Show me a bank with backbone (The Times)

Jennie

I understand that the argument against the banks is not that they shouldn't charge customers for exceeding their overdraft limits, but rather that the penalties the banks levy are out of all proportion to the extra work entailed. I think that the banks love customers like these: up to now, anyway, such customers have proved very lucrative for the poor, struggling banks.

Ken from glos

You are so right on this point! The other scandal is the I.V.A which allow the idiots off virtually scotfree because they borrowed too much money. In both cases the banks dont suffer, just you and I.!!!

Jonathan

You're not the only person who thinks that. I was saying something similar back in May: http://jonathan.rawle.org/2007/05/15/save-our-bank-charges/ The worst thing is, the many of us who wouldn't dream of going overdrawn are the ones who will lose out if banks move to monthly account fees. If the penalty charges are currently illegal, perhaps the law should be changed so that they are not (maybe with the safeguard that the bank does have to make an effort to contact the customer concerned before applying subsequent charges).

StuartA

Firstly, the banks are not obliged to allow people to exceed their overdrafts; they have an interest in allowing it to happen, and therefore do so. Secondly, the banks are charging far more than the costs they incur in lending the additional money. This is a violation of common law, and should therefore stop, regardless of whether these illegal bank charges were subsidising free banking. Thirdly, glossing your outrage as being motivated by "most of us pay[ing] a lot more" is highly unconvincing, not to mention factually dubious. You are retailing the banks' PR line, which is exactly what I would expect an overpaid, opera-attending faux man of the people to do -- "most of us" has nothing to do with it.

David

Steven, While I agree with the general sentiments about people who fail to observe their agreed overdraft limits, the issue here is one of law. Put simply, the law prohibits penalty charges; what those charges are levied for is irrelevant. The court case, agreed by the banks, aims to clarify the position.

Richard

Stephen, I think you miss the point. There is no argument that the banks should penalise customers for entering into an unauthorised overdraft, the question is the whether the severity of the punishment meted out by the Banks, is in any way proportionate to the "crime". A not uncommon situation can arise where a customer goes overdrawn by less than £10 on an unauthorised basis for a couple of days. The customer realises that they are overdrawn and credits the account with £20 two days later. In the meantime, the bank imposes a £35 overdraft fee. As a result the customer remains in an unauthorised overdraft position and they are quickly swept down a bank penalty spiral which can very quickly get out of hand, especially if the customer is on a low fixed income. With regard to the threat of increased banking fees. As an advocate of the free market, you will be well aware that the banks will be loath to rapidly increase fees for current accounts if any of their rivals down the High Street are proferring "free" banking. I assume you are not suggesting that the banks would operate as a cartel.

N West

Absolutely right. You are not alone! The contract is the cornerstone of a free society and we mess with it at our peril.

steve

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