Forum Topic

Supreme court backs bankers

Un-bloody-believable!

Vanessa Smith ● 6001d33 Comments

You dick! What has this thread got to do with Tories (or Brentford)?

Colin Murphy ● 5998d

I'm not disagreeing with you George. I am pointing out two things -1) people have individual responsibility for their own finances and should not expect others too look after them;2) banks like RBS went (almost) bust through high risk speculative lending and investments and over-exposure, not from poor treatment of their private customersI would also note that the 'greed of bankers' was allowed by overly lax regulations and encouraged by a reward structure that encouraged this risk. Both will need to change if the risk taking is to be reduced.

Alan Clark ● 5999d

AlanWe have been told countless times by government that it would have been too dangerous to let say RBS go. I think we have to accept that. We keep being told that RBS is one of the largest Banks in the world.NatWest nearly went to the wall in 1972 but after recovery it had a period of doing extremely well, and making the government billions. That was before FSA, and whatever went on behind the scenes would have been handled by the Bank of England - as it should be again.So I think that  we should just hope/expect the banks will in due course recover.Trying to control banks is far more difficult than people expect.Example.If the government of the day wishes to assist a country financially for commercial or defence reasons, but on the domestic front the bank is being threatened with windfall taxes or how it charges customers, the bank can easily look elsewhere for more profitable investments and effectively tell the government to get stuffed. In the court case earlier this week they told the government to get stuffed and won. So while I totally agree with Vanessa about the size of the charges and the unreasonable charging when a customer goes overdrawn by 59p, I am not very confident that the sin of greed will be overcome as regards arrogant bankers.Tony is right.

George Knox ● 5999d

Phil, the individual personal consumer saving and current accounts are not what really drives the banking system. The values here are tiny compared to business transactions and international transactions. So it is only 'our money' to this tiny extent.You're right about the 10% number - in fact that's the ratio that the Bank of England is now enforcing. Previously some of the banks were at 2-3%.However some of the banks were not so wayward in their dealings over the years and did not get any support from the governments of the world. So although they have indirectly benefited from the massive investments in the banking system there is also an argument that they would have benefited more in the long term from having their competitors go under. Do we punish them to?

Alan Clark ● 5999d

It was meant to be rude. I think that man has no interest in Brentford as such. He just pushes the Tory line over and over again. Sadly a lot of people on this board use it the same.

Neil Chippendale ● 5999d

Yes Lisa that's it in a nutshell.  Summed up best in the old music hall song..."It's the same the whole World over,aint it all a bleedin' shame? It's the rich wot has the pleasure,and the poor wot gets the blame".Just off for my Daily Worker and Herald :o)

Tony Wood ● 5999d

AlanThe "ratio between exposure and funds" is really just a fancy way of saying how much of other people's money they are in a position to lend out at a profit to themselves.This is the nub of it - the money which banks lend out is not their own.  It belongs to us.  They lend our money to other people and profit from doing so.  That is what a bank does.If, collectively, individuals and business were to ask tomorrow to withdraw one tenth of the funds that are currently deposited with the banks they would not be able to do so, because the banks wouldn't have enough money to pay them.  It will have been lent out elsewhere.The recent problems faced by the banks came about because the banks, fired by greed, lent out a rather more generous proportion of our money than they ought to have done.So the bottom line is that if we are irresponsible (or merely careless) with our money we pay the banks.  If the banks themselves are irresponsible with our money we pay the banks.  Isn't finance capitalism wonderful?

Phil Andrews ● 5999d

The problems the banks created recently were not the caused from their transactional banking services (current accounts etc.) but from their investment and lending divisions. And from the banks over-gearing the ratio between exposure and funds to cover the lending/investment exposure. The bonuses that we view as bad were the ones being given to reward such high risk behaviours.The customer service and the annoyance from high penalty charges for being overdrawn etc are therefore not really to do with these bad bonuses and economy destroying risk-taking. We're muddling up two issues here.

Alan Clark ● 5999d

The days George is talking about when he had a manager and when banking was not free etc., are probably the same days I was talking about when actually very few people had bank accounts.  The reason they did not have bank accounts was, as I said before, because they did not need one.  They would have received their wages weekly in cash.  The need for everyone to have a bank account and thereby get fleeced with charges came with the advent of monthly pay.  Even in this day and age I would hazard a guess that there are millions of people who would neither want nor need a bank account if they received their salary/benefits/pensions whatever in cash every week.  This has given banks carte blanche to charge what they like when they like and potentially make millions out of those that can least afford it. 

Bernadette Paul ● 5999d

Banks need to make as much money as possible as it is good for our economy.Bankers hate it but they can be asked to supply statements more frequently than once per month.Banks know we know that they know that customers suffer from inertia. They take advantage of that. Money lenders have been hated objects in literature since for ever.Many customers are not perfect at managing their accounts. Banks are not charities. Neither are they professionals. They are commercial types dressed in suits. Nor do they have clients.Before computerisation my bank manager (we don’t have them now) would write and say that they seemed to be banking with me rather than me with them. His wit was sufficient for me to be careful more often.In those days not many banks provided free banking.I don’t mind bonuses, and large ones. What I mind is how people get their bonuses and in part why they get them. If they got bonuses for growing their company in terms of more employment rather than just massaging share prices, then I would be more supportive.

George Knox ● 5999d

So the banks can be irresponsible and be bailed out at our expense but when we do the very same thing we must pay up and be told we were very silly to spend what we didn`t have????? They are the professionals, should they not set an example? Our salary is taxed, then the cash is taxed unless we spend it immediately (irresponsible), then we pay yet more taxes as we spend that money. It`s never really ours is it?

Lisa Mercer ● 5999d

Ooooooooooooooooooooooo!

Vanessa Smith ● 6000d

Oh, and leave out the comments on my name. It is in poor taste, beneath you and not relevent to the discussion.

Alan Clark ● 6000d

The winding up is working then...I've got to ask the question, though, why not move account if the service you get from your bank is unacceptable. Many banks will offer a penalty free allowance, say £200, so that charges are not applied when you accidentally slip into borrowing rather than saving mode. Go find a bank that offers you that. Or cancel the credit card with your bank and get one where the credit card company can't just take money from your account. Or set up a standing order to pay the credit card each month. Or don't use a credit card, use your debit card. Or set up an account where you get a text warning you when you go below a certain limit so that you can take corrective action. Or continue to moan about the big bad banks.

Alan Clark ● 6000d

Alan if I didn't know better I'd say you were back from the dead, the name is unfortunate to say the least! You missed my point it's NOT the charges per se, it is the disproportionate charges which is the issue. The parking analogy was that Hounslow council is putting putting up the cost of penalty charges, this is seen by many motorists as another money raising cash cow. Others say well you shouldn't park illegally, again it isn't the fact that you may have disobeyed the rules it is the amount that you are rooked for. The whole point of parking restrictions was originally to keep the traffic moving,  that seems to have gone the way of the Dodo now. The banks should not be allowed to charge over and above what it costs them to administrate for these trangsressions, they make enough money as it is. There is a big difference in making a reasonable profit and taking the p***. All the time they go on paying obscene bonuses they will have a job trying to convince Joe public these charges are necessary.

Vanessa Smith ● 6000d

So I find myself in the strange position of defending banks. That was not my point. My point was that people are not taking sufficient ownership for their own responsibilities and have tendency to blame others (especially when there are large, anonymous organisations involved). However, I don't really understand the parallel with parking tickets. But the example of "I owed the bank money on my credit card and they took the money from my account to pay for it" seems to be good case of I'm not really in control of my finances, I missed a payment, they used the terms of the contract I signed up but couldn't be bothered reading to access the money they were owed, they almost made me go overdrawn, its not fair, boo hoo, boo hoo. Or did I miss something?(PS - I am, of course, winding you up, Vanessa.)Next week I will be explaining why the bonuses for bankers and top executives is not only fair and reasonable but a reflection of robust corporate risk management.

Alan Clark ● 6000d

“Do you apply the same sort of logic regarding parking tickets Alan?”- No need to even go that far Vanessa, as this kind of logic could be applied to the retail banking sector itself – which is already in hock to generations of British tax payers.So, many people will be “held to ransom” twice – first through increasing bank charges and, second, by keeping the retail banking sector afloat.

Fraser Pearce ● 6000d

“There is every possibility that within our lifetime cash will fall out of use.”- Possibly, Alan, which is why the move to a cashless society must be resisted. There is legislation and scenarios in place for almost immediate ‘remedial action’ to protect the UK retail banking system. This includes the closure of bank branches, cash machines, online banking services and payment systems (with suspension of payment systems likely meaning that people wouldn’t be able to shop as normal at the likes of Sainsbury’s and Tesco – as their tills are plugged into bank systems).I lived in New York during a prolonged electricity blackout. The ATMs, banks and shops didn’t work. This was when people remembered the importance of cash – it can’t be turned off at the flick of switch and you can hide it under the bed.-------I agree with you on the moral hazards of debt. Sure, many blame others for their needless profligacy, but many don’t. The problem remains though that society itself relies on debt. We live in a system where most of our money comes into existence via the issuance of debt, where many on low pay rely on the monthly rollover of debt, where the state itself relies on debt just to function as ‘normal’.... And don’t forget the retail banking sector itself is in debt to the very people it is likely to be overcharging.

Fraser Pearce ● 6000d

“The point is not everyone wants a bank account but if you are in employment the chances are you have to have one.  If banks start charging simply to operate accounts, even ones that don't overdraw or incur other charges, we are then in a situation where people are forced to pay to be paid!  It's all very well for those amongst us that have savings or accounts that are permanently in credit but, there are many people who simply operate accounts to receive their wages/pensions/benefits etc.”- Absolutely, Bernadette. If such charges do happen, they’re likely to disproportionately affect pensioners now obliged to receive their money via ‘Direct Payment’ into an account.Now we have learnt the judgement for this case rests on EU law, the British government may be obliged to go to the EU Commission to get the law changed and have pensioners exempt from such charges. Such a change in the law would then require the agreement of the EU’s 26 other member states.The other likely alternative would be for the banks themselves to make exceptions for the likes of pensioners – which makes you wonder what type of inducements would have to be made for banks to accept this. Then again, our retail banking brethren may just do it out of the good of their own cold hearts.

Fraser Pearce ● 6000d

Do you apply the same sort of logic regarding parking tickets Alan? Banks can put you in the red by their actions thus incurring even more penalty charges, they simply do not give a toss. Last month I thought I had paid my credit card online - obviously I imagined it as I hadn't, my fault. I was asked to pay it with the next month's payment which was only ten days away, so immediately I thought that's fine will do. I then found that the bank had taken the payment anyway, then they wrote and told me they were allowed to do this and to see the Terms & Conditions - have you ever tried reading them never mind understanding the finer points? This could have easily pushed me into the red, it didn't, but if it had then I'd have incurred charges. What's the point of asking you to pay with the next payment and then taking the money before that? I don't think any of us are quibbling over having a charge but it is the sheer amount that these charges add up to, it is out of all proportion to the amount of work the bank has to do and what it actually costs them. Luckily I do not transgress, but I just hate the fact we are held to ransom by these unprincipled, greedy, sh**s, they really are beneath contempt.

Vanessa Smith ● 6000d

There's a couple of points to respond to here.First is the concept that the loan shark is the same as the lending bank. I'd suggest that there's a couple of fundemantal differences - least of which is the setting out of clear terms and conditions of contract which loan sharks tend to forget and re-invent (with massively higher rates) at a later stage. They are not the same.The second is about whether people need a bank account or not. Is the trend towards a cash-less society not well underway (Oyster, debit cards, internet buying, etc.) and unlikely to be reversible? There is every possibility that within our lifetime cash will fall out of use. Where would that leave those without bank accounts?But my last point is to suggest that we are increasingly in a 'blame everyone but ourselves' world. The banks overcharged me (yes, but you allowed your account to go overdrawn). I needed a loan urgently (yes, but you overspent on crap you did not need). The council is to blame for my son falling off the cliff (yes but he was drunk - and underage for drinking - at the time). And so on.

Alan Clark ● 6000d

“Please Colin go away. This thread is about BANKS not politics.”- Not quite, Neil (but your comment was quite rude). The legal judgement for this case can be found here:http://www.supremecourt.gov.uk/docs/uksc_2009_0070_judgmentV3.pdfPages 2-3 state that the case:“...depends on the correct interpretation (in its European context) and application of Regulation 6(2) of the Unfair Terms in Consumer Contracts Regulations 1999 SI 1999/2083...“The 1999 Regulations were made under section 2(2) of the European Communities Act 1972 in order to transpose into national law Council Directive 93/13/EEC on unfair terms in consumer contracts (“the Directive”).”-------In normal everyday English, this means that the court was obliged to follow EU law and, by extension, obliged to side with the banks (“Abbey National plc & Others”). This most of central facts has been conspicuous by its absence in most of the British media’s reporting of this case.The legislation determining the judgement was initiated by the Brussels government, not the Westminster one. As such, this case has as much to do with politics as it does with banks. The Westminster government could not change this law even if it wanted to. The Supreme Court is nothing of the sort.

Fraser Pearce ● 6000d

Surely one of the problems these days is that everyone needs a bank account whether they want one or not.  I am old enough to remember when workers were paid in coin of the realm before noon on a Friday each week.  I believe this is aactually a statute which is still on the books under The Truck Act (or something like that).  At some point employers realised that if they paid workers monthly or even fortnightly, the money could stay in their banks earning them money and with that change came the need for 99% of workers to open bank accounts.  Many of these people had/have no need for a bank account other than to receive their wages.  When you mismanage these accounts by even a very small amount and the charges kick in, it is entirely possible that a weeks wages can be lost in charges.The point is not everyone wants a bank account but if you are in employment the chances are you have to have one.  If banks start charging simply to operate accounts, even ones that don't overdraw or incur other charges, we are then in a situation where people are forced to pay to be paid!  It's all very well for those amongst us that have savings or accounts that are permanently in credit but, there are many people who simply operate accounts to receive their wages/pensions/benefits etc.  I realise it would be considered a backward step but if employers were obliged to pay workers in cash on a Friday each week (if the employee so desired it) I think there would be many people who would instantly close their bank accounts in any event.  At present there is nothing to choose between any bank no matter what they initially offer.  They are in the business of making money usually from those who can least afford it.

Bernadette Paul ● 6000d

AlanThe logic of your argument could also be used to justify the actions of loan sharks, who prey mercilessly upon the most desperate and vulnerable.  It is only a question of degree, the principle is surely the same?

Phil Andrews ● 6000d

A lot of the above notes seem to be saying that its ok to mismanage your bank account and its ok to ask for more money than you can afford. Its all the banks fault. This implies that people have no personal responsibility for managing their own finances or for being able to just whether they can afford something or not. Sorry, this is not correct - if you mismanage your finances or if you are so foolish as to ask for a greater loan than you can afford to pay back then really this is your own fault. I've been charged for going overdrawn. Its not pleasant, its even annoying, and you want someone to blame. And that would be yourself.

Alan Clark ● 6000d

Please Colin go away. This thread is about BANKS not politics. And yes I agree the fees are high and they gave money to people who couln't afford it. What level should people be charged for unauthoried withdrawals. In OZ all banks charge fees, we don't have free banking. Should UK introduce this. I hope not as my UK accounts are free.

Neil Chippendale ● 6001d

The essential point is that anybody who has more money than they feel comfortable leaving under the mattress has to entrust it to a bank, and they are all pretty much the same.  I think it's known as Hobson's Choice.So wherever you leave you are going to get slaughtered if you fail to honour the terms of the fine print at the bottom of your contract in every tiny detail.Let me provide an example.  An associate of mine was overdrawn to the tune of about £5 for two days.  Not intentional, simply miscalculated.  As a penalty for this she incurred both a daily overdraft fee plus a monthly overdraft fee.  So far so bad but, as she had the misfortune to have been overdrawn for two days either side of the monthly close-off date, she didn't only incur two daily charges but two monthly charges also.  A total charge of £130.True, she rang the bank and pleaded with them and they reduced the charge against her to £65, but this is still absolutely outrageous for such a minor oversight by a customer who had never previously transgressed over several years as a loyal customer.They even charge you when they write you a letter, or at least they did before everything went online.  Try charging them for your reply and see what they say.It does make one feel particularly angry to consider that public money was used to bail these people out.  The truth is of course that servicing the "ordinary" account is regarded by all the banks as a chore they would rather not be bothered with.  The banking system in this country needs a radical overhaul.  It is supposed to be a service first and foremost, and it's a very long time since it's been that.

Phil Andrews ● 6001d

It's a give it a rest answer - this is a different subject and all you are doing is muddying the waters to make a point on something that's been done to death, move on, get a life, the election will decide it.

Vanessa Smith ● 6001d

Is that a yes or a no?

Colin Murphy ● 6001d

Alan, Well that's alright then, not, these tossers are nothing more than posh loan sharks. Everyone else thinks they are taking the p*** big time, quite possibly the Supreme Court Justices or whatever they call themselves, have so much dosh they don't give a rat's a*** about the poor bloody taxpayer. You know - the idiots who have pulled the chestnuts out of the fire for these greedy, immoral, 'bankers'. The law is indeed an ass.

Vanessa Smith ● 6001d

Colin - please give it a rest.

Vanessa Smith ● 6001d

I thought, and it looks like the law courts agree, that caveat emptor applied in the purchase of goods and services. You buy the services of a bank, even if it is a free service, and you sign up to a contract. If people do not read the terms of these contracts or understand the implication of them and of going into overdraft - then as the latin phrase says, beware. The supplier has no need to justify charges - except at the time of agreeing the contract of service ... and at that point the buyer can always decline the service if they believe the justification is weak.

Alan Clark ● 6001d

Probably not, but unbelievable all the same.  Some of the charges the banks impose are clearly unjustifiable but they seem to be able to do nothing wrong.

Phil Andrews ● 6001d

More so than Cabinet members not being sacked or jailed for their capital gains tax avoidance or manipulation of  'allowances' to expand their property portfolio?

Colin Murphy ● 6001d