Banks win in High court (overdraft charges etc)

[surrey jim]

http://news.bbc.co.uk/1/hi/business/8376906.stm

Millions of bank customers seeking billions of pounds of overdraft charge refunds have been dealt a major blow by a Supreme Court ruling. The court has overturned earlier court rulings that allowed the Office of Fair Trading to investigate the fairness of charges for unauthorised overdrafts.
The decision follows more than two years of test case litigation.
At stake is an estimated £2.6bn of annual income for the banks, which had appealed against earlier rulings.
Seven banks and one building society wanted the court to overturn two previous rulings that would let the OFT investigate their overdraft fees.
In a three-day appeal in the House of Lords in June, the banks argued they would receive a "deluge of litigation" if the decision was made against them.
Historic claims
All new claims against banks were effectively suspended in July 2007 when the OFT and the banks agreed to stage the test case to see if the overdraft charges were legal or not.
The OFT has previously said that even if it lost, it would still try to use other powers, perhaps by instigating a full competition commission enquiry, to attack overdraft fees.
The Supreme Court's president Lord Phillips said that bank customers agreed to pay overdraft charges as part of the price of having a current account, so they fell outside the scope of the appropriate regulations.
But Lord Phillips added that this was not the end of the matter as the OFT could still try to scrutinise bank charges under other parts of the regulations.
"This will not close the door on the OFT's investigations and may well not resolve the myriad cases that are currently stayed [put on hold] in which customers have challenged the relevant charges," he told the court.
The Supreme Court ruling will come as a bitter blow to the consumer organisations who have campaigned against what they considered to be unfair overdraft charges.
The Court said it would not allow an appeal by the OFT to the European Court of Justice.
The judge did not give any explicit guidance as to how the judicial authorities should deal with the frozen cases.

I for one am pleased. Had the banks lost they would have gained the revenue by charging in otherways which would affect everyone not just those who utilise overdraft facilities etc

 

[Gazwag]

I agree, its a win for people who manage thier accounts, who would have suffered in the future whilst the money for nothing people who cannot would have gained

 

[liverpool_one]

hmm government own big stake in banks

 

[Mellotron]

There is a MASSIVE middle ground between the two groups of people, Gazwag.

I think it's a good thing as long as it means bank charges become less ridiculous in size.

 

[BigGully]

http://news.bbc.co.uk/1/hi/business/8376906.stm



I for one am pleased. Had the banks lost they would have gained the revenue by charging in otherways which would affect everyone not just those who utilise overdraft facilities etc

I don't see it that way. the banks do not need an excuse to rake in charges, if it was feasible and do-able for them to charge for services at present they do not, then they bloody well would, irrispective of this decision.

 

[Curious Orange]

Erm, I never saw a problem with the banks charging for people going overdrawn unauthorised. I got caught out once, I didn't complain, I just set up an agreed overdraft facility which I make sure I don't use, if I do accidentally drop into it then all I get charged is interest.

Why should the banks pay for people not managing their accounts properly?

 

[cjd]

I agree, its a win for people who manage thier accounts, who would have suffered in the future whilst the money for nothing people who cannot would have gained

Why on earth do people who manage their accounts feel they should have free banking at the exhorbitant expense of those who don't...?

If an account holder goes overdrawn, he should be liable for expense incurred by the bank.........which happens to be NOTHING like the £25-£30 they have been overcharging for years.

The beneficiaries of this outrageous behaviour (and nothing short of legalised stealing by the banks) is the people who stay in credit. Why do these people think they should have FREE banking...? They have been given a service by the bank....so f***ing well pay for it...the same as you would for any service.

Any poster who whinges about losing his FREE banking, needs to have a good think about his selfish attitude.

 

[Mellotron]

What annoys me is the assumption that ANYONE who goes into their overdraft and gets completely shafted by charges "had it coming, money for nothing, buy now pay later, blah blah greedy spend spend spend yuppie attitude". I reckon that covers about 20% of people who have problems dealing with bank charges. Most are just regular people struggling to get by on their current wage, and it's a properly snobbish attitude to assume otherwise.

The FACT is the charge amounts ARE unfair. £30 for an unrepresented DD is RIDICULOUS, with a £28 charge on top as well. £10 maybe? Bit steep still (more than covers the expense to the bank), but fair enough. It's not the charges themselves that are the issue, it's the amounts.

I COMPLETELY agree that if (by accident or on purpose, why anyone would do it on purpose I dunno) someone goes over their overdraft, they should have to pay a small fee.

For the record, I have not incurred any charges in quite a while now, but the charges made it much, much harder for me to manage my account properly for a fair while. They can become a vicious cycle.

 

[MJsGhost]

I agree, its a win for people who manage thier accounts, who would have suffered in the future whilst the money for nothing people who cannot would have gained

While this is true, it is also true that banks don't charge people fees for having current accounts because of the money they make from all the punitive charges for unauthorised overdrafts, bounced cheques etc. As someone who hasn't been charged, so benefits from free banking, I don't feel comfortable knowing this is because the banks make millions from their poorer customers. OK, so there are people without loads of money who manage their finances effectively so they don't incur charges, who would be slightly worse off having to pay a tenner a month for a current account. But I think that's an acceptable consequence of reducing the number of very poor people who end up paying £25-35 per day for being overdrawn - when that represents their budget for the week.

We have got used to free banking, so don't like the idea of paying for it, but when you look at the reasons for it being free, you'd have to be a heartless bastard not to feel guilty.

 

[dingobruce]

http://news.bbc.co.uk/1/hi/business/8376906.stm
I for one am pleased. Had the banks lost they would have gained the revenue by charging in otherways which would affect everyone not just those who utilise overdraft facilities etc

I reckon the banks will find ways of charging everyone in the future anyway, they are all in a state where they need to recoup huge sums of money and paying back overdraft charges would be a drop in the ocean.

I agree you should be penalised for unauthorised borrowing but surely the charge should be what it costs the bank and no higher.

 

[Uncle Spielberg]

People are missing the point here. Its not that banks are not entitled to recoup any expenses they have incurred if someone steps over the overdraft limit it is the fact they are taking the piss with charging £ 80 for a returned dd and charging £ 35 if someone goes £ 1 over the limit.

I am amazed at the bank arse lickers on here considering they have virtually single handedly bankrupt this country and see it back 30 years for which it is costsimng us
£ 13000 per person to cover their bad debts by spunking tens of billions of pounds in the USA sub prime market.

They then have the check to criticise individuals for not managing their acounts to the letter and stealing , yes stealing money with wheel clamp style bank charges.

This is a very bad day and you can expect these fees to now be aboused, ie £ 150 for a bounced dd, why not £ 500 ?. The banks now have carte blanche to do what they want.

 

[beorhthelm]

long and short of this: the banks took the piss (repeatedly charging people for letters already overdrawn etc), but the campaign to refund everyone all money related to overdraft charges also took the piss.

it seems this ruling is based on the simple principle that you agreed to the fees at the time of opening the account. there is still scope for the OFT to reign in the ammount charged in the future, which i hope they address now.

 

[Curious Orange]

Why on earth do people who manage their accounts feel they should have free banking at the exhorbitant expense of those who don't...?

You are joking right? The banks have the advantage of the depositors money, usually on a long term basis, and now you're suggesting that as well as that depositors should be charged for the privilege as well?

Maybe I should be charging the bank for loaning it to them in the first place? (oh, that'll be the interest then).

 

[Mellotron]

When I was 16/17, I had a HSBC account. I went 0.16p over my overdraft once.

Just over a month later, I "owed" over £500 in overdraft fees. Explain to me how that is fair.

 

[Herr Tubthumper]

Mmm. This looks a little suspicious to me. When I last read the legislation it stated that banks were not allowed to make punitive charges against people for going over drawn. Clearly, in the age of modern communications, charging £25 for going over drawn is a punitive charge. £25 for a computer generated letter and any further associated admin seems a litte step...and can only be a punitive charge in my mind.

I wonder how the banks got such a decision? They obviously have influential people at the top?

 

[beorhthelm]

I agree you should be penalised for unauthorised borrowing but surely the charge should be what it costs the bank and no higher.

this argument is so stupid. why can they not make money at this? do you only pay the cost of production for a beer, loaf of bread, sofa, car etc.? this is what banks do, make money from charges and lending.

When I was 16/17, I had a HSBC account. I went 0.16p over my overdraft once.

Just over a month later, I "owed" over £500 in overdraft fees. Explain to me how that is fair.

eithr you added an extra "0" or you are telling fibs. £30 for overdrawn, similar for a letter informing you, repeat each month. so most after one month would be £50-60. now after a year i might be £500 if you didnt sort it out. (i bank with HSBC and have gone over my overdraft limit)

 

[Curious Orange]

When I was 16/17, I had a HSBC account. I went 0.16p over my overdraft once.

Just over a month later, I "owed" over £500 in overdraft fees. Explain to me how that is fair.

Puts my £25 in perspective, and reinforces my negative image of HSBC - used to hate going in there:
join queue - see greeter/monkey - greeter/monkey doesn't let you go to a cashier - greeter/monkey points you at a phone

 

[clapham_gull]

They have taken the p*ss in the past, although it doesn't excuse people for taking the p*ss either.

I took out a loan years ago to help me with my first property. At the time I was refused it unless I took out a large payment protection scheme at the same time.

Looking back I was a bit naive.

Anyway - on balance I can't quite help thinking that the banks have got off the hook on this one, primarily because of the financial state they got themselves into.

 

[Simster]

When I was 16/17, I had a HSBC account. I went 0.16p over my overdraft once.

Just over a month later, I "owed" over £500 in overdraft fees. Explain to me how that is fair.

First Direct (owned by HSBC) did something similar to me when I was a student. I realise it was my own fault to an extent, but how does this sort of behaviour help its poorer, more desperate customers?

 

[MJsGhost]

You are joking right? The banks have the advantage of the depositors money, usually on a long term basis, and now you're suggesting that as well as that depositors should be charged for the privilege as well?

Maybe I should be charging the bank for loaning it to them in the first place? (oh, that'll be the interest then).

If you wanted to keep your wages under your matress and pay all of your bills in cash, how much do you think you'd spend on security to keep it safe?

Yes, the banks charged punitive fees for unauthorised overdrafts and yes, the majority of this should be repaid. BUT, that will also mean reasonable charges for all - something I am in favour of.
If you've got a shedload of cash in your current account (and therefore almost non-existent interest), then you are stupid. That is what savings accounts are for. It is unlikely that savings accounts would attract charges. Current accounts are very useful for managing money - all your major incomings and outgoings done online, by DD etc. This is a service the bank provides for you - currently free, but only thanks to nicking a load of cash from the poor.