Creditor numero uno

indebtstudent · 10th January 2010, 02:59

I have been thinking about this a lot and I was wondering if there was any scope to make the argument that the banks take advantage of thier customers. They apply the charges to the account knowing full well most people are more likely to get divorced or move home than change thier bank account.

They do this regardless of the effects in terms of generating more charges or ensuring other PRIORITY creditors are not paid. It shows how out of hand things are that the first thing any debt advice charity will do is advise you to open a safe bank account. They know in some cases all the pleading and the financial statements in the world will not stop the bank hammering the client with charges and interest autolinker.com autolinking image

.

The only real justification for the status quo is that it is in the contract, but given that we're looking at the fairness of the contract this may not hold up.

We also need to be careful about the terminology used in relation to charges. A lot of media articles make reference to paying charges but that's not really what happpens is it?

The bank applies the charges to the account whether or not the money is in there. They argue they are service charges which I believe means they should invoice seperately for them like any other service provider. At least then if the customer could not afford a charge the debt spiral would not affect the account, the mortgage of the council tax could still be paid that month.

In all honest there are several reasons why the banks do not send such an invoice. First they know people would be far more likely to notice the size of the service fees and question them. Secondly the invoicing would cost more, particularly with the added complaints and people not paying. Finally as noted above they know most people won't move so effectively they have them over a barrel.

If this would be better moved to legalities or some other place that is fine, I just felt it was a point worth making and discussing.

yourbank · 10th January 2010, 17:06

They argued that the charges were for consideration of whether to pay or not.
Furthermore, on page 14 of OFT1154 it is stated:

"3.14 The OFT believes that the fourth challenge described is also likely to be
difficult to mount successfully. Even if such a challenge could be
brought successfully, it is likely to be limited in its potential effect, in
particular because the OFT has been given indications (and has no
evidence to the contrary) that banks generally order the sequence of
payments where possible in a way that is not harmful to, or even
benefits, the interests of customers."

http://www.oft.gov.uk/shared_oft/per...counts/oft1154

indebtstudent · 12th January 2010, 12:44

I don't entirely follow that, there must be hundreds if not thousands of cases where the bank charges autolinker.com autolinking image

have caused other ESSENTIAL items to go unpaid. This is not a sensible decision by customers, but a decision I fell a significant number would make.

I can't think of any beneficial examples but I'm open to suggestions.

10th January 2010, 02:59	#1 (permalink)
indebtstudent Classic Account Holder Your bank owes you an awful lot more money than you realise See here Cagger since : Jan 2007 Posts: 1,432	Creditor numero uno I have been thinking about this a lot and I was wondering if there was any scope to make the argument that the banks take advantage of thier customers. They apply the charges to the account knowing full well most people are more likely to get divorced or move home than change thier bank account. They do this regardless of the effects in terms of generating more charges or ensuring other PRIORITY creditors are not paid. It shows how out of hand things are that the first thing any debt advice charity will do is advise you to open a safe bank account. They know in some cases all the pleading and the financial statements in the world will not stop the bank hammering the client with charges and interest. The only real justification for the status quo is that it is in the contract, but given that we're looking at the fairness of the contract this may not hold up. We also need to be careful about the terminology used in relation to charges. A lot of media articles make reference to paying charges but that's not really what happpens is it? The bank applies the charges to the account whether or not the money is in there. They argue they are service charges which I believe means they should invoice seperately for them like any other service provider. At least then if the customer could not afford a charge the debt spiral would not affect the account, the mortgage of the council tax could still be paid that month. In all honest there are several reasons why the banks do not send such an invoice. First they know people would be far more likely to notice the size of the service fees and question them. Secondly the invoicing would cost more, particularly with the added complaints and people not paying. Finally as noted above they know most people won't move so effectively they have them over a barrel. If this would be better moved to legalities or some other place that is fine, I just felt it was a point worth making and discussing. __________________ The views I express here are mere speculation based on my experience. I am not qualified nor insured to give legal advice and any action you take will be at your own risk.

10th January 2010, 17:06	#2 (permalink)
yourbank Gold Account Holder Your bank owes you an awful lot more money than you realise See here Cagger since : Jun 2008 Posts: 4,491	Re: Creditor numero uno They argued that the charges were for consideration of whether to pay or not. Furthermore, on page 14 of OFT1154 it is stated: "3.14 The OFT believes that the fourth challenge described is also likely to be difficult to mount successfully. Even if such a challenge could be brought successfully, it is likely to be limited in its potential effect, in particular because the OFT has been given indications (and has no evidence to the contrary) that banks generally order the sequence of payments where possible in a way that is not harmful to, or even benefits, the interests of customers." http://www.oft.gov.uk/shared_oft/per...counts/oft1154

12th January 2010, 12:44	#3 (permalink)
indebtstudent Classic Account Holder eBay user? Find misspellings and zero-bid items Cagger since : Jan 2007 Posts: 1,432	Re: Creditor numero uno I don't entirely follow that, there must be hundreds if not thousands of cases where the bank charges have caused other ESSENTIAL items to go unpaid. This is not a sensible decision by customers, but a decision I fell a significant number would make. I can't think of any beneficial examples but I'm open to suggestions.