has the strength of character to do what needs to be done.

    The banks need to be seized and interest rates need to be chopped, penalties need to be slashed, transaction fees cut or eliminated. At the same time new regulation needs to be put in place to restrict credit and prevent it from being used to speculate.

  • Comment number 59.

    What concerns me about this is feeling that our institutions are just waiting for us to make an error, and then pounce to make their profit, or bonus, and not just banks. I feel that with surveillance cameras, speed cameras, the tax man on a bonus, BBC and public sector bosses with huge salaries etc, that every part of our society are all out for what they can get, even at the expense of the poorest. When a £0.50 overdraft can cost £30.00 I know someone is having a joke, and as ever it is at our expense.
    This argument about overdraft fees is a symptom of a wider problem where none of our institutions appears to be honest or fair.

  • Comment number 60.

    In respect of over-draft charges The Peoples Union believe the following (subject to moderation by its members):


    If a person who does not have an over-draft facility or has an over-draft facility but has reached the limit of it by way of credit.

    And that person issues a cheque, requests a cash withdrawal, or another attempts to make a direct debit withdrawal on the said account.

    And if any financial institution in charge of the operation of such an account permits the payment from the account and in so doing allows the account to be over-drawn in an unauthorised way.

    The said institution will have committed an offence.

    If having committed an offence the financial institution fails to make a restitution payment equal to the sum of the unauthorised payment, then the account holder may make an application to a court for a winding up order in relation to that finacial institution.

    If an account holder unwittingly attempts to draw on an account which has no funds residing in it, and is uable to withdraw such funds, then the charge (if any) levied against him will be that which a reasonable company would charge but shall not exceed £5.00.

  • Comment number 61.

    TPU advisory note

    I speak today on behalf of all those men and women who, having participated in the scrappage scheme, and having so participated have noted their previously scrapped vehicle still on the road and intact.

    We do in fact support the evasion of car scrappage, for we believe it be green and inherently eco friendly.

    So to all those out there who, having scrapped their vehicle under the scrappage scheme, and having so scrapped it, have seen it later still being driven around, we support you.

  • Comment number 62.

    This court judgement has in effect robbed the OFT of its teeth. Parliament should be the correct place to decide what it can and cannot investigate. I hope Parliament now looks at this judgement and rectifies it with appropriate action.
    The fact is bank charges are punitive, and that is not a good basis for them. They should be fairly set. That's why we have an Office of FAIR Trading.
    I think however there should be punitive charges made on the banks for the mess they have made of the economy. There must be some consequences for being bailed out. There is just cause for these being punitive, and they should be directed against the execuitives responsible for running the banks, not the shareholders.

  • Comment number 63.

    Hmmmmmmmmmm..........................

    For there is trouble brewing in the playground of the rich and famous. Dubai World, the UAE government property development firm has asked for a standstill on its debt obligations for 6 months. It is due to pay back $4bn on an Islamic bond come Dec 14th. The price of insuring UAE government debt rose from 287bp to 420bp on the belief that a default could be on the cards. Were this to happen real estate around the world would feel the effects while banks would once again be looking for help to get rid of swathes of toxic debt. Another equity and world market apocalypse in other words.

  • Comment number 64.

    The department of injustice is controlled by the banks as is the entire government and administration. Why the surprise?

  • Comment number 65.

    I’m struggling with this damn over-draft charges thing, predominantly because I don’t understand it however:

    You cannot be over-drawn unless the bank permits it.

    Because you do not manage your account the bank has to release the money to your debtor and thereby allow the account to diminish in its value.

    They should not allow your account to become over-drawn without first having obtained your permission.

    If you do not give your permission for the account to be over-drawn and it becomes so, the bank is liable for the amount over-drawn, because it has clearly been negligent or mismanaged your account.


    The Supreme Court ruling has not changed precedent, if your claim is less than £5,000 stick em in the county court.

  • Comment number 66.

    63. At 09:24am on 26 Nov 2009, GRIMUPNORTH77

    Good point, I’m impressed, it’s not all over yet is it.
    I wonder if this is just the phoney recession and the real fun has yet to start.

  • Comment number 67.

    55 nautonier

    ''I think the rate charging is a different issue - What are we discussing here? The principle of those going overdrawn regularly being bailed out by the prudent majority or the overcharging of those who go overdrawn regularly being ripped off by the banks with excessive charges - there are different issues here....

    ....My concern is that by the time the government/FSA have finished with this I can see all current account customers paying a charge for the privilege of holding an account - so that the protagonists can keep going overdrawn whenever they feel like it. The banks will ensure that some or all customers will somehow and somewhere, pay for these overdraft facilities.''

    Nautonier

    Sorry, I think you are missing the point. Those in credit recieve 'free' banking paid for by those overdrawn. Usually the idea of a fair charge is it relates to a service provided.

    By constructing the charge system skewed then there is an inherent unfairness in the system. The banks clearly passively encourage unauthorised overdrafts, they can block the overdraft quite easily. Just dial in a figure.

    However feckless a unauthorised overdraft may be it looks disturbingly like coralling and feasting on a group of people. Yum yum plenty to eat today and everyday. As the whole economic problem around us has been based on false constructs and easy credit and feasting by businesses it seems sensible the whole thing is reworked from the ground up but the establishment are not up to it. As for 'new' banks they are far too few banks - there is what could be interpreted as a cartel culture when a population group gets small ie individually dominant in the market.

    One measurement of if this culture existed would be if all banks offer very similar packages to wannabe customers. And very similar packages to existing customers. Another would be if competion criteria were arbitarily push aside from above, oh dear that happened didnt it, Gordon Blair, Victor Blank and his blank cheque and the unholy marriage of LloydsTSB and HBOS - Now being split up by the intervention of the EU. Strange isnt it when intervention has to come from the EU. A measuement that things are not right perhaps.

    The objective of business is monopoly and the profits that result from it, exploitation. The objective of government should be to regulate, to protect the consumer, to ensure competition. Has this administration done that, and if not, should it be placed in administration.

    BTW I think you will find that the concept of the ombudsman in many sectors has broken down. The ombudsmen are overwhelmed, slow to process, placid, prevaricating, toothless imho. One has to go through the ombudsman loop before proceeding to court. At court the bias is for big business and I am not surprise the OFT ran into problems. Courts are seldom bold. The further you are from court the clearer the situation appears to solicitors and barristers, the closer you get the more the uncertainty rises. It would be hilarious if it wasnt serious. And for every pound you spend with a barrister you spend a multiple of that with a solicitor preparing the brief. The whole arrangement is designed to stop people proceeding to court. The customer is then pushed back to the failing ombudsman. Oddly enough people who are short of money have difficulty affording the handbag to take on big business. This is why the legal support system was going bust and was reined back. The demand was too high. Cut support and you cut action also.

    You seem happy with the notion that you individually get free banking, it is pleasant when it occurs. This is all fine but the problem when imbalances occur is all end up in the khazi sooner or later. Those that have not been involoved in the economic bubble or benefited/exloited it will be handed the bill also, are being. One very clear example is the growing youth unemployment. Those at school clearly had litle to do with a bubble yet are paying. The entire concept of longterm isolation from imbalance effects is wholely and completely wrong.

    Finally - If you go overdrawn on account but have sizable deposits with the same bank and point out you are unhappy with their accomodation they they will immediately scrub the charge with an apology in order to stop you moving. This tells me that the charges are entirely opportunistic.

  • Comment number 68.

    #58 FrankSz

    "While Europe reduces its debt, the UK seems to have completely missed the point on what their economic problems really are."

    Is it really or are you merly following the propoganda of the ECB? Lots of home truths to be revealed as far as Europe is concerned. The underlying problems for the Euro may have ben put-off for the present but they have not been resolved. Rather like QE for the UK.

  • Comment number 69.

    Now are we bing to quick in our analysis of the Supreme Court decision? As I understand it, the court disallowed the legal basis upon which the OFT based their actions and NOT the right of the OFT to take action. In so doing, the court helped to identify that stronger legal grounds may be available. So now the discussion can get back to concentrating upon bankers, the UK banking system and the UK debt culture.

  • Comment number 70.

    65 johnny demp

    I am afraid you are likely to continue to struggle young padawan ; ) you only see part of the game methinks.

  • Comment number 71.

    Banks are hiding behind their "Terms and Conditions." Currently they have every right to do that. In fact bank's have found having Terms and Conditions that only your average barrister stands any chance of interpreting, means cashing in big-time, (to the tune of £8.3billion in 2006.)

    At the moment then, if wanting to open an account, you would be best advised to demand a copy of the Terms and Conditions first!

    Then open your account with the bank whose conditions are a) the shortest and b) written in the biggest letters! I'd bet you a million quid the bank with the shortest T&C's is the best bank to have an account with.

    My question is anyone know who this is?

  • Comment number 72.


    To glanafon,

    I see no game, but yes I struggle, but I have padded no wans for many a long year.


    However on to the smaller picture

    I have received objections to the name (The Peoples Union) in that it was not related to the people of Judea.

    So without further ado I propose that it be called The United Peoples Front hereinafter referred to as the UPF.

    Now the UPF being a fine and dedicated body, which if so requested will represent those currently resident upon the land mass know as Judea; ask for like minded souls to raise up their voices against the oppression and financial tyranny currently being perpetrated upon the citizens of this country.

    The necessary credentials to joining the UPF, are similar to those of The Peoples Union; namely you must be a person, and secondly you must have a pulse.

    If you are a person but do not have a pulse, you can in fact be an honorary member, but you will not have voting rights.

    Nevertheless, if being a person, but having no pulse you have access to a mains electrical supply and/or a live unearthed device you can still vote, providing that you are in direct contact with same at the point of voting.


  • Comment number 73.

    Golly we have some great posters on here, living in the 1950s where nothing leaves your bank account without you popping along to see the jolly old bank manager or cashing a cheque, and all you need to do is add or subtract.

    Heard of direct debits anyone?

    I have a Dutch bank account and and English one; if my Dutch one reaches it limit, nothing further gets paid out, no cash from machines, card transactions, direct debits. In contrast my English one will go on paying out then charge me large sums of money daily for the favour. I don't check my bank account balances every day, I'm too busy for that, and everything is done automatically. I've lived in a number of countries and the British banking system is the absolute worst: a high-profit, low service shambles perhaps perhaps best suited to people who have nothing better to do than study their balances and make posts about adding and subtracting here....

  • Comment number 74.

    Well spotted grimupnorth.

    The derivatives stack of cards continues to tumble.

  • Comment number 75.

    Until you fall foul of the system, you don't really have an idea of how nasty financial institutions can be.
    About twice a month on my small business account, I have access removed to funds because an payment made on a debit card has been cleared from my account, but the computer mark has not been removed. Effectively this means I am charged twice for the item for about 1 or 2 days. If I buy GBP3000 of components, my balance is reduced by GBP6000 etc. About 3 times a year the next day a DD goes through and is bounced, because the computer says no. The money is in the account, however the computer hasn't released the mark. The account then goes overdrawn, the DD is bounced and I am charged £30 plus interest the following month. The DD recipient also charges me.
    Despite letters, phone calls etc, I have only once been able to get the charges refunded in 8 instances. I now just accept this as life, and hope that I will slowly be able to amass enough funds to provide a significant buffer so it doesn't happen.
    Until you fall foul of the system, you have no idea how insignificant your life is.

    Real change is needed now.

  • Comment number 76.

    75. At 11:09am on 26 Nov 2009, Crookwood

    I am a self employed Joe I set up a direct debit on my business account in 1993. The reason for the direct debit ceased around five years later. The same company simply re-started the DD, and more than once, and I have to try and get the money back. My Bank says they can't stop it save changing the account number.

    I finally got annoyed, and obtained a County Court Claim form in Adobe format that you can fill in the spaces, I fill it in and sent it to them showing the amount withdrawn along with my additional loss.

    Gave em 14 days.......They paid

  • Comment number 77.

    76. At 11:19am on 26 Nov 2009, Dempster

    You are right of course: it's the hassle, and the worry that the bank will retailate, or somehow mark you as a trouble maker, and this will affect your future trading.

    In these days of low credit, moving accounts in debit are likely to be problematic, so you need to keep in good favour with your current bank.

    The only real option is to be successful, and so have an element of power back.

    And then we're back to the old problem, banks exploit the weak with impunity, only the strong and those with time on their hands can get justice. This is plain wrong, and although this ruling by the Supreme court is legally correct, it doesn't vindicate the behaviour of our banking masters.

  • Comment number 78.

    My personal feeling is that banking (in the UK at least) is an industry in the stone age - by this I mean the levels of customer service are atrocious and would not be tolerated in, for instance, retail. If only consumers were more willing to vote with their feet and change banks then we may see some improvement in the way in which we are treated by the banks.

    I must agree with John (no. 73) - I have no overdraft facility and simply cannot go into the red. Clearly the banks can stop unauthorised overdrawing but choose not to and instead levy charges. This does seem to me unfair.

    On the whole I am happy to allow the financially illiterate subsidise my and many others' banking and therefore would rather the charges remain than a blanket annual charge is introduced.

  • Comment number 79.

    Well done #43 spareusthelies.

    This is just another example of the bank's determination to make banking as opaque and complex as possible, soley for the purpose of their own aggrandisement. Its why the UK's banking system is such a mess.

    Why are banks so opposed to a system of paid for banking? Where does my money go for 2 days when I transfer it between accounts? Why does it cost the bank £35 to pay a direct debit costing £10? Does anyone really know the answers to these questions?

  • Comment number 80.

    In the 1970s I lived in SW3 in a rented flat. I had a phone, gas and electric, and a job. But I didn't have a bank account.

    Sometimes I got a cheque, a gift maybe, so I signed it on the back and cashed it.

    Since then-no countersigning, no cash from my employer, standing orders from the utilities all mean, as far as I can tell, that a bank account is compulsory.

    So it has turned into a stitch up, obviously.

    As for those who blame the feckless, get a life please, this country runs on credit.

  • Comment number 81.

    In reply to mastergee 25th 8:08pm: I do understand and take issue with your inference. In my view the ruling is based on the interpretation of Unfair Terms in Consumer Contracts Regulations 1999; most of the argument surround Section 6(2). While the judgement of the Supreme Court may well be correct on that issue, I believe and I think many will agree that the qualifying "greylist" elsewhere in the Regulations that attempt to further clarify the difficulties in such transactions and Section 8 of the ruling makes it quite clear that “A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.” In these cases it is the responsibility of the higher courts to make that moral judgement; their responsibility as to the way that the written law is applied to its meaning not it’s definition, thereby requiring that that law is changed or modified by the peoples’ law makers. When a “mob” represents a sufficiently large proportion of the society in which a law is adversely affecting question that law then that, with due process, is democracy.
    While one may argue that charge levels made on "Paid Item Charges; Overdraft Excess Charges; and Guaranteed Paid Item Charges" may or may not cause "significant imbalance" - it would depend on the relative level of the transaction to the charge; however, there is no benefit to the consumer from an Unpaid Item Charge therefore the charge must be considered punitive and consequentially cause an imbalance in the provision of that service.
    Many of these charges have been as a direct result of the banking systems' increasing use of card and automatic payments without increasing their responsibility of ensuring the quality of this supposed cash substitute. When we pay with cash, we pay the money there and then, not a couple of days later when the vendor feels like taking the money out of your wallet – in this case it is impossible for the bank to charge you for not having the cash in your wallet if they try. The banks have the technology to ensure card payments are treated as cash, although it is not in their interest to do so. Direct debits allow the vendor to take what they want and (within a couple of days) when they want it. Is it any wonder that those on tight budgets fall foul of this ridiculous situation, a DD claiming a small increase to that expected can be compounded many times over in a few days, especially when the vendors request the DD repeatedly.
    The OFT seemed to me to be challenging the contract’s validity based on the fairness of the charge itself, the Supreme Court did not agree with that in a point of law, siding with the banks view. The social problem with this which the Supreme Court either did not consider, or ignored (whereas I believe the lower courts did) is the effect of the ruling, not as a matter of law but in how it was being applied. Most now believe that the banks are able to charge what they like and get away with it, those that do not have the understanding will not question this and pay up or continue to pay up, or live a more miserable life or worse end it: Meanwhile the banks argue with others for the next few years in how much they should be paying when the OFT get their legal argument adjusted and maybe “win”. Great, tell that to the thousands of people or their families who have gone through the hardships the unfair rules have wrongly created. This is just more “profit today and ignore tomorrow” fiscal policy that affects so many more than the short sighted here are criticising.

  • Comment number 82.

    tsahford (78) - It doesn't matter if you have or haven't an overdraft facility (infact it is easier to fall foul if you haven't). An "insuffient funds" event costs money, instantly.

  • Comment number 83.

    Interesting, Dubai effectively defaults on it's debt making the announcment on a holiday when banks are closed and now the stock exchange is closed due to technical problems preventing trading...

    What's worse is that I remembered it's my wife birthday (but not that it is one of those "significant" ones). Dempster, can I clain political asylum?

  • Comment number 84.

    81. At 12:29pm on 26 Nov 2009, gestalt

    Interesting post

  • Comment number 85.

    No one has yet pointed out the massive liquidity and interest benefit the banks get from taking 1-3 days for clearing cheques or other transactions. Notwithstanding the profit from charges, this income accruing to banks on the float is the reason I expect free (in the black) banking. I understand the technology exists to have instant clearing, but then Turkeys neither vote for Thanksgiving nor for Christmas.

    #80@Maimonides your plea for cash and a bygone era ignores the fact that electronic transactions and the advances in technology make life so much simpler for the majority, rather than carrying around wads of paper. Perhaps you would prefer we reverted to seashells. Money...it's a gas!It's not the poor who are necessarily penalised (many have to manage a tight weekly budget which causes problems against the monthly cycle favoured by banks) Why should those who can organise their affairs to remain in the black subsidise those too idle or stupid (rich and poor)to take that care?

  • Comment number 86.

    All this fuss because a few people cant stick to the rules and then want to be compensated when they get caught. They should arrange an overdraft before spending more than they have, not afterwards. Why should the majority suffer because a minority are unable to live within their means.

  • Comment number 87.

    More proof that the worst types are drawn to dodgy money

    http://news.bbc.co.uk/1/hi/world/africa/8380117.stm

  • Comment number 88.

    86. At 1:09pm on 26 Nov 2009, hilley90
    Why should the majority suffer because a minority are unable to live within their means.
    -----

    Apart from the gweneral mess we are all in, please explain how you will suffer, if not already?

  • Comment number 89.

    #73, #78

    Interesting posts - I agree that the current UK system in not acceptable. As other posters have noted the poorest people are those most likely to fall seriously foul of the additional charges and this is typical of this country.

    To everyone who like 'free banking' - don't you think we should have a FAIR system where people pay a reasonable charge for the service and you are NOT allowed to go overdrawn by the bank! This would have a far greater beneficial effect on people managing their money more carefully and remember - those personal bankruptices and voluntary arrangements - they still cost all of us money even if indirectly. Also - did you see the banks planning to charge for withdrawing money from ATMs - where did your 'free banking' go then!

  • Comment number 90.

    UPF advisory note 05

    The following is an advisory issued by the United Peoples Front

    It has come to our attention that those persons having spent more than they actually had, and having done so did draw upon their accounts a sum larger than that which was credited to the said account, have suffered a financial penalty.

    In the above case we advise our members as follows: To put in place such credit as one can reasonably foresee using in any given month, and if one finds the necessity of needing more than the said amount of credit, contact the Bank of England and ask for Mr King. He is a banker that specialises in lending to those on the verge of bankruptcy.

  • Comment number 91.

    Please see this earlier post to solve this dilemna from Robert's blog:
    ----------------------------------------------------------------------
    At the risk of promoting 'another news channel' - Channel 4 news had it spot on last night when it asked the BBA representative (on the bank charges)

    something along the lines of:

    Interviewer: "so you think it's reasonable to charge people huge amounts for going slightly overdrawn"?

    BBA rep: "yes, well customers are paying for a service, the service of an unauthorised loan"

    Interviewer: "..but isn't that like the 'unauthorised overdraft' the banks have taken from the taxpayer to the tune of billions in order to bail them out from their inability to function correctly?"

    BBA rep: "I don't want to get into that issue - it's entirely seperate"

    -----------------------------------------------------------------

    There is a new album being released for charity by the BBA - it's a compliation album titled "Now that's what I call hypocrisy 15"

    Are we really going to accept that?

    Anyone who has been charged should now contact the treasury and demand their 13k share of the 'unauthorised overdraft' the banks have taken - back with immediate effect....and don't forget to charge £30 for the letter.

    I have actually sent the treasury my letter - I shall keep you up to date with progress.

  • Comment number 92.

    79 druidpld:

    ''This is just another example of the bank's determination to make banking as opaque and complex as possible, soley for the purpose of their own aggrandisement. Its why the UK's banking system is such a mess.

    Why are banks so opposed to a system of paid for banking? Where does my money go for 2 days when I transfer it between accounts? Why does it cost the bank £35 to pay a direct debit costing £10? Does anyone really know the answers to these questions?''

    The banking system is in part infrastructure, that was the reason for the bailout. That means that it should have been privatised, large sections of it were bust, others would have fallen as a domino fall. The infrastructure should have been privatised and the other activities sold on. The problem is in the compensation paid to shareholders following takeover as the definiton of value is argueable. As the RBS alone has a book bigger than the UK the cost of privatising the entire banking sector as they are set up was prohibitive. The casino element got the banks in trouble but the casino element saved them in their current make up as there was neither the time nor the will to dismantle and sell off seperate functions so they were ringfenced and propped. The individual bank account charges are arbitary, which is not unusual - there is only a loose association between cost and price in many situations. In the case of zero cost for an account in credit then the other charges have to rise to cover. Slowing down transfers is a way of gaining further marginal income. As the banks are predominately interested in rebuilding the bottom line they will make as much as possible wherever they can. In view of the size of the problem this will continue for some time. Essentially the customer always pays, the money can come from nowhere else. More money can be made from charges as there is an action to charge against. Charges outweigh costs because they have to cover free services. Further - as I posted earlier the German Robin Hood experience shows the true cost of blanket unauthorised borrowing is about 15 percent default, to this has to be added interest and processing etc. The problem is the sequential unit charging which looks large against the real liability, therefore inherently abusive. As the banking sector moves to more and more automation, IT, and customer self account management, internet access the costs look more and more disproportionate.

  • Comment number 93.

    86. At 1:09pm on 26 Nov 2009, hilley90
    "Why should the majority suffer because a minority are unable to live within their means."

    This is a bank's argument - do not adopt it as your own.....

    The truth is that banks make money by taking savers money and lending it at a higher rate to borrowers. There is no direct connection between the overdraft fees and free banking.
    This is known as 'divide and conquer' - because if they can convince the savers they will loose out by not charging over-extended borrowers - then they can retain the ridiculous charges they impose.

    Don't forget, the banks can actually print money - up to a ratio of 10:1 - why do they need to charge for banking?

    What they mean is that they are able to cover up their poor practices and bad management by simply finding another revenue stream - and they wish this to continue.

    The War on terror is nearly over - the war on finance is just beginning....

  • Comment number 94.

    A surprising number of comments on here that pretty much say - if you can't afford it or the subsequent charges, don't spend it.
    All my accounts are in the black - due to good management of my money rather than good fortune - and yet faced £70 in charges due to non payment of some standing orders.
    I wouldn't have minded had it not been that the standing orders were convenient payments from my current account to two of my savings accounts - and the standing orders were cancelled the night before payments were due.
    So charges based upon non-payment of cancelled standing orders into two other of my own account accounts. Had the standing orders not been cancelled I would have been overdrawn for a couple of hours before I logged on to notice the error - caused by making payments into my own accounts.
    I understand that the charges are there, I understand that they are there for two reasons (1. deterrent 2. profit making) but they are really fair in terms of the actual costs to the bank in comparison to the customer? Clearly not - but the OFT being told they have no remit over it through the legal process suggests to me that something is wrong - even if legally this was the right decision.

  • Comment number 95.

    91. At 1:48pm on 26 Nov 2009, writingsonthewall

    Brilliant, I hope it was strongly worded.

    I thank I might send them one but mine's going to be for £4,900.00 so if they don't pay I can stick 'em in the small claims court.

  • Comment number 96.

    87. At 1:15pm on 26 Nov 2009, KitGreen wrote:

    "More proof that the worst types are drawn to dodgy money"

    ...and to think I was arguing with someone just the other day about this very situation - we are not blessed with being especially productive in this country, nor or we particularly advanced. It's also untrue that Capitalism has brought us our riches.

    The truth is we stole our riches from other less aggressive cultures and we still live off that today. However the arrogance of some actually makes them think that the UK is special or blessed in some way.

    This is the same for virtually all the 'wealthy Capitalist countries' - their wealth is based on robbery and oppression, not talent or genius and certainly not our failed financial system.

  • Comment number 97.

    aren't there a lot of people keen to get very high and mighty and bash the poor little proles who can't do their sums!! i've never had a bank charge in my life, and i used to think that the people who got them invariably deserved them or, where they did not, would have their charges swiftly rescinded.

    but then i actually took some time to find out why people got charged and how those charges so easily snowballed... and i stopped being such a blinkered snob.

    let us have no doubt.. most people who get charged have, initially at least, made a mistake... but the charges are not proportional, and the way they accumulate is outragoues.

    people must be held responsible for their actions. the principle of charging is fine... but the charges have to be fair.

  • Comment number 98.

    86. At 1:09pm on 26 Nov 2009, hilley90

    I would point out in addition to my last post that not everyone who falls foul of these charges 'break the rules'.

    Case in point, the electric board decided to 'change the direct debit amount' based on an estimated reading. They send a letter but the post don't deliver it on time (or they never actually sent it - I mean who's checking?). The current account only holds barely enough to cover the standing orders and direct debits - because there is no interest earned you keep the rest elsewhere.

    Result is the DD fails and you get whacked with charges - through no fault of your own.

    Now you're probably thinking "well you shouldn't have to pay" - which is absolutely right....

    ...so who has to write all the letters to sort it out? Have you ever been in such a situation? By the time you get to the end of it you would have been better off paying the fine and saving yourself the stress and hassle - even though you were not at fault.

    That's the reality of the situation - only a tiny amount of people 'overcharged' are actually carelessly breaking the rules.

    Banks are well aware that they can drag out any issue for as long as possible and most people will simply give up. It's the same when you take them to court - because you can guarantee they would be appealing had they lost yesterday.

    No-one should ever seen banks as socially acceptable. They are simply tools to ensure the rich stay rich and the poor get poorer - don't believe all the adverts about being 'caring' to the customer - if the banks were like this - why would they need to constantly advertise the fact?

  • Comment number 99.

    My bank doesn't comply with it's mandate, refuses to reverse incorrect DDs, double bills me at work and at home for the same service, doesn't put money into my account when they should and has recorded incorrect personal data and it costs them nothing, albeit it has cost me a fortune. Why should customers pay charges, surely the bankjs are a big enough rip off?

  • Comment number 100.

    to those who accuse poor people for not being able to add up i will add this little story

    once upon a time a small business was trying to grow and approached his friendly bank manager ( thats if you can get to see him ) for finance to run his business . oh dear he said you do not fit our criteria for lending so we will not lend you any money. the poor owner goes way and gets on with it trying to run his business . unfortunately as any business owner knows cash flow is not even and regular and neither are sales and one day the owner goes overdrawn trying to sasify the need of a customer . said bank them charges £35 for him to raise a letter to send to the owner who knew there was a problem but couldnt do anything about it as they had made the decision to bounce his cheque at 8.30 am which evrybody knows banks are not open and so owner could not pay any money in even if he could. The next day the owner is now £35 in the red and unfortunately the bank charges him £15 for being overdrawn because of their charges . the following day the owner is now £50 overdrawn so they then charge him another £15 . the owner is now £65 overdrawn
    you get the picture , how is this his fault ! He is only tring to run his business . people who criticise
    a) have no experience in running a business
    b) do not live in the real world
    It is very easy to manage your affairs when a fat wadge arrives every month regularly. it is far more difficult for the rest of us

 

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