Customers angry as banks win battle over overdraft charges

[Loki]

Customers angry as banks win battle over overdraft charges (http://www.metro.co.uk/news/article.html?Customers_angry_as_banks_win_battle_o ver_overdraft_charges&in_article_id=777747&in_page_id=34)

Wednesday, November 25, 2009

Campaigners were shocked today as High Street banks won their appeal over unauthorised overdraft fees - meaning many people will miss out on refunds.

The verdict result was a setback for tens of thousands of customers whose refund claims have been frozen while the test case went through the courts.

The Supreme Court ruled in favour of the seven major banks and a building society, which had challenged earlier decisions that the charges come under "unfair contract" rules and were therefore subject to regulation by the Office of Fair Trading.

Handing down the unanimous ruling today Lord Phillips, president of the Supreme Court, said: "It may be open to the Office of Fair Trading to assess the charge under other criteria."

Customers who go into unauthorised overdraft or breach their agreed limit can be charged as much as £35 or more for a single bounced payment.

Campaigners claim the actual cost to the banks could be as little as £2.50.

If the banks had lost the test case, it could have cost them £2.6billion a year in lost revenue and led to their having to make refunds of up to £1billion.

Before refund claims were frozen, banks had already paid out more than £559million to customers who complained about "rip-off" overdraft charges.

But many of the high street banks have already changed the structure of the fees they charge people who go into the red, with or without permission.

Anti-charges campaigner Martyn Lewis, of moneysupermarketcampaign.com, was gloomy about people's chances of now winning back money from previous charges.

He said: "My fingers are crossed but I'm not feeling too hopeful.

"To lose at this stage, on a legal technicality, is absolutely devastating.

"There are going to be millions of disappointed people out there."

He called for politicians to intervene to ensure "these abominable and unfair charges cannot be levied again on people".

The test case to decide the legal issues thrown up by the dispute was brought jointly by the OFT and Abbey, Barclays, Clydesdale, Halifax Bank of Scotland and Lloyds TSB, which are now part of the same group, HSBC, Royal Bank of Scotland Group and Nationwide Building Society.

[Eldritch]

Up to 35 quid? That's ridiculous.

I think over here it's around 6 €.

[Poltergeist]

You can provide this article with as many thumb-down smilies as you like, Loki, but it is usually so in the modern freakonomics and the rule of law(lesness). In an unequal struggle between a bank and some of its customers, the bank's victory is the almost inevitable outcome. I can myself attest, from several of my personal experiences, to this sad reality.

Well, it goes this way at least when the "small fish" are in question.

In connection with this I remember one sarcastic joke (or rather a statement of fact): "If you owe 50 000 dollars to a bank, you have a problem. If you owe 500 million dollars to a bank, then the bank has a problem."

[Treffie]

Oh well, bang goes my claim! :mad:

[anonymaus]

un...fair... contract? what?

i'm confused:

do the overdrafts in some way constitute usury or do the contracts in some other way sign away their inviolable rights?

what the hell is an "unfair" contract?

[Loki]

un...fair... contract? what?

i'm confused:

do the overdrafts in some way constitute usury or do the contracts in some other way sign away their inviolable rights?

what the hell is an "unfair" contract?

It's like this: the banks have a monopoly on our money -- they can basically do what they want, and we have to accept it. These days, it is almost impossible to get by without a bank account. The banks all levy these charges, so there is no way to escape it. But the amounts charged are unreasonably large -- it is in effect bullying of the customer by the banks.

[anonymaus]

It's like this: the banks have a monopoly on our money -- they can basically do what they want, and we have to accept it. These days, it is almost impossible to get by without a bank account. The banks all levy these charges, so there is no way to escape it. But the amounts charged are unreasonably large -- it is in effect bullying of the customer by the banks.

I didn't realize the government had such control over the banks to create a monopoly there. That's unfortunate.

[Loki]

I didn't realize the government had such control over the banks to create a monopoly there. That's unfortunate.

No, not the government ... the banks themselves. :D But increasingly so here in the UK, since the government is a majority stakeholder in the massive Lloyds Banking Group and also Northern Rock. And, the government has lots of pressuring influence in most other large banks, in giving them Bank of England loans with strings attached during this past credit crisis.

[anonymaus]

No, not the government ... the banks themselves. :D But increasingly so here in the UK, since the government is a majority stakeholder in the massive Lloyds Banking Group and also Northern Rock. And, the government has lots of pressuring influence in most other large banks, in giving them Bank of England loans with strings attached during this past credit crisis.

I see what you mean. They're doing that in the US, too; it will be terrible for everyone. Ultimately, however, any monopoly is either created or sanctioned by the government. We have suffered this problem in other areas of the economy but public outcry helped us break free and prosper: telecom was the big one.

In Canadian banking there was recently quite an upheaval over bank fees, just as in the UK. There were mobs of hosers politely asking for someone to perhaps do something if it wasn't too much trouble. :P

In the end the government decided against interfering in the banks business and Canadians went about their business.

But that's easier to do when one has such a broad range of competitive options (http://en.wikipedia.org/wiki/List_of_banks_and_credit_unions_in_Canada).

Does the UK gov't have such influence over credit unions? I would think citizen self-organization in that regard would do a lot more to persuade banks to serve their customers, than the forceful hand of government ever could.

[Loki]

Does the UK gov't have such influence over credit unions? I would think citizen self-organization in that regard would do a lot more to persuade banks to serve their customers, than the forceful hand of government ever could.

Credit unions are more a North American kind of thing. I think a limited amount may exist here, but they don't have much scope or power to help many people.

[Beorn]

Simple solution, and one I have used for years: Don't use banks.

I get paid and my money comes out that same day. Any bills get paid by post office or pay points.

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