UK: Supreme Court Rules Bank Charges Are Legal.

Unfortunately life doesn't work that way.  Everybody has to pay for the mistakes of few. 

You are wrong.  According to the BBC's report on the 6 O'clock news last night, only 20% of customers are hit with fees for unauthorized overdrafts.  So if you're in the 80% who never goes into unauthorized overdraft, you're not paying anything for anyone else's mistake.

I'm with the banks on this one!

I support the court's decision and the banks' prerogative.

It's good to finally see some sympathy for big business.  You know, after big banks got into financial trouble and had to be bailed out by ordinary people, I was worried there would be a backlash against banks charging exhorbitant fees to the very people who bailed them out when they were in danger of going bankrupt.

Happily, there's enough faith in the good works of bankers to ensure no matter how hard they squeeze people struggling to make ends meet, they'll still have the support of those who apparently aren't affected by the issue at all.

I haven't read through the entire thread and maybe someone else has touched on this but I’m of mixed feelings about this. Though I 100% believe that people should live within their means and not borrow money they cannot afford to pay back why bother offering an overdraft or have overdraft limits if the banks allow their customers to routinely exceed them?

The sole purpose is to rake in exorbitant fees. What is the difference between this activity and loansharking? -- not much in my opinion.

Isn’t it the bank’s responsibility to cut people off who reach their limits? It’s OUR money they are giving out. Where is their responsibility to protect it? I simply don’t understand how any borrowing can be unauthorised. Not enough money in an account? Deny the transaction.

Recently, a friend was robbed at a cashpoint. She had gone to withdraw some money, was surrounded and in the ensuing distraction, the thieves took £200 from her account. Was it the bank’s fault that she was robbed, no. But why is my friend now responsible for £200 when she had had £100 in her account and NO overdraft facility? It’s outrageous. The best the bank could do was say she graciously wouldn’t be charged a $25 penalty for being overdrawn.

I’m not of the opinion that the banks should now pay back any money, but the system really needs to be overhauled. If a bank sets an overdraft limit on an account, it should be held accountable to stick to that limit and charge a reasonable interest rate for the time the money is borrowed.

It's good to finally see some sympathy for big business.  You know, after big banks got into financial trouble and had to be bailed out by ordinary people, I was worried there would be a backlash against banks charging exhorbitant fees to the very people who bailed them out when they were in danger of going bankrupt.

Ordinary people did not bail the banks out. The govt did. Elected by ordinary people.  Through taxes which are derivered from - ordinary people AND BIG business.

You have a beef with bailouts - take it up with the govt. If one is on the dole, the govt is bailing them out. They are working the system. I don't have a beef with them being on the dole and using my tax money but if I did I would complain to the govt, not slag off the dole recipient.
Without bailouts, what would the affect have been on all of us? Dire, me thinks.

Sorry but I had compassion for the people getting hit with these fees but I am slowly losing that compassion as I get the preception that BIG business is expected to foot the bill for people's honest mistakes. Honest mistakes or not need to be paid for. I made an honest mistake and knocked over my neighbours pot plant and it broke, should I not have the responsibility to pay for it or should I just let my neighbour suck it up? Yea but he wants £30 for a £5 pot! Yea well it cost £5, but he had to take time to replace it, petrol to get there etc...

Sorry I still say it ain't your money. It was NOT even authorised. I really fail to see how anyone cannot comprehend the difference between authorised and unauthorised.

Happily, there's enough faith in the good works of bankers to ensure no matter how hard they squeeze people struggling to make ends meet, they'll still have the support of those who apparently aren't affected by the issue at all.

Apparently I must be the odd one out as this does affect me. I have PAID my dues many times in the past for MY mistakes. I support them yet I am still under their rules and this could happen to me again just as easy as anyone else. But what did I do? I sorted out my affairs and got a larger AUTHORISED overdraft. Is it perfect? Nope but it is getting better. Why? Because I took responsibility for MY financial affairs.

But if you look closer, I think you may well find that this problem is not isolated to ordinary people. BIG businesses also use overdrafts and suffer as well. This is not just ordinary people that pay for this service.

Javee mentions the system could be overhauled. Perhaps it should be looked at. If one feels that then WE need to write our MPs to get things changed. I know some do this already but spread the word. Get more people involved.

Personally I don't think there should be any OD. But if it weren't available, what would the cost to these people be? How would it affect people if one's bills were denied? I dare say it could be more costly than the cost of 'routine' overdrafts. I say routine because obviously there are some very bad cases out there. But if there was no overdraft, I think us 80% would be picking up the costs through increased taxes to support these 20%.

I really fail to see how anyone cannot comprehend the difference between authorised and unauthorised.

You don't seem to comprehend that much of the time the overdraft isn't authorised by the account owner as well as the bank. If, for example, a small direct debit is put through repeatedly  in one day because of a glitch or insufficient funds because it's come out of the wrong account or at the wrong time, that is the bank's error, not the account holder's or the person being paid by the direct debit. Therefore, why should the account holder pay hundreds of pounds in fees for something that wasn't their fault? Not everyone has internet access or chooses to do internet banking for security reasons. Not everyone has time or the ability to go to the bank or cash machine and check their balance everyday. I keep an eye on my account weekly, but in doing that I could easily miss an error as described above for a few days and end up with huge charges if it happens just before payday. Does that make me irresponsible with my money? No, it just means that I expect my bank not to screw me over for its own mistakes. These sorts of charges are profit-making, not to cover the banks own costs. It's the same as the UKBA charging huge amounts for visas; it's nothing to do with the cost of the application, it's to make a profit and punish/deter poor people. Meanwhile, Fred Goodwin gets to go home with a multi-million pound pension for almost destroying a major banking institution. Perfectly fair.

I'll just agree to disagree on this.  If it's a one-off mistake, most banks will issue you a credit if your account is in good standing.  Banks in the UK have issued over £600M in credits so it's not like it doesn't happen...banks can admit when they are wrong sometimes.  

I just hope all this media exposure will make people more aware of the policies their banks have.  I learned the hard way (when I had $4000 stolen from my bank account that I never got back).  If you don't like your bank's policies (especially when it comes to unauthorized overdraft fees and identity theft protection), go to a different bank.  I did.  You need to protect yourself against things that can happen that are beyond your control (a paycheck that didn't clear when it was supposed to, causing your account to have an unauthorized overdraft...or someone stealing your identity) and be proactive by checking your account every single day to make sure there is nothing fishy going on and so you know exactly where your money is.

I'll just agree to disagree on this.  If it's a one-off mistake, most banks will issue you a credit if your account is in good standing.  Banks in the UK have issued over £600M in credits so it's not like it doesn't happen...banks can admit when they are wrong sometimes.  

I don't know which banks you mean by "most banks" but RBS did not do this for us. I mentioned above they refunded us £1500 but this was only after I sent a very forceful letter to their managing director (Fred Goodwin, the one who had to resign) setting out all the errors they had made on my/our accounts over an 8 year period. Many of these errors had previously been reported to the branch manager and to the RBS complaints team but nothing was ever properly investigated until I went to the top. This is no way to run a business and while bank customers of course should be vigilant, so should the bank. They are supposed to be the professional partner in this relationship after all. You would not expect to have to self diagnose when you go to see your GP, why would you expect to do the bank's work for them? (That's a rhetorical question, btw). That is  pretty much what I said to RBS, only in a more legalistic fashion. They agreed and paid back our bank charges and then some more as compensation. This was while the court case was going on too, and such claims were theoretically suspended.

You don't seem to comprehend that much of the time the overdraft isn't authorised by the account owner as well as the bank. If, for example, a small direct debit is put through repeatedly  in one day because of a glitch or insufficient funds because it's come out of the wrong account or at the wrong time, that is the bank's error, not the account holder's or the person being paid by the direct debit. Therefore, why should the account holder pay hundreds of pounds in fees for something that wasn't their fault? Not everyone has internet access or chooses to do internet banking for security reasons. Not everyone has time or the ability to go to the bank or cash machine and check their balance everyday. I keep an eye on my account weekly, but in doing that I could easily miss an error as described above for a few days and end up with huge charges if it happens just before payday. Does that make me irresponsible with my money? No, it just means that I expect my bank not to screw me over for its own mistakes. These sorts of charges are profit-making, not to cover the banks own costs. It's the same as the UKBA charging huge amounts for visas; it's nothing to do with the cost of the application, it's to make a profit and punish/deter poor people. Meanwhile, Fred Goodwin gets to go home with a multi-million pound pension for almost destroying a major banking institution. Perfectly fair.

I do grasp it and stated that if it is not the account holder's mistake, then they should NOT have to pay. I am refering to the majority (as per the FSA advice) that the OD is caused by the account holder not being aware of their financial situation.

Are you saying most accounts don't have an OD facility? That is not my understanding.
And I did state that if one does not have an OD facility, then the bank should never allow any OD on that account and they do. Sometimes. That is wrong and I would defend anyone who gets charged for an OD on a non OD account.

So I do comprehend the nature of ODs. All the ones I am refering to are unauthorised.



But banks are a business to make a profit. People keep refering to it as loansharking. Well yes it is to some degree. But then the OD was unauthorised. So they could go to real loan sharks or accept the deal the bank offers. Again I am refering to people's own mistakes, not someone elses.

And yes the banks do make amends and do help genuine mistakes. Not always but they do. It should be easier to get a yes or no from the banks and there should be an appeal process for the no answers.

I don't know which banks you mean by "most banks" but RBS did not do this for us. I mentioned above they refunded us £1500 but this was only after I sent a very forceful letter to their managing director (Fred Goodwin, the one who had to resign) setting out all the errors they had made on my/our accounts over an 8 year period. Many of these errors had previously been reported to the branch manager and to the RBS complaints team but nothing was ever properly investigated until I went to the top. This is no way to run a business and while bank customers of course should be vigilant, so should the bank. They are supposed to be the professional partner in this relationship after all. You would not expect to have to self diagnose when you go to see your GP, why would you expect to do the bank's work for them? (That's a rhetorical question, btw). That is  pretty much what I said to RBS, only in a more legalistic fashion. They agreed and paid back our bank charges and then some more as compensation. This was while the court case was going on too, and such claims were theoretically suspended.

I am surprised they did that during the court case. Yes there are areas that need to be looked at but when money is so important and so hard to come by and keep, I would think more people would be more vigilant. Not all these cases are mistakes of someone else's doing. But I do agree, it should not be difficult to make a claim and yes the banks should be more vigilant on their part.
But this is where we come in and should put our concerns to our MPs. I have written, this morning, a letter to Mike Weir, my MP. I asked that unauthorised OD be reviewed and if he could explain the guidelines of being notified 14 days BEFORE charges are applied to an OD account. I also added that I think we should be educating our kids in the ways of the real financial world. So I have done something. What if everyone expressed their concerns? Might this help?

Again I am not assuming no one has done this nor am I pushing anyone to do this but I am suggesting, to those that have an interest and have not done so, to do so.

I'll just agree to disagree on this.  If it's a one-off mistake, most banks will issue you a credit if your account is in good standing.  Banks in the UK have issued over £600M in credits so it's not like it doesn't happen

£600m in credit for a total of how many unauthorised overdrafts -  that is how much per overdraft? And how much is the credit in comparison to the fees?

DH was once charged £180 for a £5 overdraft, due to a cheque that he paid someone else clearing before he expected it to. This was a business account, with no authorised overdraft.  He had money in an additional personal account at the same bank, as well as with another bank - but because nobody notified him that he had been overdrawn, he never transferred any money  over. He didn't become aware of the charge until several days later, which is why it grew so high.

After complaining about it, he was given £20 back.

If the bank really wanted to stop him from spending more money than he had, couldn't they just have notified him that there wasn't enough money in the bank to cover the check? (This account has no authorised OD, so why did the bank allow  it to go overdrawn?)It would have taken him a minute on the computer to transfer money from Account A to Account B - but then the bank would have lost £160.

Are you saying most accounts don't have an OD facility? That is not my understanding.
And I did state that if one does not have an OD facility, then the bank should never allow any OD on that account and they do. Sometimes. That is wrong and I would defend anyone who gets charged for an OD on a non OD account.

So I do comprehend the nature of ODs. All the ones I am refering to are unauthorised.

No, I'm not saying that. Many do have agreed ODs, but those on agreed ODs can still end up going over due to these errors. What I mean is that sometimes the bank will push through a debit on an account that causes it to go into an unauthorised OD, but if the account holder knew this was going to happen, they would probably choose not to authorise the charge or point out the error rather than go into the OD. They don't get this choice; the bank forces them go into OD even if it's an error, and charges the customer well over what it costs them to have an account in OD.

What I mean is that sometimes the bank will push through a debit on an account that causes it to go into an unauthorised OD, but if the account holder knew this was going to happen, they would probably choose not to authorise the charge or point out the error rather than go into the OD. They don't get this choice; the bank forces them go into OD even if it's an error, and charges the customer well over what it costs them to have an account in OD.

Exactly. If I don't have enough money in my account to pay a creditor, I want to be able to contact the creditor myself, personally, and deal with the situation, making whatever arrangements I need to make. If the creditor has made an error, I want to speak with the creditor about it myself.

The bank shouldn't be able to decide who I pay and who I don't pay, particularly if it means that their decision will make me go overdrawn. 

I do grasp it and stated that if it is not the account holder's mistake, then they should NOT have to pay. I am refering to the majority (as per the FSA advice) that the OD is caused by the account holder not being aware of their financial situation.

But what do you say to the fact that banking practices are set up in a way to keep people from being aware of their financial situation?
   
Debit debits and standing orders make it easy to pay and process transactions but they also make it extremely difficult to know when money is leaving your account.

My point is a limit is a limit. A bank enters into an agreement with a customer and sets an overdraft limit on their current account. If the customer exceeds the limit he or she is breaking the agreement, but isn’t the bank breaking the agreement as well by allowing the customer to exceed the limit? Why is the responsibility solely on the customer? In my opinion the banks allow this because it makes them a helluva lot more money then it costs them to lend the money.

No, I'm not saying that. Many do have agreed ODs, but those on agreed ODs can still end up going over due to these errors. What I mean is that sometimes the bank will push through a debit on an account that causes it to go into an unauthorised OD, but if the account holder knew this was going to happen, they would probably choose not to authorise the charge or point out the error rather than go into the OD. They don't get this choice; the bank forces them go into OD even if it's an error, and charges the customer well over what it costs them to have an account in OD.

Well said.

The bank shouldn't be able to decide who I pay and who I don't pay, particularly if it means that their decision will make me go overdrawn. 

The bank doesn't decide. You do by setting up DDs and SOs. The bank doesn't pay if you don't have a DD. The bank authorises you to go overdrawn because you agreed to it. If you don't have a bank with OD, then I would say you have a valid argument.

But what do you say to the fact that banking practices are set up in a way to keep people from being aware of their financial situation?
   
Debit debits and standing orders make it easy to pay and process transactions but they also make it extremely difficult to know when money is leaving your account.

How are they set up to keep me in the dark? I am more aware of my finances now than I have ever been before. Banking is easy these days.

I know when my pay goes in. All my DDs & SO are set for a certain date. I am online so I know what my situation is. I review my statements as soon as they come in. I didn't when I was young and that was stupidity on my part. That was costly. It's my money.

My point is a limit is a limit. A bank enters into an agreement with a customer and sets an overdraft limit on their current account. If the customer exceeds the limit he or she is breaking the agreement, but isn’t the bank breaking the agreement as well by allowing the customer to exceed the limit? Why is the responsibility solely on the customer? In my opinion the banks allow this because it makes them a helluva lot more money then it costs them to lend the money.

Nobody broke agreements (except those accounts without an OD facility). The agreement is if one goes past their authorised limit, they will go into an unauthorised OD. It was all agreed by both the bank and the customer when setting up the account.

Yes it does make them more money than a loan. It is a higher risk 'loan'. Why should they not charge more? That is why the FSA recommends people nearing or exceeding their authorised limits to get in contact with the bank ASAP. It's your money. 
 

No, I'm not saying that. Many do have agreed ODs, but those on agreed ODs can still end up going over due to these errors. What I mean is that sometimes the bank will push through a debit on an account that causes it to go into an unauthorised OD, but if the account holder knew this was going to happen, they would probably choose not to authorise the charge or point out the error rather than go into the OD. They don't get this choice; the bank forces them go into OD even if it's an error, and charges the customer well over what it costs them to have an account in OD.

This is one of the points I wrote to my MP about. There was a recommendation from (FSA, I think) that banks should give you a 14-day notice before charges are levied.

But how can the bank possibly know that you don't want a DD paid? How can the bank possibly know that a DD is in error? But IF the account holder KNEW they would go into the red, then they have the knowledge to do something about it. If the bank didn't pay the DD for say BT, and the bill wasn't paid, could BT cut you off and then you have to pay reconnection fees, the outstanding bill and any other interest that may be due? Would you have a case of recuping the costs of reconnection from the bank because they thought and decided for you not to let you go into an prior agreed OD? If people are really concerned then perhaps they should not set up DDs. DD's are designed to help people, make life a little easier and I dare say 80% must find it very useful. I don't use DD for CCs and sometimes I get caught out. All other bills will be paid.

How could a bank justify trying to shove through the same DD repeatedly in one day, causing an OD? I've had one or two cases where a company tried to do a DD, it didn't come through, and that company contacted me straightaway to say there had been a problem. I could then work with them and my bank to sort it out. BT or anyone else doesn't just cut you off if a DD doesn't come through, they contact you first, but they sure as hell won't pay your OD fees if the DD does come through and the funds aren't there.

The problem isn't just DDs though. If you use your debit card at a shop and there is a technical glitch where you get double charged, or you write a cheque to someone who doesn't use it until much later than you expect, you might get caught out, and though you might be able to fix a glitch once it's caught, the bank is not under any obligation to refund the OD fees incurred.

If you want to start a petition or a court case that demands all banks deny unauthorized overdrafts, I'm standing right there beside you 100%.  But that's not what these court cases are about.  They are about people thinking the unauthorized overdraft fees (which you agreed to when you became a customer of that bank) are unfair.  Those are 2 different battles.

I don't know which banks you mean by "most banks" but RBS did not do this for us. I mentioned above they refunded us £1500 but this was only after I sent a very forceful letter to their managing director (Fred Goodwin, the one who had to resign) setting out all the errors they had made on my/our accounts over an 8 year period. Many of these errors had previously been reported to the branch manager and to the RBS complaints team but nothing was ever properly investigated until I went to the top. This is no way to run a business and while bank customers of course should be vigilant, so should the bank. They are supposed to be the professional partner in this relationship after all. You would not expect to have to self diagnose when you go to see your GP, why would you expect to do the bank's work for them? (That's a rhetorical question, btw). That is  pretty much what I said to RBS, only in a more legalistic fashion. They agreed and paid back our bank charges and then some more as compensation. This was while the court case was going on too, and such claims were theoretically suspended.

I didn't say it was easy; I said it was possible.


I've been reading articles online about ridiculous unauthorized overdraft fees from as far back as 2003...why is this so shocking now?  Just because Stage 1 of the claims to get the money back has failed?  It's not like the banks just implented a new policy and started charging you without any notification.  I'm just back to that whole "you knew what you were getting yourself into" boat.  Maybe you didn't think unauthorized overdraft fees would affect you at the time you opened your bank account, so you didn't pay any attention to them.  But as consumers, we all need to be prepared for the worst, and make sure we are protecting ourselves.  When you put your money in a bank, you can't honestly think they have YOUR best interest at heart...they're just trying to make money.  You have to protect yourself.  And Bank B might help you do that a lot better than Bank A.