Bank charge date revealed

[Dolph]

The point of dispute is whether these 'consequences' are justified though.
Considering it costs the bank ~£2.50 for actions of the customer when it happens (as stated by an independent study), is it fair to ask for 2000% more to put it right?
Also taking into account the said people are already struggling to pay the bills.

Should OcUK only charge trade price for all it's products? if not, why should the bank not charge appropriate market rates for services?

Part of the problem, it has to be said, is that the banks are forced to give customers accounts with direct debit facilities irrespective of how poor they are at managing their finances (with the minor exceptions of undischarged bankrupts or those convicted of fraud). (basic bank account)

 

[Tefal]

With no income they wouldn't give me anything.

Ah ok, I was just wondering if it would have been possible

 

[Berserker]

basic bank account

You linked to a Microsoft TechNet article. You probably want to fix that link.

 

[Dolph]

Indeed, that is the whole point of this. The whole debate centres around whether it's a charge for a service or essentially what amounts to a fine (i.e. charging more than is reasonable to cover the expense incurred by the bank). The former is legal, the latter is not.

I'm firmly in the 'fine' camp. If it's a service, then it's a service I didn't ask for and don't want. In my view, unauthorised overdrafts should be outright banned (i.e. the banks put systems in place to prevent it from ever happening). The end.

That can only happen by removing the current debit card and direct debit setups and starting again though, because both of these are 3 way agreements between consumers, banks and businesses, not just 2 way agreements between consumers and banks.

Should I have to accept the inconvenience and additional costs associated with the change because you aren't happy with the service? A better solution would be to just stop some people using direct debits and enforcing the restrictions on solo/electron (that customers complained about hence the relaxation) regarding how they can be used.

 

[Dolph]

You linked to a Microsoft TechNet article. You probably want to fix that link.

Doh, corrected

 

[Dolph]

Nice generalisation there. I'm responsible for getting myself £25K in debt, and I'm responsible for getting myself out of that debt too. I'll still hold that charging £35 for going over by 37p is downright stupid even though in the end I didn't have to pay. If I'd have gone over by £37, I'd have accepted it, but not 37p.

I agree with you there, however. Most banks are now moving away from doing this and have been for a while, introducing small buffers before the charges start, but there is always going to be a cut off point where you have to say 'you were over it'.

 

[Rambo2683]

Should OcUK only charge trade price for all it's products? if not, why should the bank not charge appropriate market rates for services?

If OcUK charged 2000% mark up on things, they would be out of business pretty soon as people would chose not to use them.
I don't think people chose to go overdrawn, and I can't see how you can get around owning a bank account in this day and age. The banks are free to do as they please.

 

[kylew]

Its the fact that your already short on cash to land in this situation, then you get fined a hefty fee which only makes your financial situation worse.

Im happy to admit the fault is mine for being crap with money, but I dont think the punishment is fair

Even so, being crap with money isn't the worst thing in the world

If you're crap with money and struggling too these are devastating.

What really confuses me is the mentality behind it.

Failed direct debit, one of the reasons what that's happened is that you've ran out of money and couldn't afford it, so they put a charge on your account leaving you with the DD to pay off and a completely unnecessary charge too.

A failed DD costs the bank nothing at all, even if they like to pretend the issuing of a letter costs them money, it's not much.

They send people statements all the time at no extra cost so they can't be THAT expensive.

Under no circumstances should a bank punish some one for having no money in their account which results in them have even less money in their account, thus posing a potential risk of it happening again, it's bizarre.

If a DD fails for what ever reason, it should be just that, a failed transaction, and the company requesting the DD then contacts you to arrange alternative payment or work something out.

Also, before people start banging on about spending money you haven't got; Sky takes payment for their services in ADVANCE, therefore, you pay FIRST and receive your month's service AFTER you've paid.

That's just one example.

 

[Berserker]

Requiring all transactions to be authorised would go a long way to fixing the debit card problem. I realise that's some inconvenience both to you and to the retailer, but in a significant majority of cases it happens anyway and it doesn't cause a problem. Point accepted on solo/electron.

I don't have a solution for direct debits, but if it was made in their interests to do so, I'm sure the banks could find one.

 

[daz]

Should I have to accept the inconvenience and additional costs associated with the change because you aren't happy with the service? A better solution would be to just stop some people using direct debits and enforcing the restrictions on solo/electron (that customers complained about hence the relaxation) regarding how they can be used.

Well at the moment Dolph, your free banking is being subsidised by the people who go into an unauthorised overdraft or who have returned direct debits. Are you happy about this? You talk about responsibility - how about paying for your account and it not being subsidised by the poorest.

 

[Dolph]

If OcUK charged 2000% mark up on things, they would be out of business pretty soon as people would chose not to use them.

You might be surprised at the markup of some products when sold at the RRP... A 200ml cup of post-mix coke, for example, costs about 2p (inc the cup), and is normally sold for around £1.

I don't think people chose to go overdrawn, and I can't see how you can get around owning a bank account in this day and age. The banks are free to do as they please.

Well, clearly they aren't, because they are heavily regulated as to what they can do, and the regulator approved the various setups that can lead to people going overdrawn as being acceptable due to the small numbers penalised vs the massive numbers benefitted from the setups, and because ultimate responsibility lies with the customer.

 

[Dolph]

Well at the moment Dolph, your free banking is being subsidised by the people who go into an unauthorised overdraft or who have returned direct debits. Are you happy about this? You talk about responsibility - how about paying for your account and it not being subsidised by the poorest.

I do pay for my account already... the benefits I get from doing so outweigh the costs.

I do struggle to see, however, why the actions of others in this case should be used against me? If I am profiting from anything, it is the choices of others... no-one is forcing them, certainly not me, to spend more money than they have.

 

[kylew]

Requiring all transactions to be authorised would go a long way to fixing the debit card problem. I realise that's some inconvenience both to you and to the retailer, but in a significant majority of cases it happens anyway and it doesn't cause a problem. Point accepted on solo/electron.

I don't have a solution for direct debits, but if it was made in their interests to do so, I'm sure the banks could find one.

I'm really surprised that all transactions aren't authorised.

They obviously want to make it easy to give charges out to people.

They shouldn't be allowed to do such things.

What makes it worse to me, is when they make out that they're really inconvenienced by the charges they've imposed.

I've had a letter about a failed DD, where they had pretended that they had paid it for me, and that's the reason I was being charged £30.

I got it right back when I complained about the letter and asked them why they were lying about paying my DD for me.

 

[Rambo2683]

You might be surprised at the markup of some products when sold at the RRP... A 200ml cup of post-mix coke, for example, costs about 2p (inc the cup), and is normally sold for around £1.



Well, clearly they aren't, because they are heavily regulated as to what they can do, and the regulator approved the various setups that can lead to people going overdrawn as being acceptable due to the small numbers penalised vs the massive numbers benefitted from the setups, and because ultimate responsibility lies with the customer.

It is still a person's choice to buy a product.

And I think where we are today with this whole case pretty much proves how good that regulation was/is.

 

[kylew]

I do pay for my account already... the benefits I get from doing so outweigh the costs.

I do struggle to see, however, why the actions of others in this case should be used against me? If I am profiting from anything, it is the choices of others... no-one is forcing them, certainly not me, to spend more money than they have.

Also, before people start banging on about spending money you haven't got; Sky takes payment for their services in ADVANCE, therefore, you pay FIRST and receive your month's service AFTER you've paid.

That's just one example.

I wish you wouldn't act like the examples you provide are the only possible situations that could happen.

You're more than entitled to express your opinion on them, but when asked about situations different, please don't ignore it.

People spending money they don't have isn't the only reason such things happen.

Even then, what's worse? Some one spending £50 on their credit card (money they haven't got)? Or some one going overdrawn by £2 unintentionally? Or some one already hard of cash is 10p short on a DD which gets returned and a charge is placed due it it?

 

[Dolph]

Requiring all transactions to be authorised would go a long way to fixing the debit card problem. I realise that's some inconvenience both to you and to the retailer, but in a significant majority of cases it happens anyway and it doesn't cause a problem. Point accepted on solo/electron.

It's significant inconvenience for the retailer, because now instead of the person having to pay their bank an unauthorised overdraft, they'll be shouting and screaming at the shop staff because their card has been declined. (Going back years, I actually had a customer take a swing at me on the tills in Tescos when his card was declined...)

I don't have a solution for direct debits, but if it was made in their interests to do so, I'm sure the banks could find one.

The problem is direct debits are generally used for ongoing services where the goods/services have already been delivered. Increasing DD refusals is going to increase the collections/debt recovery requirement for many companies who use DD, and again, there is significant customer impact from the company's viewpoint, which is why the DD agreements are constructed the way they are, it was a big negotiation between consumers, businesses and the banks, to make all of them happy. This is not just about the consumer customers, but the business customers as well, especially when the vast majority of consumer customers cannot be refused DD options at present due to regulation.

 

[daz]

I do pay for my account already... the benefits I get from doing so outweigh the costs.

I do struggle to see, however, why the actions of others in this case should be used against me? If I am profiting from anything, it is the choices of others... no-one is forcing them, certainly not me, to spend more money than they have.

At the moment what you've got with the retail banking sector is poorest subsidising a substantial proportion for everyone else... it's like socialism reversed!

Most other countries in the world you do have to pay for a bank account, it's not a completely alien concept - and as you say you already do (I imagine you have a premium account of some kind). If people did have to pay £5 a month for their banking, I'd like to think that people will perhaps be more inclined to think of the banking as a product/service, and demand more from their bank in terms of the way many are treated as customers; it will probably lead to increased competition in retail banking because customers can more easily assess the suitability of a bank for them. For example, If cost is their primary motivator, no doubt there'll be one bank doing free or very cheap accounts, etc.

 

[Dolph]

I'm really surprised that all transactions aren't authorised.

They obviously want to make it easy to give charges out to people.

They shouldn't be allowed to do such things.

No, they want to balance the needs of their consumer and business customers. Remember the Debit card was really introduced as a replacement for the guaranteed cheque, not a means to offload the responsibility for money management to the bank.

What makes it worse to me, is when they make out that they're really inconvenienced by the charges they've imposed.

I've had a letter about a failed DD, where they had pretended that they had paid it for me, and that's the reason I was being charged £30.

I got it right back when I complained about the letter and asked them why they were lying about paying my DD for me.

Some of the letters could be better worded, and some banks could use a more common sense approach with regards to charges, but you have to look at the other side too. We have generated, over the years, an irresponsible entitlement culture where the public generally and in all areas is focused on rights and not responsibilities. If the banks reduce unauthorised overdraft charges, what disincentive will people have to not spend more money than they have? This will eventually result in the banks changing to not offer anyone an unauthorised overdraft at all, despite the fact that sometimes it is a very useful facility for some, and all the complaints will just change from 'they charged me' to 'they refused me over 30p' and people will still moan, whinge and complain, and again start demanding changes...

The real problem and solution lies with people, not the banks.

 

[kylew]

It's significant inconvenience for the retailer, because now instead of the person having to pay their bank an unauthorised overdraft, they'll be shouting and screaming at the shop staff because their card has been declined. (Going back years, I actually had a customer take a swing at me on the tills in Tescos when his card was declined...)



The problem is direct debits are generally used for ongoing services where the goods/services have already been delivered. Increasing DD refusals is going to increase the collections/debt recovery requirement for many companies who use DD, and again, there is significant customer impact from the company's viewpoint, which is why the DD agreements are constructed the way they are, it was a big negotiation between consumers, businesses and the banks, to make all of them happy. This is not just about the consumer customers, but the business customers as well, especially when the vast majority of consumer customers cannot be refused DD options at present due to regulation.

And how much do you think said companies receive of the £30 the bank takes from you?

 

[Dolph]

And how much do you think said companies receive of the £30 the bank takes from you?

They don't, they generally receive the money that was requested on the DD or the debit card, which is what they needed for the goods supplied.