More FSA shambles apparently

[righty]

http://www.mailonsunday.co.uk/money/...ing-farce.html

If ever there was a need for truly independent regulators this is it as. Apparently the FSA don’t understand (or choose to ignore) that it will be they who’ll have to enforce the new impending regulation on bank charges

[Tools]

Re: More FSA shambles apparently

TONY HETHERINGTON: Bank fees... a mess turning into farce


By Tony Hetherington
Last updated at 10:06 PM on 30th May 2009

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S. W. writes: I went overdrawn on my Alliance & Leicester account by £12, which has cost me £130 in bank charges.
I asked whether the bank would consider reducing this amount, as it was excessive, but I received a stock letter about the legal proceedings involving the Office of Fair Trading.
I think this test case has given banks and building societies the perfect excuse to ignore complaints and continue with outrageous charges. This behaviour is disgraceful and the Financial Services Authority should tell them so.


Overdrawn: No end in sight to the two-year legal battle against the banks

Two years ago, the Office of Fair Trading began a case in the High Court against eight banks and building societies over the issue of charges. Several weeks ago, it abandoned its action against five of the banks, leaving just Lloyds TSB, HSBC and Clydesdale in its sights.
The OFT believes that if it wins against these three, the others will fall in line. However, all the signs are that the case will drag on for years. Meanwhile, hundreds of thousands of people have outstanding complaints with their banks.

When the case began, the Financial Services Authority gave the banks a waiver, excusing them from having to consider any complaints over charges, except in hardship cases.

Alliance & Leicester told me, quite correctly: 'This is a classic case for the FSA waiver, where complaints are put on hold until the test case is resolved.'

The original waiver was for six months, but the FSA has renewed it time and again and it comes up for renewal again soon. The FSA has told me that it 'continues to consider whether the waiver is necessary and appropriate in the light of the prevailing circumstances'.

And this is where things get interesting because the prevailing circumstances are about to change.

Later this year, a new diktat from Brussels takes effect. It is called the Payment Services Directive and it will place more responsibility on the shoulders of the FSA, rather than the OFT.

I asked the FSA what effect this would have on overdrafts and was told: 'The OFT are, and will remain, responsible for regulating all overdrafts within the scope of the Consumer Credit Act.'

When I pressed, the FSA told me bluntly that 'all overdrafts come under OFT rules'. Well, not exactly.

One of the biggest bones of contention is the size of the charges levied by banks simply for writing to tell customers a cheque has been bounced. A fee of £35 a letter is not chicken feed.

But from November, the new rules from Brussels say this fee must be limited to the actual cost of the letter and enforcing this will be the complete responsibility of the FSA, not the OFT.

What does this mean for the OFT's court case? Who knows - the FSA doesn't appear to have the answer?

Can the FSA continue to grant the banks a waiver over customer complaints that involve charges which, under the new rules, the FSA itself is obliged to ensure are fair?

This is a mess. The FSA must be praying that somehow a deal can be struck to halt the court case before the new rules apply in November.
If this does not happen, the situation will descend into farce. After recent events, the controlling shareholder-in Lloyds is the Government. The FSA is a Government agency. So is the OFT.

So we could see the Government's OFT bringing a legal action against a Government-controlled bank, while the Government's FSA excuses the Government's bank from applying rules that the Government's FSA is supposed to be enforcing.

When politicians talk about joined-up Government, is this really what they mean?
Five-year account is a trap

Mrs L. M. writes: I took out a five-year savings investment with the Post Office and Bank of Ireland some months ago.

I ensured that the investment was covered by the Financial Services Compensation Scheme. I was given a booklet that confirmed this in bold print. As you will know, this is no longer the case, so I rang the Post Office, asking to withdraw my money as I believed the original contract had been broken.
At first I was told this would be no problem, but then the Post Office wrote saying I could not have my funds as, under the Bank of Ireland's terms and conditions, I had agreed to invest for five years.

The Post Office did allow some savers in growth bonds to withdraw their money, but investors in the five-year scheme that you chose have all been told they are locked in as the withdrawal rules are different.
The real question, though, is whether the savings guarantee offered by the Irish government is a valid replacement for the original cover provided by the UK compensation scheme that the bank has dumped.

Battered as our own economy is, Ireland's is in a worse state, with serious protests from its own citizens.

I asked the Bank of Ireland to comment on your complaint, and since British investors are in effect being asked to form a judgment on the stability of the Republic of Ireland, I asked the bank to let me have its own views on this.

It failed either to comment or give its views, which probably says more about the bank than any comment would have done.

The Post Office did comment, apologising for having messed you about. But the blunt fact is that it marketed a savings scheme with a guarantee that has now been withdrawn. Can we trust it again, I wonder.
Taxman is driving me mad

D. S. writes: I have been corresponding with the Revenue for 12 months, asking to be exempted from a tax liability on what tax officials call a 'company car benefit' that they assume I have. My employment involves visiting 160 sites, covering three counties and my only use of the vehicle provided by my employer is for business.

Early last year Revenue & Customs ruled that you enjoyed the private use of a company car and that the annual value of that private use was equal to a pay rise of £3,045, on which tax was due.
You have told me that you were able to show from travel records that the vehicle was used only for business, and you tried to appeal against the taxman's decision but were ignored.

Then tax officials tried to justify their decision by saying that even if you did not use the car privately, your wife could do so - despite being told by you that she was disabled and could not use the car.

The key to all this is a bit surprising and does not seem to have been explained by your tax office. The law does not say that you have to pay extra tax if you use a company car for private driving. It says you have to pay extra tax if there is such a car that you could use - whether or not you actually do use it.

Because your employer told the Revenue that for 2007-08 you were allowed to use the car privately, the tax is due.
Officials at Revenue headquarters have told me that since then your employment terms have been changed to say that you must not use the company car privately, and so the extra tax charge has been dropped.

And as your problem was handled poorly, you have been sent £60 in recognition of this.

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In his midweek email alerts last Wednesday, Tony Hetherington warned investors in Nevada Northern Gold not to inject more cash into the company unless it first produced audited accounts.
This Wednesday you can read the results of a further investigation.

[righty]

Re: More FSA shambles apparently

It occurs that as the EU have deemed that these banks charges can only be equivalent to the actual cost (which is precisely what we have been claiming) the whole ferango that is the OFT v Banks has been a complete waste of time for us but not the banks of course who have thanks to their mates at the FSA been allowed to continue running rampant

[EXC]

Re: More FSA shambles apparently

It occurs that as the EU have deemed that these banks charges can only be equivalent to the actual cost (which is precisely what we have been claiming) the whole ferango that is the OFT v Banks has been a complete waste of time for us

Not really as any new regulation would probably require an investigation and litigation to establish charge costs and enforce it, which the current test case & UTCCR investigation are doing anyway

[Tools]

Re: More FSA shambles apparently

Also that does not come in until November, if at all.

[righty]

Re: More FSA shambles apparently

Apparently the law is quite clear in that the charge MUST reflect the actual cost - Therefore IMHO if challenged by a consumer the banks will have great difficulty in justifying such extortionate charges simply for rejecting either a DD or cheque. - In otherwords we'll be back to square one & in the meantime the banks are permitted, courtesy of the FSA, to continue imposing their extortionate penalties

[EXC]

Re: More FSA shambles apparently

You would have thought UTCCR was quite clear but the banks dispute the applicability of it - which is surely what they'd do with any regulatory challenge.

[Amethyst]

Re: More FSA shambles apparently

PSD = EUR-Lex - - EN

if that link works - otherwise Final Text from European Commission Internal Market &raquo Payment services &raquo Final text