BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

hmmm so the OFT's mass work on switching lead to sweet fanny adams then.

I'd never use a switching service - I much prefer to have control then if things cock up its my own fault.

I don't get how you can sign up for a switching service and they just 'take' all your DD's etc without ensuring your income is switched over first - and the other bank don't even check with you that you wanted to switch. Errors and fraud could cause complete mayhem with that system.

[EXC]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Mark Hoban has suggested that the Government will publish it's decision on whether to transfer consumer credit regulation from the OFT to the FCA, but judging by the way he's talking it's likely it will and will mean that bank charges will get a new regulator.

It's a good speech Speech by the Financial Secretary to the Treasury, Mark Hoban MP, to DLA Piper - HM Treasury

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

To that end the FCA will have a new power to publish the fact that it has taken action against a misleading or inaccurate financial advertisement.
The FCA will also have the power to ban products or to restrict certain product features. Again, looking back at the PPI, in a similar situation, the FCA would have the tools and authority to prohibit the selling of PPI products, such as the single premium PPI, until firms redesigned them and demonstrated that they could sell them safely.
This new power will enable the FCA to intervene more quickly and decisively where it spots a problem by imposing a temporary ban with immediate effect for up to 12 months. It will also enable the FCA to render unenforceable any contracts made in breach of the ban.
And we are also providing the FCA with the power to disclose the fact that it is taking disciplinary action against a firm or individual.

...

[EXC]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

The FSA have published a 'Strategy Paper' to promote 'public debate' on how the Financial Conduct Authority (The FCA is due to be up & running by the end of next year) will approach the delivery of it's objectives.

http://www.fsa.gov.uk/pubs/events/fca_approach.pdf

Responses need to be in by September.

I want going to respond to this from a bank charges perspective. Although the paper doesn't specifically refer to bank charges, it does propose to consider pricing as part of it's remit:



Pricing
The government has said that the FCA will not be an economic regulator in the sense of
prescribing returns for financial products or services. The FCA will, however, be interested in
prices because prices and margins can be key indicators of whether a market is competitive.
Where its powers allow, the FCA will take into consideration more positively the cost of
products or services in making judgements about whether consumers are being fairly treated.
Where competition is impaired, price intervention by the FCA may be one of a number of
tools necessary to protect consumers. This would involve the FCA making judgements
about the value for money of products.

The FCA will thus consider exercising its powers to take action where costs or charges are
excessive. There are currently rules on excessive charges for mortgage arrears; and the FCA
could, for example, re-introduce rules on excessive charges for a wider range of investments.
For charges that are unfair or clearly out of line, there is an immediate value to intervention
which would not require the FCA to be an economic regulator. The FCA could also consider
requiring product providers to show that charges are not at a level that undermines the
possibility of consumers achieving a return.

On the basis that the Supreme Court held that overdraft charges are in exchange for the general package of banking services supplied, it could be reasonably argued that the charges apply to the above.

Notwithstanding, now that it's likely that the FCA will assume responsibility for consumer credit, Hector Sants is already on record as telling the Treasury Select Committee that the new regulator (which will be the FCA) should look at overdraft charges:

''Even before that, this was more an issue for the OFT than us, because you have to remember we do not regulate at the moment consumer credit, and overdrafts count as consumer credit. But the answer is, when and if all that is tidied up, yes, I do think the appropriate regulatory authority should be directly looking at both the transparency and indeed the level of unauthorised overdraft charges. That should be part of our regulatory machinery.''

http://www.publications.parliament.u.../612/612ii.pdf

In support of the response I'm going to FoI the OFT to get the 2010 industry revenue figure for overdraft charges (we've only got up to 2009) to prove that the OFT's assertion that paid and unpaid item fees have been considerably reduced are misleading.

[EXC]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

From OFT:


''The total revenue earned from consumers incurring UOCs from the largest banks in Great Britain fell from approximately £2.5 billion in 2009 to £2.0 billion in 2010.''

[enaid]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

So this is still a good little earner for the banks.
Has the consumer learned nothing over the last few years or is it that the banks can still manage to get you in a situation on their accounts that consumers find hard to get out of?