marks right about ebcouraging prudent finances but teh banks dont want this

they want you in your OD and over you OD so they can keep racking up teh charges

which is why the government should step in and regulate them to a decent standard

To me, this reads as an overturning of the laws relating to penalty clauses (Dunlop Pneumatic Tyre Company Limited v New Garage and Motor Company Limited) and more or less allows private companies to issue penalty charges for breach of contract.

It's not in my habit to read judgements (I consider it to be a professional burden), but I'd be interested to see the extent of discussion on this point.

If it had come at any other time this might have gone the other way.

When I've had these charges it seems silly to me that they'll allow you to borrow the money and then charge you for it. The reason I have a limit on my overdraft or no overdraft is so I can't borrow more than I have, however my bank will allow me to borrow the money and then charge me – I'd rather not have the money. This is unreasonable.

It's not in my habit to read judgements (I consider it to be a professional burden), but I'd be interested to see the extent of discussion on this point.

From the judgement

Andrew Smith J considered at paragraphs 295 to 324 whether the Relevant
Charges were penalties at common law so as to be unenforceable for that reason. He held
that they were not because a penalty at common law is a payment that becomes payable
upon a breach of contract. Liability to pay Relevant Charges is not contingent upon
breaches by the customers of their contracts. It is not a breach of any of the standard form
contracts under consideration to overdraw, or attempt to overdraw, on a current account.
Mr Sumption rightly conceded, however, that the Banks could not convert what were in
effect penalties into “price” simply by wording their contracts so as to ensure that the
contingencies that triggered liability to pay the charges did not constitute breaches of
contract.

Hmmm.

So they're basically saying that going overdrawn is not a breach of contract.

I've seen these charges hit people pretty hard. Yes, people who don't always manage their money well. But if you're paying several hundred pounds a month out of a meagre income to provide banking profits, it's a VERY difficult hole to get out of. Happened to me once, when I was poor an not watching my account. Never again.

Oh, and lol at the guy with the chip on his shoulder. I **** around in school something chronic and I've got a reasonable job 🙂

Mark. If you want to avoid the same again, don't move to RBS or Coop. They have both done the same to me -spending money I don't have, without my permission and then charging me twice for a facility I don't want.

In both cases, numerous phone calls resulted in being told there was nothing that could be done to change it.

IMHO This is a clear case for reimbursement. Grrrrrrr.

I realise that by saying my strategy is to look for a bank that is less predatory I'm being aspirational at best and on a hiding to nothing at worst.

Crap I have to agree with mark again.
However how can someone with no bike bits to pay can be OD 😉
If you were more open you could move to France 😉 the last national bank is great for all that.

As said earlier the banking system in this country is effectively a cartel.

Despite everything that's happened they won't change one single aspect of their behavior. Why should they? There's no motivation too. And no penanlty at all for not doing so (as todays ruling has proved yet again).

As Vince Cable/Will Hutton/anyone with a brain keep pointing out, they HAVE to be broken up. Otherwise they'll just keep shafting the country to look after their own preposterous interests, to the exclusion of all else

and again, they're getting all the swine flu vaccine

Swine-flu? appropriate for those with their snouts constantly in the trough

Good, common sense at last. I'm on top of my finances & I enjoy free banking.
If others live beyond their means, spend to much, breed when they cannot afford it and go into debt thats their problem.

However how can someone with no bike bits to pay can be OD

It's my crack habit! The street value of that stuff is up and down like a whores knickers!

🙂

Perhaps we should implement a system for if a Subscribers DD bounces we automatically deduct 2 issues from their subscription to 'cover our costs' of telling you in a letter about the costs we've incurred by sending you a letter about our costs.

Which of course we could easily implement if I could just get all the other publishers of bike mags to do the same.. Yup.. I think I'll arrange a meeting at a motorway services somewhere with all of them to agree to that policy. Yes!

… er.. that's not illegal tho is it?

So they're basically saying that going overdrawn is not a breach of contract.

So, in effect, I have access to an unlimited overdraft? Genius. I'll order up that Learjet tomorrow… 😀

If others live beyond their means, spend to much, breed when they cannot afford it and go into debt thats their problem.

And when they're evicted from their home, end up on the dole, who's problem is it then? I'm all for self-responsibility, but at what point does one pull up the drawbridge and prepare to repel all boarders?

There is some utter right **** on this one…

Mark can't you sell said bike bits to cover yoru crack habit 😉

[start rant]

I don't owe anyone a penny apart from my mortgage. I have free banking because I know how much money I have, I know when my bills come out and stay organised. Why the chuff should I start to pay for my bank account because people don't like honouring their contract with the bank.

YOU signed the agreement when you opened the account
YOU spent more money than you had.
YOU should abide by the contract terms and pay the penalty.

If you don't like it keep your money under the bed. Oh you dont want to do that? I know why, cos you want free money from the bank!!!!!

Sort out your finances, live within your means and hey! Guess what? NO CHARGES!!

Grow up and welcome to the real world.

[stop rant]

I tell you what. I hope some of the sanctimonious ****s in their ivory towers on here never hit some real financial problems. The ones that are out of your control.

You may be forced to reconsider your perfect ****ing take on everything. Perish the thought

Robdob I am in the same boat as you regarding finances but I do not agree that the banks can charge what they want.
If people are in genuine difficulty with their finances then heavily fining them is not the way to go.

As said earlier – the banks could simply refuse to to allow you to go OD, problem solved
They don't want to do that though do they?

They have made it impossible for people on the edge to live within their means by – effectively – not allowing them to run without a bank account & live with just cash

I tell you what. I hope some of the sanctimonious ****s in their ivory towers on here never hit some real financial problems. The ones that are out of your control.

Indeed.

I'd quite like to see a change in terms of contracting with banks (and it would be with all of them, of course, because as binners points out it *is* a cartel):

Any person who has never incurred any bank charges to have as a "penalty" in their current account the following provisions:

Go overdrawn once – bank pushes dogsh*t through your letter box
Go overdrawn twice – bank takes your car off you
Go overdrawn three times – bank takes one of your children and sells it into slavery
Go overdrawn four times – your house is taken off you and burned down in front of you

Seems reasonable because, after all, you'll never go overdrawn, will you?

Well when I left Uni I paid my debts off quickly and told myself I'd never get into debt again. When I bought myself a house I checked if I could afford it if the interest rate went up to 15%. I could. I save up for stuff rather than borrowing money.

If me and my wife both lost our jobs we would still be ok. Might have to lose Sky tv and tighten a bit on food and buying nice stuff, but we could survive quite easily. We started out on £550 a month ten years between theboth of us with no benefits available, sp I learnt my lessons early. I couldn't even afford to go to my best friends wedding we were so skint. But we are in such a better position now for it. Wonder why people of 60+ have so much? They were prudent with money because banks weren't always so nice.

Everyone is now throwing a tantrum because they are now being held to account for their lack of monetary sense, and the courts have now gladly backed up a legally binding contract.

You can call me sanctimonious if you want, it doesn't matter.

I'm starting a group for people who don't use banks but instead keep their money at home; please send me your details so that I can add you to my mailing list.

Well I've never paid a fee simply because I'm relatively financially aware however I am lazy so I set up DDs for everything and have an offset mortgage – nothing goes unpaid and I can't overdraw. If I want to buy a nice car I can do that to….

I don't think it's fair that the less aware should suffer for making mistakes. They remain at the bottom of society but somehow can end up subsidising the better off; we all suffer in the end from this unfairness.

BTW, curiously I don't consider myself to be a socialist!

mudshark that is wierd because you sound like one, actually better than the joke called new labour or PS

Seems reasonable because, after all, you'll never go overdrawn, will you?

I wouldn't have a problem with that. If faced with such terms on a contract you might not sign up to it, it's your choice. But you can't just decide you don't like it one day after you've signed up to it and start moaning "it's not faaaaaair".

I think we all need to stand back and give robdob a round of applause. He should clearly be running the country.

Like I said, I hope you don't end up with the kind of luck that has left 3 million people unemployed. I'd be interested to see how long you'd last on your savings etc when your income dries up completely. I'll guarentee you its less time than you think, believe me!

Wonder why people of 60+ have so much?

The vast majority didn't have bank accounts until later in life – I never had one until I was 30 {I'm 50 now]
My mam & dad never had one, they paid their mortgage every week at the building society with cash

Cash rules is so many different ways – but every obstacle they can think of is put in the way of you using it

Well Juan I suppose I am socialist in the sense that I think we should look after those that need it – but I have little sympathy for those that would rather not do certain jobs, because they are too lazy or whatever, just because they can survive on benefits. It's a difficult balance to get right.

What do you mean "less aware"? Less aware that the new Plasma screen tv is twice what they earn in a week? Give me a break, if you are mentally able to do a job of any sort then you should be aware of how much you earn and how to count up the things you buy.

The thing I don't get (apart from the obvious money grabbing nature of it all) is why the banks feel it's a good idea to financially penalise the people who have no money?

Surely it would make more sense rather than taking money from those that have none, to limit their account, actually pay attention to how much money a person has in their account, stop them being able to use ATMs, change their card types to electron so funds have to be in the account for the transaction to complete etc.

I've been stung a few times in my penniless student days, when the bank has allowed direct debits to go out when I've been a few pennies short at the end of the month. Obviously the "fine" for having a failed dd is less than the fine for an unauthorised overdraft, so the bank deliberately chooses the most cost effective penalty as far as it's concerned….

Well you know socialism has never been about having people "live" on benefit. Benefit are here to help those who have not been lucky enough to get an education and earn a sufficient wage. They are like in all systems abuse, indeed, but not as much as the media would like to let you believe.

Wonder why people of 60+ have so much?

Because they grew up during the post war consensus, and had the full and luscious fruits of the welfare state, with free university education, followed by Thatcherism, which bolstered their money and house prices, before knocking away the ladder for the young?

geetee wrote,

"It could be argued that he charges for having an unauthorised overdraft are disproportionately high because these charges are needed to subsidise free banking for everyone else who either don't go over their OD limit or else don't have any need for an overdraft in the first place."

Yup. This place was absolutely up in arms when HBOS introduced their new charging structure, which does away with the old £30-odd overdraft fees which everyone says are unfair, at the cost of everyone who didn't go over their agreed limits. Lots of people want these overdraft charges to go away, nobody wants to pay for it.

Crazy-legs wrote,

"The point of it is that people who are overdrawn are often that way because they simply have no money – not because they're going out spending thousands, it's because they're struggling to make ends meet for whatever reason."

And obviously the banks should subsidise them.

I don't owe anyone a penny apart from my mortgage. I have free banking because I know how much money I have, I know when my bills come out and stay organised. Why the chuff should I start to pay for my bank account because people don't like honouring their contract with the bank.

The bank cards you have in your wallet cost money. They cost around 25p to produce. Then the correspondence and postage that goes along with sending them out to you. Each statement you receive has an associated cost. These are actual costs that as a business the banks have to pay for. It's perfectly acceptable for them to pass these costs on to the customers and even (shhhhh! dirty word approaching)… charge extra on top of the costs and make a profit! No really!

I just think it's a crap business model to have the customer group with the lowest ability to pay forking out for the cost of running YOUR account out of the charges they impose on those that run their accounts on credit.

Why should your account and all it's costs be free? Just because your account is run in credit with no borrowing doesn't mean it doesn't cost the bank to manage it. I choose to use the credit facilities of a bank with the associated costs, but why the hell should I pay for yours?

It's perfectly acceptable for them to pass these costs on to the customers

The do pass on these costs – by offering very low in-credit interest rates while investing our money at much higher rates.

Not everyone who gets into difficulty buys expensive stuff! It is true that there are many who think the essentials include Sky TV, fags, beer and fast food but many just don't really 'get' money.

Perhaps a compromise would be checks to ensure that penalty fees are proportionate over various periods of time – go overdrawn by a few quid for a few days then there's a penalty, do it each month for a year and the penalty shouldn't be 12x as much.

In the US some current accounts are free if you keep a minimum balance – quite a few grand though.

This is great!:

Robin Hood banker

Why should your account and all it's costs be free? Just because your account is run in credit with no borrowing doesn't mean it doesn't cost the bank to manage it. I choose to use the credit facilities of a bank with the associated costs, but why the hell should I pay for yours?

If the banks start charging me to run my account, they can stop gambling with my money in the stockmarket.

not just cards that need to be paid for, web banking, atms, card fraud refunds etc we all get it subsidised by those who can least afford it

the same way we by clothes produced in sweatshops or food from endangered species

humans are just very selfish and some of those on here just a bit more blinkered and selfish than others

And obviously the banks should subsidise them.

No they shouldn't. They should charge them fairly. And they shouldn't employ a strategy of charging them for making an arbitrary decision to authorise their accounts to be debited when there are no funds in the account.

The one potentially good thing to come out of all this is that the free market may be the thing that breaks the cartel as the first bank to openly market itself as having fairer and more ethical charges is going to be swamped with new customers from those banks that continue to earn their revenue in the current way by using customers with bad credit to subsidise those with good credit records.

Didn't someone in this thread say that they had received an email from Natwest this morning announcing they had dropped their unauthorised OD charges from £38 to £5?

Well done Natwest! You may be getting my custom if that's the case.

All that has to happen is the breaking of the cartel by one bank deciding to make a break from it and impose fairer charges.

If the banks start charging me to run my account, they can stop gambling with my money in the stockmarket.

But they can still lend it out for mortgages and cars and whatever?