Banks Win Dispute Over Overdraft Fees

[Edmund]

http://www.telegraph.co.uk/finance/persona...aft-ruling.html

British banks win 'stunning' victory in landmark ruling on overdraft fees

High street banks won a 'stunning' victory at the Supreme Court today in a dispute over overdraft fees that lands a blow to thousands of customers who hoped to recoup charges.

HSBC, Royal Bank of Scotland, Barclays and Lloyds are among seven lenders who had asked the Supreme Court to halt a challenge to their fees brought by the Office of Fair Trading.

The surprise ruling comes as banks are already shouldering much of the blame for the worst recession since the 1930s. Nicholas Phillips, the Supreme Court President, said that banks' customers agree to pay the fees that banks charge as part of having current accounts.

"This is a stunning victory for the bank," Ed Crosse, a partner at law firm Osborne Clarke, told Bloomberg. "Many commentators wrote off the banks' chances of winning."

The banks had challenged High Court and Court of Appeal decisions that the charges come under "unfair contract" rules and are therefore subject to regulation by the OFT. The ruling had been awaited by tens of thousands of customers whose refund claims have been frozen while the test case went through the courts. The OFT said today it will review the ruling and give an announcement next month.

Those who had campaigned to have the scale of the overdraft fees overturned attacked the verdict.

Peter Vicary-Smith, chief executive of consumer group Which?, which led a campaign encouraging people to reclaim the charges, said of the decision that "not only does it give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance."

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 £2.6bn a year in lost revenue and led to their having to make refunds of up to £1bn.

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

Justice Brenda Hale explained: "the banks may not be the most popular institutions in the country at present, but that does not mean that their methods of charging for retail banking services are necessarily unfair when reviewed as a whole."

Abbey, Clydesdale, Halifax Bank of Scotland and Lloyds TSB and Nationwide Building Society were the other institutions involved.

The British Bankers' Association welcomed, the trade body for the banking industry, welcomed the ruling. It said: "The Supreme Court has today confirmed that the banks' unarranged overdraft charges are an important part of current account services which the banks provide to their customers and that the amount of those charges is not assessable for fairness."

However, the Government said that "while the decision on past charges has not gone in favour of consumers, we are determined to ensure the system is made fairer in the future.

"The Government will work with the OFT and Financial Services Authority to reach a new framework for fairer bank charges going forward."

[davieG]

Well perhaps they can agree to make transfers and payments a bit quicker/consistent now that most payments are electronic. The only reason I've gone overdrawn is because they took 8 days to process a payment in and 2 days to take a payment out - both electronic.

[Edmund]

Well perhaps they can agree to make transfers and payments a bit quicker/consistent now that most payments are electronic. The only reason I've gone overdrawn is because they took 8 days to process a payment in and 2 days to take a payment out - both electronic.

Who do you bank with?

Most banks have now signed up to the faster payment scheme. It works between banks who have signed up to the service which is most of them I believe.

You can transfer money between accounts 7 days a week 24 hours a day and takes up to 2 hours (usually instant).

I think it can only be done via online banking mind you.

http://en.wikipedia.org/wiki/Faster_Payments_Service

[davieG]

Who do you bank with?

Most banks now have now signed up to the faster payment scheme. It works between banks who have signed up to the service which is most of them I believe.

You can transfer money between accounts 7 days a week 24 hours a day and takes up to 2 hours (usually instant).

I think it can only be done via online banking mind you.

http://en.wikipedia.org/wiki/Faster_Payments_Service

This was Nationwide to Barclays - payment in and a bill from Barclays to one of the utilities both online. I actually submitted the payments in a couple of days before I paid the bill.

The next thing I got was a bill from Barclay's for £30 - the payment in arrived the day after the letter was sent.

[Edmund]

This was Nationwide to Barclays - payment in and a bill from Barclays to one of the utilities both online. I actually submitted the payments in a couple of days before I paid the bill.

The next thing I got was a bill from Barclay's for £30 - the payment in arrived the day after the letter was sent.

That's strange. Both of those banks are part of the scheme according to wiki. There is usually an option to select via fast payment just as you're making the transfer. It is free as well. I know before they use to sting people with a fee for chaps transfer. I'm no expert though.

Did you try talking to your bank? I once had a charge in similar circumstance as you and they waived it at there discretion as goodwill.

[davieG]

That's strange. Both of those banks are part of the scheme according to wiki. There is usually an option to select via fast payment just as you're making the transfer. It is free as well. I know before they use to sting people with a fee for chaps transfer. I'm no expert though.

Did you try talking to your bank? I once had a charge in similar circumstance as you and they waived it at there discretion as goodwill.

Yes & no they weren't interested and put me on some overdraft scheme that I haven't a clue how it works, this after banking with them for 30+years and never having gone over drawn before. I'd have changed banks but with all the different payment settings it'd bloody hard work.

[hairy]

Nationwaide are still a building society and are outside of the main banks clearing system hence why it takes 7 days instead of 3 for a cheque to clear

[CosbehFox]

So if banks' overspend by millions, myself/we pay.

If yourself overspends by pennies, we/myself pay.

Not fair really is it? Surely they should be a circumstance or system which can account for mistakes/minor penalty. Like if a bill is mischarged by a couple of pence, that puts you penalty cos some other ****tard made a mistake.

[Kilworthfox]

Scandalous!

[Sir Fynwy]

So if banks' overspend by millions, myself/we pay.

If yourself overspends by pennies, we/myself pay.

Not fair really is it? Surely they should be a circumstance or system which can account for mistakes/minor penalty. Like if a bill is mischarged by a couple of pence, that puts you penalty cos some other ****tard made a mistake.

A significant amount of the charges are caused by ****tards (as you so eloquently name them) managing their own money badly. I personally want to see realistic charging but not at the expense of people who manage their money better.

[DANGEROUS TIGER]

Legalised robbery!

[davieG]

Nationwaide are still a building society and are outside of the main banks clearing system hence why it takes 7 days instead of 3 for a cheque to clear

Maybe so but it left my Nationwide account fairly quickly so was in no-mans land for 6/7 days where presumably along with all the other payments was making someone additional profit at my expense and then they charge me for it taking so long - robbing bastards. A shame we can't charge them for taking too long.

[maddog]

If your foolish enough to spend money you haven't got and go overdrawn you deserve to be charged.

[Kilworthfox]

If your foolish enough to spend money you haven't got and go overdrawn you deserve to be charged.

Agree buy what if you were charge £25 for being 25p over? Is that excessive?

[hairy]

Maybe so but it left my Nationwide account fairly quickly so was in no-mans land for 6/7 days where presumably along with all the other payments was making someone additional profit at my expense and then they charge me for it taking so long - robbing bastards. A shame we can't charge them for taking too long.

Yep. They make money on transfers even the ones that take 3 days to clear. They are not daft to see a chance to make money.

[DANGEROUS TIGER]

This ruling seems to have political overtones. With the economy in a mess, and banks having problems, had the ruling been otherwise, the banks would have been overwhelmed with claims, from people like me. Literally a few pence overdrawn has just cost me £28.

[breadandcheese]

I'm going to admit to being happy at this ruling. I've never had to go into an unauthorised overdraft, so haven't had to pay any of these charges. Consequently, if this ruling means free banking can continue for those who manage their accounts properly, then I'm all for it.

[Edmund]

the banks would have been overwhelmed with claims, from people like me.

You're quite right, especially since Mr moneysavingexpert has put templates up for people to send to their banks.

They must have had a back log of millions.

[maddog]

Agree buy what if you were charge £25 for being 25p over? Is that excessive?

Yes is a bit but it's like when you go over your minutes on a mobile phone contract, and they charge you a ridiculous amount per minute.

There has to be a limit somewhere just don't even go 1p over it

A £25 charge for being 1p over surely should stop 99% of people going overdrawn anyway.

[lavrentis]

Yes is a bit but it's like when you go over your minutes on a mobile phone contract, and they charge you a ridiculous amount per minute.

There has to be a limit somewhere just don't even go 1p over it

A £25 charge for being 1p over surely should stop 99% of people going overdrawn anyway.

Yes but its unethical. That's just like saying you'd give a life sentence to a petty thief, it'll stop them but there's no need for it.

[filbertway]

I like the fact I went £150 over my overdraft and didn't get charged. The perks of student banking.

[CosbehFox]

A significant amount of the charges are caused by ****tards (as you so eloquently name them) managing their own money badly. I personally want to see realistic charging but not at the expense of people who manage their money better.

I agree but I am in the Kilworth school of thought as below. As I said they should be a system up to a certain amount, where the charge is the same as the exceeding amount. After say £50, you begin to face a more costly amount.

Agree buy what if you were charge £25 for being 25p over? Is that excessive?

A £25 charge for being 1p over surely should stop 99% of people going overdrawn anyway.

Sometimes when you are a single parent supporting three kids and you pay bill after bill, shopping etc. etc. Come the end of the month, as good as you budget, it could be a couple of quid or pence difference.

Anyways, the point stands. We dug the banks out of shit for overspending billions yet they can't dig people out of a couple of pence.

[Daggers]

We dug the banks out of shit for overspending billions yet they can't dig people out of a couple of pence.

The two are wholly unrelated.

The former is to do with preventing an entire banking system - and the economy - from going into collapse.

The latter regards idiots who can't keep track of their finances. I've gone overdrawn, I've got pissed off and I've paid the fees...but it was my fucking fault I went overdrawn. I'm an idiot.

The charges are clearly stated - so if you fuck up, you pay. It couldn't be clearer.

The moans over this stem from a society which wants to blame everyone else for every little shitty thing that happens rather than accept some responsibility.

Dear General Public,

Grow the fuck up.

Don't like the charges? Don't cock up your fucking expenses.

[stez]

The two are wholly unrelated.

The former is to do with preventing an entire banking system - and the economy - from going into collapse.

The latter regards idiots who can't keep track of their finances. I've gone overdrawn, I've got pissed off and I've paid the fees...but it was my fucking fault I went overdrawn. I'm an idiot.

The charges are clearly stated - so if you fuck up, you pay. It couldn't be clearer.

The moans over this stem from a society which wants to blame everyone else for every little shitty thing that happens rather than accept some responsibility.

Dear General Public,

Grow the fuck up.

Don't like the charges? Don't cock up your fucking expenses.

well done you, but when the charges are the equivalent to what you actually earn in a month. it's not that easy to get out of the hole. in fact it just gets deeper and deeper.

not everyone who goes over the overdraft is a fucktard and not everyone isn't.

[grth2004]

i feel a revolution coming against the banks. millions of people feel they are being f***ed over by the banks in this country and gordon brown is making things worse by giving them secret multi billion loans of tax payers money or helping them win cases against the public.

banks should not profit from other peoples missfortune , but apparently they make billions of pounds each year from doing this. i know from experience that going only a few pounds overdrawn can cost upto £200 , this has happened to me and just because i was working away and didnt realise this why should i pay that much. all most people want is fairness and charges that represent the cost to the bank , especially in these times when alot of people are struggling due to loss of jobs or other reasons.

its time the banks helped the people as the people have helped the banks