Wed 15 Aug 2007
Over the years, like many, I’ve fallen foul of bank charges - being charged a fee because my account was over the overdraft limit. More often than not I didn’t know anything about it and was blindly continuing to pay for things, therefore attracting even more charges! This was totally my fault for not keeping a closer eye on both my spending and my bank balance, so I just took the charges on the chin and soldiered on.
Many people didn’t just accept that this was all their own doing and decided to fight back against the banks either because they thought they shouldn’t have been charged at all or that they shouldn’t have been charged so much. This has come to the fore recently as there are quite a few websites and forums setup to help people argue the case with their banks in the hope of reclaiming these charges.
Normally I’m of the opinion that if you sign up to something, in this case you open a bank account with Bank X, and in the contract it states that if you do a certain thing then you will be charged for it, and you then go on to do that thing then Bank X are entitled to make the charges set out in their documents.
So while I don’t really agree with the stance which says banks shouldn’t be allowed to charge you if you go overdrawn for a few days, I do agree that the amount the banks are charging does seem a bit excessive - which I would think is the attitude most people would have.
Apparently the banks should only charge customers enough to cover their costs, ie they shouldn’t use bank charges as a way to make a profit - they make enough of them as it is. I watched a programme on TV a few months ago, where the reporter had gone undercover to work in a bank and she found out that the total administration cost to a bank of them having to bounce a payment is approximately £2.00 yet bank charges I’ve had have been as much as £38.00.
Literally millions of people are affected by this, and well over a million have either applied for their charges to be refunded, or are in the process of doing so. The banks seem a bit scared that if one person actually takes them to court and the ruling says that the charges are excessive then they will have to repay everyone’s charges so until now they have been keen to settle out of court and a high percentage of claimants are successful in getting at least part of their charges back.
However, the banks have grouped together and decided to have a test case - though the literature I’ve had said this test case was to find out whether the banks are right to be making charges or not rather than determining exactly how much they should be charging.
I’ve no doubts the courts will decide it is fair to make the charges, but as they aren’t being asked to set a limit on how much they can charge then it’s not really getting anybody any further forward.
What it is doing is giving the banks some breathing space.
Currently they must be dealing with an incredibly long backlog of claims, and are paying out huge sums of money to keep the claims out of the courts (reports estimate that banks have paid out something in the region of £500 million in reclaimed charges) - by running this test case, it means all current claims are put on hold until this case is decided, thereby giving them anything up to a year to put contingency plans in place.
In the meantime, anyone in the process of claiming has to sit back and wait while the banks are allowed to continue to make these charges - surely the fair thing would be to say that okay noone can claim in case the charges are lawful, but the banks can’t charge in case they are unlawful!
There are a couple of things that we can do while we wait though. The excellent website MoneySavingExpert has setup an online petition in the hope that new PM, Gordon Brown, will take up the fight and hopefully get this sorted out speedily. You can add your name to the growing list here, after you have read Martin Lewis’ Bank Charges Charter which details what he feels are fairer conditions for the application of charges, and how much they should be.
August 16th, 2007 at 4:11 am
Two stories on this one - good and bad. The good comes from several years ago when I was still in England and banking with Lloyds. I was pretty careful about being overdrawn but finally I screwed up and a cheque arrived the day before some more money went into the account. I forget how much the bank wanted to charge me for it but, thinking it was a bit excessive, I phoned my branch and explained that I thought it was unreasonable to charge me so much in view of the fact that more than enough to cover the cheque had arrived the next day.
To my amazement, the guy said, “OK, that seems fair - I’ll cancel the charges…” I didn’t think banks did that kind of thing!
In contrast, banks in the States are just plain evil. I couldn’t believe this the first time it happened but I’ve seen so many occurrences that it’s obviously standard practice. What they do is wait until midnight before putting through the transactions of the day. And they put the debits through first! No matter that a credit might have arrived in the morning and some cheque just gone through five minutes ago - the cheque is dealt with first.
Naturally, this often puts the account into the red before they deal with the credits - and the bastards charge for you going overdrawn! They deduct their charges and only then do they deal with the credits. And the most evil thing of all is that, if you’re running a really tight ship, their charges could keep you in the red - so they charge again!
It’s a total scam and should be made illegal. No wonder the banks are universally hated over here. Come back Lloyds, all is forgiven…
August 16th, 2007 at 9:32 am
Yeah, that is one of the more unfair things the banks do - you get orverdrawn so they charge you £30, then that makes you further overdrawn so they charge you another £30 and so it goes on…
The American system does sound even more unfair than the British way, better the devil you know perhaps!
August 19th, 2007 at 1:32 am
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