OFT let consumers down AGAIN on Overdraft Charges

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

We have had an influence, I don't think we have been wrong in supporting the OFT at all.

This is a blow we just have to keep lobbying government and pushing the issues through the courts - if we can win there, and with a brilliant team behind us we do have a chance, then that will HAVE to affect the future too.

The SC Judgment has said that 'all along' the charges have been 'part of the price' etc - that can't change now - so if that 'part of the price' is found to be an unfair relationship or unfair under UTCCR in court - then future charges will HAVE to change.

See all the people coming out in support of the 'consumer responsibility' comments in the OFT report now.

What about these people ?

Customer : “I need help, went to my bank July 09 asked for a £100 overdraft
as I could foresee would go overdrawn. Was refused....told not enough
activity on my account!! Went overdrawn by approx £55 at end of July 09, I
am now over £400 overdrawn Dec09, I am being charged £8 per working
day. I wrote disputing as I came in for help and was not given any....just told
to borrow from friends and family.”

Customer : “First they charged me £88 for being within the reserve limit. I then
cancelled the reserve to be greeted by £32 in guaranteed transaction fee's
because there was no reserve limit and the account was now just overdrawn.
Then they charge me another £88 for reserve fees for the time I was within
my reserve limit prior to cancelling it! I am now £217 overdrawn made up
entirely of fees.”


This needs to stop.

[EXC]

Re: OFT let consumers down AGAIN on Overdraft Charges

The OFT is a non-ministerial government department established by statute in 1973.
</H1>

Don't get me started on the independence of the OFT. But maybe that's it - that they are too independent and as such are answerable to no one.

[enaid]

Re: OFT let consumers down AGAIN on Overdraft Charges

Don't get me started on the independence of the OFT. But maybe that's it - that they are too independent and as such are answerable to no one.

Well they must be answerable to someone, somewhere and it is certainly not the consumer, so who does pull their strings?

[ed.]

Re: OFT let consumers down AGAIN on Overdraft Charges

Am I the only one seeing this as being brilliant for the next stage in terms of misrep and and a general unfairness angle (given in the meetings with the OFT for this study they have obviously again rewritten the apparent true meaning of the terms) + showing how fundamentally flawed the Test Case was?

Or am I just being very optimistic again?

ps Ame, is their a thread detailing the 'arguments' raised with Scrivener etc.....just curious as to what's been presented to him for thoughts and what wasn't (as you know I have more left field take on the some of the arguments lol)

[natweststaffmember]

Re: OFT let consumers down AGAIN on Overdraft Charges

The future.....

Oh goody, we have another PCA report in Olympic year......will they be the ethiopians at 10, 000 metres of the bangladeshi runner, just there to make the numbers up....... I haven't read the report in full so I won't comment but if the current views expressed are right then it is a very disappointing day if that is what they have got for 3 years work.......let's not yet burn their offices down quite yet.....

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

Adam Phillips, Chairman of the Financial Services Consumer Panel said:

"The OFT's response today is weak. It relies on banks improving themselves, when they have patently failed to do this in other areas in the past, a key driver for the FSA taking over regulation of the deposit taking side of banking was to introduce an explicit and overarching requirement to treat customers fairly which had not been in the previous voluntary Banking Code.

“If the OFT's proposals do not work, it must deliver on its commitment to make further intervention in the market, including legislation.”

[natweststaffmember]

Re: OFT let consumers down AGAIN on Overdraft Charges

The executive summary is not that bad initially.
For example:
"the development of minimum standards to cover how consumers are
offered the ability to opt out of unarranged overdraft facilities"
I hope that this does not mean the Barclays approach of you are in unless you say you are out.

"a new industry working group to explore ways to give consumers greater
control and access to real-time information,"
just why has this taken 3 years to set up considering most banks have been on real time for at least the last 10 years(I remember NatWest going to real time in 2001).

"a new working group of industry and consumer representatives that will
develop best practice for PCA providers in dealing with customers in (or at
significant risk of being in) financial difficulty who incur UOCs"

Why is this happening if industry providers have been following correctly the Bank Code and now the lending code where it explains about dealing with customers in financial hardship? Why not simply have a more refined definition of financial hardship so that everyone knows exactly what it refers to ie a definition of essential outgoings?

------------------------------- merged -------------------------------
This is the only thread I will be on all day. lol/

"The average level of unpaid item charges levied by the major PCA
providers has fallen from approximately £34 in 2007 to £17 in 2010, and
per transaction paid item charges for using an unarranged overdraft from
approximately £30 to £22."
Hmmm, so that will be Barclays change of Terms and conditions so that their return item charge is down to £8.00 and RBS Group changing their return item fee from £38.00 to £5(likelihood is government pressure to do so rather than competition).

[enaid]

Re: OFT let consumers down AGAIN on Overdraft Charges

This is the only thread I will be on all day. lol/

"The average level of unpaid item charges levied by the major PCA
providers has fallen from approximately £34 in 2007 to £17 in 2010, and
per transaction paid item charges for using an unarranged overdraft from
approximately £30 to £22."
Hmmm, so that will be Barclays change of Terms and conditions so that their return item charge is down to £8.00 and RBS Group changing their return item fee from £38.00 to £5(likelihood is government pressure to do so rather than competition).

Well if all was fair and square with the charges why would they allow anyone (even the government) pressure them into dropping them?

[natweststaffmember]

Re: OFT let consumers down AGAIN on Overdraft Charges

"some PCA providers introducing the ability to 'turn off' or 'opt out'
of having an unarranged overdraft facility"

That will be one provider Barclays unless we are talking as well of LloydsTSB Control which costs you to opt out or turn off.
------------------------------- merged -------------------------------

This is the only thread I will be on all day. lol/

"The average level of unpaid item charges levied by the major PCA
providers has fallen from approximately £34 in 2007 to £17 in 2010, and
per transaction paid item charges for using an unarranged overdraft from
approximately £30 to £22."
Hmmm, so that will be Barclays change of Terms and conditions so that their return item charge is down to £8.00 and RBS Group changing their return item fee from £38.00 to £5(likelihood is government pressure to do so rather than competition).

Well if all was fair and square with the charges why would they allow anyone (even the government) pressure them into dropping them?

Cos the government are already allowing RBS Group to pay large bonuses and they are also taking a hit on the share price with the likelihood of having to keep money within RBS Group for 5 years.
Base Rate is at 0.5% and the changes made are in line with what the OFT test case were kinda saying. Plus lower charges equal more customers potentially.
------------------------------- merged -------------------------------
I just don't get the switching approach. It should already have been done.
------------------------------- merged -------------------------------
"3.2 The OFT is not a price regulator and has no power to impose price caps
on bank charges or elsewhere. The OFT aims to ensure that consumers
get value for money by making markets work well. Providing consumers
with greater control over whether and when they use an unarranged
overdraft can help consumers to get value for money from their PCAs."

Apologies am currently just picking bits out from previous comments
------------------------------- merged -------------------------------
"In a survey conducted for the market study, only seven per cent of
consumers that exceeded their arranged overdraft limit said that they
had chosen to do so"

Who the hell had they interviewed? How do you make a conscious decision to go over your overdraft limit? (FFS!!!)

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

3.2 The OFT is not a price regulator and has no power to impose price caps
on bank charges or elsewhere.

Think they forgot about credit card default fees.

[natweststaffmember]

Re: OFT let consumers down AGAIN on Overdraft Charges

"Consumers' lack of ability to opt out of an unarranged
overdraft facility and the difficulty in controlling when they use it has
two effects. Firstly, it reduces the ability of consumers to manage their
finances. Secondly, consumers are unable to act as an effective
competitive constraint by rejecting a service that they perceive is poor
value or inappropriate, thereby reducing incentives for providers to
improve their service or reduce prices."

Is this part of the report adding weight to UTCCR 1999 since it is about the average consumer having a significant imbalance contrary to good faith?
------------------------------- merged -------------------------------
"3.9 Consumers have had, for some time, the ability to opt out of unarranged
overdrafts by choosing to have a basic bank account. However, the
basic bank account may not be a suitable alternative for many
consumers who value other features of a PCA that are not available with
a basic bank account"

Have a few items bounced and you are into an excess or unarranged borrowing scenario, which although is not charged a fee for doing so, does incur charges and could incur collections teams potentially
------------------------------- merged -------------------------------
"3.10 At the time of writing, the OFT is aware that some PCA providers now
offer consumers the ability to opt out of unarranged overdraft lending
(and its equivalents) on their main PCA. This is either through switching
the facility off on their existing account or choosing another account
with similar features but with no unarranged overdraft"

Name them anyone? I have Barclays with its opt out Reserve, LloydsTSB control account....are there any others?
------------------------------- merged -------------------------------
"3.12 The UPIC levels for the major PCA providers' main PCA product in April
2007 and March 2010 are shown in Table 2 below.35 While the UPIC is
only one of a number of PCA charges and not the only basis for
choosing a provider, the OFT notes that since it began its PCA market
study, there have been significant reductions in the level of UPICs for a
number of the major PCA providers. Between April 2007 and March
2010, the weighted average36 UPIC across the major PCA providers
declined by approximately 50 per cent from about £34 to about £17.37"

The footnote at the end though does say this:
"37 It should be noted that this fall refers to the average level of UPIC, not the total revenue
earned from these charges or number of UPICs levied."
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Footnote on Page 33:

"42 The OFT acknowledges that this opt-out facility may not apply to certain forms of
transactions such as guaranteed cheques or non-authorised (below-floor limit) debit card
transactions. The important issue is that individual customers have the information required to
understand what is or is not covered by any individual account."

If they cannot work with Streamline(RBS Owned) or other card providers to eliminate floor limits. Why is this becoming rocket science?

[crashbandicoot]

Re: OFT let consumers down AGAIN on Overdraft Charges

Hi everyone,

Without reading everything, am I right in thinking that the OFT have now passed the buck to the banks and customers to 'fight it out between themselves'? That is pretty pants but kind of gives us the firm green signal to battle it out in our own way, provided the banks don't get away with having all our claims struck out? If so, bring on the court claims?

Crash

[natweststaffmember]

Re: OFT let consumers down AGAIN on Overdraft Charges

Honestly, it is a load of crap really isn't it? I mean for 3 years that is the best that they can come up with?

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

One of the UK's biggest banks, HSBC announced the launch of a new bank account from 26 April to meet the OFT's requirements.
"The new account - to be known as HSBC Bank Account Pay Monthly - features a strict overdraft limit that cannot be exceeded unless the bank has formally agreed a higher limit beforehand," HSBC said.
"The account has a monthly price of £15 and because the overdraft limit cannot be exceeded, it carries no unauthorised overdraft charges and no returned item fees.
"The strict limit on overdrafts that is a central feature of Bank Account Pay Monthly could mean that customers experience more bounced cheques or unpaid direct debits than they are used to and their credit rating could be affected," it warned.

Havent seen anything else on this yet though

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

Okay got it off HSBC

16 March 2010

HSBC welcomes OFT PCA study and extends range of accounts
** New account carries no unauthorised overdraft or returned item charges **

HSBC welcomes the findings of the Office of Fair Trading’s investigation into the Personal Current Account market. The bank agrees with the regulator’s conclusion that the range of choices available to consumers and the quality of information to which they have access has increased dramatically in recent years.

It also agrees that more can and should be done to ensure that every PCA provider gives their customers information that is absolutely clear and simple to access.

While, as the OFT notes, the range of options available to consumers has expanded in recent years, HSBC will add to its range of current accounts to ensure that the bank offers a solution for everyone, regardless of their circumstances or preferences.

The new account – to be known as HSBC Bank Account Pay Monthly – will be available from 26 April 2010 and features a strict overdraft limit that cannot be exceeded unless the bank has formally agreed a higher limit beforehand. While the vast majority of customers will want to retain the flexibility offered by HSBC’s other accounts, those seeking a high level of control over their daily spending now have a unique option.

The account has a monthly price of £15 and because the overdraft limit cannot be exceeded, it carries no unauthorised overdraft charges and no returned item fees. The account will be offered to new customers and to existing customers, who can choose to move to the Pay Monthly option while retaining their existing account number.

The strict limit on overdrafts that is a central feature of Bank Account Pay Monthly could mean that customers experience more bounced cheques or unpaid Direct Debits than they are used to and their credit rating could be affected. As such, HSBC will provide every Pay Monthly applicant with a financial review to ensure that they understand how the account works and that it is appropriate for them.

The new account stands alongside the existing HSBC Bank Account, HSBC Advance and HSBC Premier products, all of which feature the unique HSBC Fair Fees Policy. This policy waives fees in a range of circumstances, including no charge for going up to £10 over the agreed limit with a maximum of one overdraft charge per day. HSBC believes its existing overdraft proposition offers the majority of customers the best value in most situations.

HSBC is also the only bank with ATMs that warn its customers if a cash withdrawal will take them over their limit and the only bank to conduct an annual review of its customers’ overdraft limits to ensure the limit remains appropriate to their financial circumstances.

To help customers stay on top of their balances, Bank Account Pay Monthly also features text overdraft limit alerts sent as customers have used 60, 80 and 95 per cent of their overdraft limit, as well as online money management tools. Every Pay Monthly account also comes with a £50 buffer so short term emergency payments can be made and small miscalculations are not an inconvenience. Subject to status and credit scoring, customers can ask to alter their overdraft limits as often as they wish.

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