BBC Money Programme gets on the “banks can’t impose penalty charges” bus: welcome aboard!
I’m really encouraged by the number of people who’ve added comments, over the years, to my post on how you don’t have to pay credit card charges. (They’re illegal under English contract law, if you haven’t heard.) It seems one way in which, perhaps, I’ve helped other people - not a huge difference, but a positive one.
Last night (Tues 12th) the BBC’s Money Programme joined in, pointing out all the same things. Well, that’s good. To reiterate: the penalty charge should only be what it costs to administer the “defaulting” payment. If they’ve just sent you a form letter, then how exactly has that cost them £35? Have they somehow lost that amount on the foreign derivatives market because they were waiting for your little bit of cash to make up that £500m “put” on Chilean biscuit futures?
Sure, the outcome might be that “free” banking ends. Well, I can live with that if the charges that are imposed are transparent - that is, explained, with a breakdown of how they’ve come up with the charges. Not imposed out of the air. Then we’ll be able to choose between banks, and do it in an informed way.
It’s interesting (watching the programme) how the banks have simply underestimated peoples’ realisation that this is wrong. And it’s testament to the power of the net. The fact of this has spread via the net (initially, I’m sure, from the article in the Guardian by a solicitor pretty much thinking out loud, really, about penalty charges). You can test it. You can prove it. And now it’s getting exposure on TV.
Time to look up those old bank statements? You can get back those “penalty” charges from up to six years back. See moneysavingexpert.com or just the BBC’s page on how to reclaim your penalty charges. Enjoy.
Update: (as I watch the program, which I’d Sky+’d): the Money Programme’s “commission” (two professors and a former chief exec) reckon that the costs are - for bouncing cheques: £4.50 (”can’t you get it higher?” pleaded the interviewer, in the interests of balance); for unauthorised overdrafts/refused direct debits, about £2.50.
- These posts might be related (the database thinks..):
- If your credit card imposes a penalty payment, don't pay it: it's not legally enforceable (26 September 2004; score: 117.26%)
- BT "charges" for cheques - the next "penalty charge" retreat? (13 February 2008; score: 83.33%)
- Like water on a stone, slow processes work: bank penalty charges declared illegal. Update: *maybe* illegal (24 April 2008; score: 81.54%)
![[Valid RSS]](wp-includes/images/valid-rss.png "Validate my RSS feed"){kind=small}
December 14th, 2006 at 12:16 am
Hang on. Is this post just very elaborate spam for Chilean biscuit futures?
I’d like a disclosure statement detailing all your South American confectionary interests post haste, please.
December 14th, 2006 at 4:02 pm
Hi Charles
Good timing. I’m a British Gas gas and electricity customer and given the growing knowledge of illegal penalty charges imagine my surprise when I get a letter from them this week advising me that from March 2007 thye will be charging me £5 per late payment.
Grrrr.
December 20th, 2006 at 11:23 pm
i watched the money programme and i too have been over charged over the years not only on credit cards but current account,only recently i have been charged 30 pounds twice in one month for returned payments when i was just 2 pounds short in may account .the only problem i have like millions of other people in my situation is because i have been over charged over the years by the banks on my credit cards i ended up almost finacialy broke and had to use debt management to help clear my debts so would find it difficult to challenge my bak abount there charges so feel like that they have me by the short and curlys
January 14th, 2007 at 2:21 pm
This reminds me that I need to trawl through my bank statements and file a claim for reimbursement of all the penalty charges. It’s worth a try!
What irks me most is how high the charges are. But my next biggest bugbear is how the banks don’t deny withdrawals or payments when you’re about to go overdrawn. Instead, they let you take the money out and then charge you for it - and they’ll still take their own charges out even if it takes you overdrawn AGAIN. It’s so obvious that they want you to go overdrawn and that it’s all just another profit generator.
I’m not convinced that it’s better to do away with these charges and accept the end of free banking as part of the package, and nor do I think there is justification for this. In Australia, overdrafts do not come as standard and they don’t let you go overdrawn so that’s not an issue. But there is an average of $5 a month in account keeping fees, which adds up to quite a bit. And you are charged if you use another bank’s ATM for withdrawals or if you use more than eight withdrawals per month.
On the other hand, there is a universal right to a bank account, regardless of how much or how little you earn. Whereas in the UK, as a snooty Barclays woman reminded me when I first arrived in the country three years ago, “banks _choose_ their customers”. You have to prove your income and so on or be reduced a basic bank account that is really _very_ basic (no internet banking or overseas withdrawals for example). UK banks are already cherry-picking the most profitable customers, they’ve got no justification for saying this has to mean the end of free banking. The situation in Australia is by no means analogous.
February 6th, 2007 at 1:05 pm
I think what you’re doing is pretty great - I think it’s fair to say there’s a popular perception that UK banks will often simply try to get away with what they can. It’s pretty surprising that there isn’t more competition between them to deliver on actual customer services and lower fees for such issues.
Either way, thanks for bringing the entire issue closer for public consumption and hopefully we’ll see some changes in the finance industry because of this. :)