Just What We Need

Yay!

The fees became a subject for consumer rebellion last year after the OFT ruled that similar fees for late and unpaid credit card repayments were unlawful, and consumer groups started to encourage customers to claim refunds.

More than 1m reclaim letters were downloaded from websites, and in some cases customers were able to win back thousands of pounds from the banks, who refused to contest the claims in court.

Martin Lewis, founder of the website Moneysavingexpert.com, told Sky News the ruling was "a massive vindication for bank charges campaigners".

He said up to £9bn could now be reclaimed by bank customers.

Let\’s rip £9 billion of capital out of the banks in the middle of a credit crunch!

Yippee!

Update: this seems to have been misunderstood. I\’m not arguing that the banks should not have to obey the law: of course they should. I\’m not trying to argue that it should be set aside or ignored, far from it. I\’m solely commenting on the point that in the grander scheme of things about bank solvency ratios and the like, this isn\’t exactly the most glorious time for this to happen. It never rains but it pours etc.

8 thoughts on “Just What We Need”

  1. Personally I don’t see any problem with banks and credit card companies charging a fee over and above admin costs on those who pay late. (And that has included myself on a number of occasions). However, the law is that they are only allowed to charge the costs that they have incurred, not punative charges. With this in mind, it was pretty cheeky of them to then go and charge penalty charges and expect to get away with it indefinitely. The fact that in my opinion they should be allowed to charge penalty payments is not here nor there.

  2. What ChrisM says, there are old established rules that split up contractual damages into IIRC ‘liquidated’ (fair estimate of loss caused by other party’s breach) and unliquidated damages (punitive – usually not upheld).

    Ergo, what the banks were doing fell into latter category and they can whistle for it. Given that banks are going to have to raise £50-bn plus from their shareholders in the foreseeable, will that extra £9 bn make a difference? Nope, thought not.

  3. “So, do banks make enough on current accounts without this, or will they decide that they’ll scrap free banking?”

    An example of unintended consequnces when the state decides to stick its nose in where it doesn’t belong. The banks should be able to charge penalty fees IMHO. That’s on libertarian grounds. The fact it may pay for free banking is just a bonus. Still, that said, for as long as the law says they should not be charging these fees, then they should not be charging them, and on that basis I don’t have much sympathy for them.

  4. Letters From A Tory

    It will take ages for this to come into effect. The banks will appeal, drag it out for ages only to lose the ruling again, but once the ruling is lost for good there still has to be a decision as to what constitutes “unfair” and what level of compensation will be offered – which will take several more months!

    http://lettersfromatory.wordpress.com

Leave a Reply

Your email address will not be published. Required fields are marked *