FSC panel response on Bank Charges

[Amethyst]

Call for regulation.

These include fair bank charges which are transparent and proportionate to the product or service provided. While we do not support the setting of maximum tariffs as such, we would like to see the financial services regulator putting measures in place to ensure that a bank should be able to break down a particular charge into the nature of component costs, including the
element of profit that has been applied.

[leclerc]

Re: FSC panel response on Bank Charges

"Moves to impose mandatory limits on bank charges would, amongst other things, challenge
current banking models and in particular the myth of “free banking”. Any profit lost as a
result of limiting charges would almost inevitably result in banks seeking to recoup this in
other areas of their business which would not be subject to such controls, such as by
reducing the rate of interest payable on savings accounts. The Panel would welcome a
public debate into whether consumers who remain in credit should pay a ‘fair’ fee for banking
services and whether this would actually be to the advantage of the market as a whole."

Interesting.

[EXC]

Re: FSC panel response on Bank Charges

These include fair bank charges which are transparent and proportionate to the product or service provided. While we do not support the setting of maximum tariffs as such, we would like to see the financial services regulator putting measures in place to ensure that a bank should be able to break down a particular charge into the nature of component costs, including the
element of profit that has been applied.

That's just silly isn't it?

[Guest]

Re: FSC panel response on Bank Charges

"Moves to impose mandatory limits on bank charges would, amongst other things, challenge
current banking models and in particular the myth of “free banking”. Any profit lost as a
result of limiting charges would almost inevitably result in banks seeking to recoup this in
other areas of their business which would not be subject to such controls, such as by
reducing the rate of interest payable on savings accounts. The Panel would welcome a
public debate into whether consumers who remain in credit should pay a ‘fair’ fee for banking
services and whether this would actually be to the advantage of the market as a whole."

Interesting.

Hi
Not seen this particular clip before although I have seen similar ideas put forward by various banks.
It seems that the bank charges that plague us mere mortals are being used to swell the coffers of more affluent savers. Bit like Robin Hood in reverse.
Peter

[EXC]

Re: FSC panel response on Bank Charges

Hi

It seems that the bank charges that plague us mere mortals are being used to swell the coffers of more affluent savers. Bit like Robin Hood in reverse.
Peter

You could argue that the reverse is true.

The OFT PCA Market Study found that 50% of revenue derived from personal current accounts comes from those who keep their accounts in credit, by way of net interest income (ie forgone interest).

This compares with revenues of just 30% from bank charges. So in crude terms the group of consumers that think they get 'free banking' are actually subsidising the other group of consumers that think they don't.

[Guest]

Re: FSC panel response on Bank Charges

You could argue that the reverse is true.

The OFT PCA Market Study found that 50% of revenue derived from personal current accounts comes from those who keep their accounts in credit, by way of net interest income (ie forgone interest).

This compares with revenues of just 30% from bank charges. So in crude terms the group of consumers that think they get 'free banking' are actually subsidising the other group of consumers that think they don't.

HI

It is a clever argument but if you examine it you see that the funds generated by the accounts in credit is created out of the banks ability to invest funds on deposit( it is after all there main buisness model), and creates no extra cost to the customer, whereas the situation regarding fees is of course a completely different scenario.
So the situation remains where the person least able to pay makes the biggest real contrubution.

Peter

[EXC]

Re: FSC panel response on Bank Charges

The OFT did conclude that forgone interest is a cost to the consumer and the banks did agree that ''it is part of the price'' of a current account during the test case. And recently Lloyds said the same when giving evidence to the Treasury Select Committee.

So it's a cost even though it's not actually charges for and although it's not as tangible as bank charges, lending your money to a bank for nothing in return does have a real cost if that money would otherwise be earning interest in a savings account.

[Guest]

Re: FSC panel response on Bank Charges

The OFT did conclude that forgone interest is a cost to the consumer and the banks did agree that ''it is part of the price'' of a current account during the test case. And recently Lloyds said the same when giving evidence to the Treasury Select Committee.

So it's a cost even though it's not actually charges for and although it's not as tangible as bank charges, lending your money to a bank for nothing in return does have a real cost if that money would otherwise be earning interest in a savings account.

Hi
I dont think anyone would argue that the depositing of money in an accout that doesnt return any interest is a charge.
I thik it is the difference between the interest payed back to the customer (if any) and the amount the bank are able to gain through investing the customeres money that makes up the banks profit.

But i think it is acknowledged that the money raised from charges not only covers the cost of the less viable accounts but also subsidises the "free banking " facility of the larger accounts, in addition it seems that it adds to thier income in their savings.

Peter