Banks win Supreme Court case on overdraft charges

vincent1989 · 26 Nov 2009 at 12:23

gambitt said:
Wonderful. Now let's say your dad gets made redundant and has trouble finding another job. Yes this does happen to many people, especially in a recession. The mortgage and bills eat up his savings within a few months and then he starts going involuntarily overdrawn, thus landing him with compound "service charges" from the bank. What then?

what savings? what mortgage? we're lower class, you expect us to have those? straight on the JSA as well as all the other benefits he'd be entitled to which we wouldn't feel bad claiming as we've been paying in to the pot all our working lives.

we'd actually be better off on benefits but we chose not to be lazy (well, i wouldn't but my parents would be), they could probably afford that plasma or a car then but you know

scorza · 26 Nov 2009 at 12:26

gambitt said:
Wonderful. Now let's say your dad gets made redundant and has trouble finding another job. Yes this does happen to many people, especially in a recession. The mortgage and bills eat up his savings within a few months and then he starts going involuntarily overdrawn, thus landing him with compound "service charges" from the bank. What then?

He should cancel his mortgage and bill direct debits and not pay rather than paying with money he hasn't got - better still contact the mortgage and bill companies to discuss the situation. Going into an unauthorised overdraft is not a solution to his problems, and could result in him being made bankrupt faster than he might otherwise be.

Edit: better point out that the above isn't financial advice

growse · 26 Nov 2009 at 12:27

Tute said:
Can I do it to you?

If you're desperate.

gambitt said:
Please tells us more about yourself if you are going to use yourself as an example. Or you could continue to argue the semantics in order to avoid the real point of this debate.

What is the "real point" of this debate? That we should be teaching children fiscal responsibility in schools, something we've not had a particular problem with for the past century?

Proposing that we need to even teach something that is such basic common sense is a huge indicator of the decline in personal responsibility being taken by people in society. We need to fix *that* problem.

gambitt · 26 Nov 2009 at 12:30

growse said:
What is the "real point" of this debate? That we should be teaching children fiscal responsibility in schools, something we've not had a particular problem with for the past century?

Perhaps you haven't noticed but the way things are done in the financial world have changed a little in the last 100 years.

I understand where all of you are coming from. Those who are pro "bank service charges" are those who wish to keep banking free for themselves because they never have this problem. So educating people on how to avoid paying these charges through effective financial management is not in their best interests because if the banks don't make money this way they will turn to charging for bank accounts for everyone.

Time for lunch

gambitt · 26 Nov 2009 at 12:31

vincent1989 said:
read enough

That's a "no" then?

vincent1989 · 26 Nov 2009 at 12:32

gambitt said:
That's a "no" then?

what more do you suggest i should know, what more would most people need to know?

King85 · 26 Nov 2009 at 12:38

gambitt said:
understand where all of you are coming from. Those who are pro "bank service charges" are those who wish to keep banking free for themselves because they never have this problem. So educating people on how to avoid paying these charges through effective financial management is not in their best interests because if the banks don't make money this way they will turn to charging for bank accounts for everyone.

It's nothing to do with that for me it's purely that I despise stupid people passing the buck and crying about situations that they have put themselves in.

vincent1989 · 26 Nov 2009 at 12:46

King85 said:
It's nothing to do with that for me it's purely that I despise stupid people passing the buck and crying about situations that they have put themselves in.

this.

growse · 26 Nov 2009 at 12:55

King85 said:
It's nothing to do with that for me it's purely that I despise stupid people passing the buck and crying about situations that they have put themselves in.

This. The overwhelming sense of entitlement that some people have is astonishing. I don't particularly care about paying for banking, I can afford it. I do care if the reason why I have to foot the bill for bank accounts is because other people shirk their responsibilities.

Yas786 · 26 Nov 2009 at 12:58

Thankfully ive only ever been overdrawn a grand total of 5 times in the past 20 yrs that ive had my HSBC current account...the only issue i have is that the banks charge a stupid amount of money if you go overdrawn by a few pence..this is where i think it need to be regulated by some authority...i havent got a problem if i have to pay late fees if i go overdrawn but the problem i would have is paying a bank close to £40 for something that costs them less than £5.

If they brought their charges down to say something like £10 then fine no problem for me and i would imagine most people...its the fact that now they can charge whatever they want...perhaps the Supreme court should have said to the banks that bring your charges down to a more reasonable level....like hell it costs them £30-£40 for admin work...thats what annoys me the most.

But like i said i dont go overdrawn as i try to make sure i have enough money in my bank to cover my DD's etc.

growse · 26 Nov 2009 at 13:05

Spawn said:
Thankfully ive only ever been overdrawn a grand total of 5 times in the past 20 yrs that ive had my HSBC current account...the only issue i have is that the banks charge a stupid amount of money if you go overdrawn by a few pence..this is where i think it need to be regulated by some authority...i havent got a problem if i have to pay late fees if i go overdrawn but the problem i would have is paying a bank close to £40 for something that costs them less than £5.

If they brought their charges down to say something like £10 then fine no problem for me and i would imagine most people...its the fact that now they can charge whatever they want...perhaps the Supreme court should have said to the banks that bring your charges down to a more reasonable level....like hell it costs them £30-£40 for admin work...thats what annoys me the most.

But like i said i dont go overdrawn as i try to make sure i have enough money in my bank to cover my DD's etc.

Quick question: Do you think the number of people getting charged will increase, stay the same, or decrease if they lowered their charges to £10?

glitch · 26 Nov 2009 at 13:16

gambitt said:
I understand where all of you are coming from. Those who are pro "bank service charges" are those who wish to keep banking free for themselves because they never have this problem. So educating people on how to avoid paying these charges through effective financial management is not in their best interests because if the banks don't make money this way they will turn to charging for bank accounts for everyone.

I already pay a monthly fee for my banking and I'm happy to do so for the service I receive and thus I'm 'pro' service charges because I don't see why people should get a free ride for not being capable of managing their money effectively.

It really isn't rocket science - you are given every opportunity to understand how the system works and free choice to go with whatever bank you feel is giving you the best deal. Ignorance simply isn't an excuse when it comes to money, but it seems to be the increasingly popular option.

Sure, I feel somewhat sorry for people who slip over the threshold by a few pence and get whacked by a disproportional charge, but talk through the situation with your bank and they'll usually let you off with a slapped wrist. But do it repeatedly and it shows you are incapable of managing your money and require a sterner warning to ensure you don't do it again in the future.

I know four people who were pinning their future financial hopes on getting some 'free' money from their banks for having the temerity to repeatedly charge them for going overdrawn when they had been totally incapable of spending within their means. Quite frankly they should have been more careful in the first place rather than blaming everyone but themselves, but they still keep spending money they don't have because they still don't get it.

khimbar · 26 Nov 2009 at 13:46

Someone I know works for the A/L (though maybe not for much longer the way things are going) and he put it something like this...

'People think that when they go overdrawn it's their money they're spending. It's not. It's the banks. It's not a right it's a favour.

Hatter The Mad · 26 Nov 2009 at 14:41

Surfer said:
Because its *that* hard for the bank just to not pay dds and other automatic debit transactions if there are no funds available??????

Beggars belief...

The Direct Debit, Mastercard debit and Visa debit transports do not support balance querying. They could, but they don't. They are legacy systems and need International acceptance and upkeep.

This is why Visa introduced Visa Electron - a new system capable of balance querying (performing custom authorisation checks at your bank).

Visa, Mastercard etc can do:

Your card -> PIN terminal/online debit -> Your account -> Authorise -> Debit

However, most of the time they can not do:

Your card -> PIN terminal/online debit -> Your account -> [Your bank -> Balance query -> Authorise ->] -> Authorise -> Debit (or refuse)

Mastercard/Visa is a legacy system and progress is held back by a number of things (International acceptance, pressure from the supermarkets (believe it or not)). This is why they introduced another system, Visa Electron, which can support these kinds of 'cashcard' services.

Unless (for example) your bank is HSBC and HSBC also provides the terminal or debit service for the company trying to debit your account, on the traditional Visa/Mastarcard debit systems, balance querying cannot take place.

In the case where your bank supplies you AND the terminal you are using, the bank may have implemented their own hackery to make two connections:

1) Dial into the bank, do a primary authorisation (which includes balance check). If that fails, the transaction gets blocked. The transaction doesn't even make it onto the Visa/Mastercard/etc transports.

2) If (1) succeeds, proceed with the typical transaction support.

dowie · 26 Nov 2009 at 14:42

gambitt said:
Wonderful. Now let's say your dad gets made redundant and has trouble finding another job. Yes this does happen to many people, especially in a recession. The mortgage and bills eat up his savings within a few months and then he starts going involuntarily overdrawn, thus landing him with compound "service charges" from the bank. What then?

A DD arrangement can be canceled - he knows he has a mortgage, he knows how much he has in his bank - if he slips up once the bank will likely refund the charge anyway - there is no reason for him to go overdrawn and get further charges he can't afford - the fact that he can't pay his mortgage has got nothing to do with bank charges. Its quite simple, go over your overdraft and you'll get charged - there is no reason to repeatedly go over your overdraft and keep incurring these charges except simply being disorganised.

Tute · 26 Nov 2009 at 15:01

growse said:
If you're desperate.

Fantastic. Hold still.

Hairybudda · 26 Nov 2009 at 15:05

If you have trouble with your finances, contact the think money group for their managed bank account, you pay them £10.00 a month and they manage your finances for you, no charges, no missed payments. All you do is pay your salary in and a person will keep your bill money to the side and put yur money into a spending account.

Don't personally use this service myself but its what I tell anyone I know who is having issues with their banking, and its cheaper than incurring charges on a month to month basis!

Gittins · 26 Nov 2009 at 15:08

Good news IMO if you have not got it dont spend it, just needs people to manage there banks propely.

All I'm thinking is that the ammount they charge is questionable

peter_hutson · 26 Nov 2009 at 15:08

Hatter The Mad said:
The Direct Debit, Mastercard debit and Visa debit transports do not support balance querying. They could, but they don't. They are legacy systems and need International acceptance and upkeep.

This is why Visa introduced Visa Electron - a new system capable of balance querying (performing custom authorisation checks at your bank).

Visa, Mastercard etc can do:

Your card -> PIN terminal/online debit -> Your account -> Authorise -> Debit

However, most of the time they can not do:

Your card -> PIN terminal/online debit -> Your account -> [Your bank -> Balance query -> Authorise ->] -> Authorise -> Debit (or refuse)

Mastercard/Visa is a legacy system and progress is held back by a number of things (International acceptance, pressure from the supermarkets (believe it or not)). This is why they introduced another system, Visa Electron, which can support these kinds of 'cashcard' services.

Unless (for example) your bank is HSBC and HSBC also provides the terminal or debit service for the company trying to debit your account, on the traditional Visa/Mastarcard debit systems, balance querying cannot take place.

In the case where your bank supplies you AND the terminal you are using, the bank may have implemented their own hackery to make two connections:

1) Dial into the bank, do a primary authorisation (which includes balance check). If that fails, the transaction gets blocked. The transaction doesn't even make it onto the Visa/Mastercard/etc transports.

2) If (1) succeeds, proceed with the typical transaction support.

Thats a very interesting post. I had no idea that many of these systems were so antiquated. Quite shocking really.

Hatter The Mad · 26 Nov 2009 at 15:24

peter_hutson said:
Thats a very interesting post. I had no idea that many of these systems were so antiquated. Quite shocking really.

It is, but then you need to consider that major protocol changes cannot be made due to the number of companies and institutions that would need to be brought up to speed. Don't forget, this includes a number of technologically disadvantaged countries in the would.