Memo To The Banks....

[ROBSTER]

Some home truthes for the banks:

http://blogs.birminghampost.net/busi...-thanks-f.html

[Amethyst]

Re: Memo To The Banks....

Discussed OTR here - The government can and now should order the banks to drop the OFT Case Appeal order a return of all charges - The Consumer Forums


John Clancy is a long standing member of CAG

Memo from the Banks - "Thanks for saving us, but we will fight for the right to be unfair, and use your money to do it!"

By David Bailey on Feb 9, 09 01:29 PM in Finance

Blogged by David Bailey and John Clancy
You may have missed it, but while you and I stump up the cash for a taxpayers' bail out of the banks (and whilst their greedy execs still have their snouts in the trough for yet more fat-cat bonuses), the issue that first undermined public trust in the banks has continued to rumble on - namely unlawful, unfair Bank Charges.
Did you know, however, that even as the government places the first priority in getting the nation through the recession as being the test of 'fairness', the banks are using your money and mine (as taxpayers) to try to prove that, actually, they have a right to be unfair? Hmmm, yes it came as surprise to me as well.
The Bankers were rather hoping that the government and the rest of us had forgotten about that one, thank you, what with all the other awful stuff they've had to deal with in the last 6 months in particular (must be tough at the top for a banker, eh?)
As we write, the Banks we have bailed out are collectively spending millions of pounds on a court case fighting the Office of Fair Trading (the OFT) on the other side (also, of course, funded by you and me) to get the courts (also funded by you and me) to say that the bank charges they have been levying for the last 7 years are not subject to the test of 'fairness'.
More specifically they are spending our money to get the courts to rule that they can continue to charge what they like and that fairness need not enter, and need never to have entered, into it. "I'm alright Jack" seems the line as they collectively stick two fingers up at the taxpayer and the government.


There is, of course, a team of very highly paid lawyers for each of the EIGHT banks fighting for the right to be unfair. The OFT also has its own team of lawyers simply arguing the case that the banks should be fair (under the Unfair Terms in Consumer Contracts Regulations). In addition, the court staff, the judges, the expenses, the energy bills, and the paper (imagine the bills for that alone...) are all effectively coming out of the public purse.
The banks lost the case in the high court in the spring of last year, so they appealed it. The High Court made it clear last April that banks' contracts have to be subject to the test of fairness when it comes to the issue of bank charges.
The case is now awaiting judgement in the Court of Appeal with the banks indicating an intention thereafter to proceed to the House of Lords and Europe. So we had better dig even deeper into our pockets to help them pursue their case to establish their right to be unfair.
The case has to be stopped now. The government through its shareholding can instruct UKFI (the body set up to protect the taxpayers' colossal investments in rescuing the banks) to order the banks to accept the high court judgement and drop the case immediately. It is clearly a waste of public money for the banks who have got us into such a mess to squander our money in this way.
In addition, UKFI should instruct the Banks as a matter of policy to refund all bank charges to consumers and businesses over the last seven years (the normal 6 year rule preventing legal action was effectively put on hold pending the outcome of the case) at least. This takes it out of the legal sphere entirely.
Let's not start spending even more money on arguing what level of charge should have been fair. It will be cheaper and more straightforward to refund them all. Most independent analysts accept that the real costs of going beyond an agreed overdraft - i.e. the 'fair' costs - were and are pence, not pounds. The easiest route is to order the banks to return the lot. They should also not make a distinction between consumers and businesses. Businesses who have been fleeced by the lazy business practices of the banks need to have the balance restored.
The OFT has to accept that times have changed. There's no balance to be made any more here between the interests of the banks and the consumer. Their decision effectively to fix fees for Credit Card charges at £12 was exceptionally generous and allowed the Credit Card companies simply to multiply up several £12 charges in any one month under different headings (late fee, over limit fee, administration charge, letter charge) simply to fleece the consumer. In the current downturn when millions will be late on payments, they will do the same again and the OFT, UKFI and the government has to be on guard.
Of course, the major upside of ordering the banks to return the charges will be a much needed and perfectly legitimate injection of liquidity into the economy and business. This would genuinely be an example of what is now entering parlance as 'quantitative easing' and the time is ripe for it. It would also have the advantage of going to some of the poorest in society, made deliberately even poorer by the banks in order to fleece even more in charges, in a rather extreme example of 'poor farming' by the richest in our society.
Ah, but the banks will squeal that they can't afford it in such remarkable times. Nonsense. We calculate that the intended payout in bonuses to bankers, bank traders and their extended employees will actually go quite a long way to pay for the payout on unlawful bank charges.
These sums could perahps be protected immediately by the chancellor announcing that all bonuses paid under apparent contractual obligation to employees of banks which have either had their lending guaranteed by the taxpayer (that's effectively all of the banks, including HSBC and Barclays) or in which the taxpayer holds shares will be subject to a 100% 'bonus tax' with immediate effect, payable immediately: no problem with the contracts there then!
This can anyway be avoided by the employee voluntarily declining them - they can then be used for the great bank charges payout, or the government can recapitalise the banks with the receipts to assist the payout. Ordinary bank customers and taxpayers can receive a tax-free bonus on return of their bank charges - a real bonus to many in society who have never received a bonus in their lives.
The bank charges business model employed by the banks should now be punished for what it was: a lazy, but easy, way to make money without any effort whatsoever, while causing misery and distress. It's (literally) payback time.
Footnote: The eight banks taking the action in the court comprise: Abbey; Barclays; Clydesdale; HBOS; HSBC; Lloyds; Nationwide BS; and RBS/Nat West.
P.S. Some banks (like Barclays today) suggest that they are standing on their own two feet and have not had a government bailout. Actually, they have had a bailout: the Credit Guarantee Scheme puts £250billion of taxpayers' money at risk to enable the banks to lend to each other and us. All of them!
The treasury statement on the scheme in December said: 'Following the announcement of the scheme and the Government's proposals for recapitalising the banks, the positive market reaction has reduced the risk premium (or credit default swaps) of UK banks'.
And: 'On 8th October 2008 the Government announced a Credit Guarantee Scheme, as part of a comprehensive package of measures to address the extreme stress in financial markets, and to prevent the collapse of the banking sector.'
And: 'extending the maturity date for the Bank of England's Discount Window Facility which provides liquidity to the banking sector by allowing them to swap less liquid assets;
Where would Barclays and HSBC have been without this happening?
In addition where would they have been without the government extending the drawdown window for new debt under the Government's Credit Guarantee Scheme (CGS) which is designed to reduce the risks on lending between banks?
Basically the state has had to intervene to support - in one way or another - the entire banking system.
David Bailey is Professor of International Business and Economic Policy at the Birmingham Business School. John Clancy is a former Birmingham City Councilllor, venture capital solicitor and runs two SMEs including MediaFuturesAlert.com

[EXC]

Re: Memo To The Banks....

I think these people are confusing morality with the law. Government cannot simply order the banks to act. It just doesn't work like that.

We need legal clarity. Yes it's slow, yes it's frustrating, yes it's damaging to people in the meantime but the long term protection of the law outweighs the complications that a fudged shortcut will have.

The piece also misleading claims that the public are footing the bill for the banks but the reality is the taxpayer has invested in shares, bought at a knock down price (unlike in the US who paid over the odds), and will sell them at a large profit when - as sure night follows day - banks' share prices will soar.

[Amethyst]

Re: Memo To The Banks....

I would have to agree, it HAS to be played out through the court system before any decisions can be made as to the legality or otherwise of the charges, but shortcut now and you would have the same situation arise further down the line, or risk the future of PCA fairness.


this bit is true though - ''We calculate that the intended payout in bonuses to bankers, bank traders and their extended employees will actually go quite a long way to pay for the payout on unlawful bank charge''s...... when the figures in the PCA report were published it was a similar time that the bonus figures were published, and I worked out if the banking sector removed one years worth of bonus's it would repay the past 6 years worth of charges to every PCA holder.

[ROBSTER]

Re: Memo To The Banks....

I would have to agree, it HAS to be played out through the court system before any decisions can be made as to the legality or otherwise of the charges, but shortcut now and you would have the same situation arise further down the line, or risk the future of PCA fairness.


this bit is true though - ''We calculate that the intended payout in bonuses to bankers, bank traders and their extended employees will actually go quite a long way to pay for the payout on unlawful bank charge''s...... when the figures in the PCA report were published it was a similar time that the bonus figures were published, and I worked out if the banking sector removed one years worth of bonus's it would repay the past 6 years worth of charges to every PCA holder.

How much do you reckon the 6 years worth of bank charges are worth? I predict £32Bn

And stop using that language there is no "past six years" there is a future 3 years (Banks barristers must have an advent calendar with £1m a day behind each window to this end): six years started in February 2006 when a "reasonable person" (on the Clapham omnibus your honour) first realised that bank's charges were more than a true reflection of their "costs of administration" as a result of John Fingleton’s (OFT) musings on Credit Card over charging.

The six year bit is the Bank’s advantage in this issue which every one is missing.

STOP THE BANKS DESTROYING CRUCIAL EVIDENCE

The scandal is that Banks are going to "routinely" destroy your copy statements for this day six years ago at midnight tonight!..why wouldn’t they? No matter which way the court case goes they will tell any future claimants “we only have to keep six years of statements..IT’S THE LAW "

Here’s what they might to tell you in the FSA (who pays their wages?) guided letter.

Dear Claimant,

Thank you for your correspondence regarding your (misunderstanding of how we make our true profit) bank charges. We thank you for your remittance of £10 for the DSAR which we have duly paid into our trading account enabling us to lend an additional £200 at our unauthorised (cos we cancelled it last month) overdraft rate in order that we can comply with current FSA directive and be backed by UK government loan guarantee policy.

We believe that our charges (as described on the hastily amended leaflet 2007) are fair and further The High Court of Justice have stated that our charges can not be tested as a penalty and as such we believe they can neither be tested as "a free kick".

In July 1807 we entered into an agreement with The Office of fair Trading to help us from drowning in the tsunami of claims which were landing on our doorstep on an hourly basis and similarly affecting the County Court Judge's ability to have a hassle free day. Stays in the courts and (you’ll never guess what?) the FSA granted us a waiver. It worked a treat.

The FSA (the “independent” body we pay the wages of) have issued guidelines on dealing with hardship whilst we are delaying the court procedure with costly (your paying for it) appeals.

We want to help you by sending you a form to complete which we previously used for assessing your suitability for a "consolidation loan” with bonus PPI front load (only Joking!.. we just needed your signature). Please inform one of our specialist managers, on the (premium rate from your mobile) local rate phone number above if you feel you are not suffering hardship and we will see what we can sort out for you by way of assigning your case to one of our dedicated debt collection agencies who will be pleased to make you life a living hell in not resolving this issue.

Should (and when ) we are not able to resolve your complaint within living memory we would remind you that the Financial Ombudsman service have supplied us with enough complimentary booklets to reinstate the rain forests, to tell you how to complain to them (on our terms).

We look forward to contacting you soon with a similarly condescending letter so that we can further delay your claim until Gordon sorts us out with the folding.

Yours sincerely


Slumdog Millionaire

[EXC]

Re: Memo To The Banks....

How are the six years of bank charges worth?

According to the OFT the banks made £2.6b in insufficient funds charges during 2006. Times this by 6 gives you £15.6b.

[Curlyben]

Re: Memo To The Banks....

Well THAT would certainly be the ultimate Stimulus package and a much needed shot in the arm for the UK consumer and economy !!!
Yes, it's a BIG figure, but nothing when compared to the whole bail out package.

[ROBSTER]

How much do you reckon the 6 years worth of bank charges are worth? I predict £32Bn

Yes they did make £2.6 bn in 2006 making 15.6Bn over a six year period but they also made £4.6 bilion in interest on PCAs how much of that will have to be returned as a result of (wrongful?) application of these charges. Given that you would not be getting the charges unless your account was "exceeding its limit", it is safe to assume that a lot of these charges have also attracted interest at the banks marginal (unarranged overdraft) rate.

Chuck in a bit of statutory interest (and don’t forget court costs returned to claimants, I dont even want to think what the legal fees are for the banks!!!) I would be struggling to keep the figure as low as £32Bn in terms of what it is worth to the banks.

I wonder what a banker might make of this synopsis ?

[natweststaffmember]

Re: Memo To The Banks....

Yes they did make £2.6 bn in 2006 making 15.6Bn over a six year period but they also made £4.6 bilion in interest on PCAs how much of that will have to be returned as a result of (wrongful?) application of these charges. Given that you would not be getting the charges unless your account was "exceeding its limit", it is safe to assume that a lot of these charges have also attracted interest at the banks marginal (unarranged overdraft) rate.

Chuck in a bit of statutory interest (and don’t forget court costs returned to claimants, I dont even want to think what the legal fees are for the banks!!!) I would be struggling to keep the figure as low as £32Bn in terms of what it is worth to the banks.

I wonder what a banker might make of this synopsis ?

When can you come in to speak to a private banker to help make you money on that amount?

Former banker

[ROBSTER]

Re: Memo To The Banks....

In terms of earning a tax free lump sum, I would be struggling to find better VFM on the high street.

[righty]

Re: Memo To The Banks....

How much do you reckon the 6 years worth of bank charges are worth? I predict £32Bn

And stop using that language there is no "past six years" there is a future 3 years (Banks barristers must have an advent calendar with £1m a day behind each window to this end): six years started in February 2006 when a "reasonable person" (on the Clapham omnibus your honour) first realised that bank's charges were more than a true reflection of their "costs of administration" as a result of John Fingleton’s (OFT) musings on Credit Card over charging.

The six year bit is the Bank’s advantage in this issue which every one is missing.

STOP THE BANKS DESTROYING CRUCIAL EVIDENCE

The scandal is that Banks are going to "routinely" destroy your copy statements for this day six years ago at midnight tonight!..why wouldn’t they? No matter which way the court case goes they will tell any future claimants “we only have to keep six years of statements..IT’S THE LAW "

Here’s what they might to tell you in the FSA (who pays their wages?) guided letter.

Dear Claimant,

Thank you for your correspondence regarding your (misunderstanding of how we make our true profit) bank charges. We thank you for your remittance of £10 for the DSAR which we have duly paid into our trading account enabling us to lend an additional £200 at our unauthorised (cos we cancelled it last month) overdraft rate in order that we can comply with current FSA directive and be backed by UK government loan guarantee policy.

We believe that our charges (as described on the hastily amended leaflet 2007) are fair and further The High Court of Justice have stated that our charges can not be tested as a penalty and as such we believe they can neither be tested as "a free kick".

In July 1807 we entered into an agreement with The Office of fair Trading to help us from drowning in the tsunami of claims which were landing on our doorstep on an hourly basis and similarly affecting the County Court Judge's ability to have a hassle free day. Stays in the courts and (you’ll never guess what?) the FSA granted us a waiver. It worked a treat.

The FSA (the “independent” body we pay the wages of) have issued guidelines on dealing with hardship whilst we are delaying the court procedure with costly (your paying for it) appeals.

We want to help you by sending you a form to complete which we previously used for assessing your suitability for a "consolidation loan” with bonus PPI front load (only Joking!.. we just needed your signature). Please inform one of our specialist managers, on the (premium rate from your mobile) local rate phone number above if you feel you are not suffering hardship and we will see what we can sort out for you by way of assigning your case to one of our dedicated debt collection agencies who will be pleased to make you life a living hell in not resolving this issue.

Should (and when ) we are not able to resolve your complaint within living memory we would remind you that the Financial Ombudsman service have supplied us with enough complimentary booklets to reinstate the rain forests, to tell you how to complain to them (on our terms).

We look forward to contacting you soon with a similarly condescending letter so that we can further delay your claim until Gordon sorts us out with the folding.

Yours sincerely


Slumdog Millionaire

I suspect that sec 32 of the limitation act (concealment) is going to find itself in everyday use:tinysmile_twink_t2: