Can the CMA’s banking remedies deliver better banking?

Banks, like other commercial organisations, will arrange their business to maximise profitability (not necessarily meaning excessive, but competing well with their rivals). Existing customers with good track records may be better bets when it comes to loans maybe, but “loyalty” in the sense of sticking with someone even if it is not in your commercial interests really does not exist by and large, and I doubt it ever has. No more than customers are loyal to a provider; lazy or sticky maybe. I have no hesitation in changing energy, breakdown, insurance providers if it benefits me, and if I was not happy with my current bank I would switch.

KB -according to the banks that deal with charitable organisations there is a lot more for the banks to oversee than an ordinary account . They are obliged to keep a close watch on it and there are other conditions involved which means talking to the bank personally . Have you tried – Danske Bank /ICICI Bank /Cumberland Building Society /the Co-op Bank Yorkshire Bank /Ulster Bank – they deal with charities. If you mean a non- business type of account , so far I have not found one bank that will deal with that type of account but I am sure the sharp-eyed Convo watchers will come up with some.

Really sorry to hear about that. This is a good website for legal and practical help, lots of people have debts cancelled on a technicality.

http://beatthebailiffsandthebanks.co.uk/

Is it being suggested that there should be a minimum income below which people who incur debt should not be liable to repay it?

That is not the point, unless you are suggesting that people on low incomes have a right to take money from private companies and not repay it. We have a benefits system designed to help the genuinely needy. Not the bank’s job.

However what we never know are all the circumstances that surround this kind of plight. For example, how did Neil incur this debt, and did he talk to his bank about his financial problems to try to make an “arrangement”? Has he discussed the problem with the benefits provider? It is unlikely the bank has sold his debt without making efforts to resolve it directly (or is it?). So to condemn either side is unfair without more of the facts, i’d suggest.

Neil posted he had £65 to live on unless somebody says he is lying and knows him why would he post an angry comment in which he feels justified to put to the public ? If that is the total of his benefit then he is like many others in this wealthy country having to borrow to survive . I cannot approach this in a cold clinical manner as I personally suffered from poverty, fainted in the school playground from lack of food and permanently had my health impaired. There are plenty of European countries where the state gives better provision for the poor like the Scandinavian ones ,even Germany . He is a citizen of Britain check out what benefits the refugees get in Germany and they are not citizens . I am not against paying back a loan , I did that in my mortgage payments and I had zero luxuries as a child but should my suffering be applied as normal in 2016 Britain ? I had to work for what I got but that was in an era of near full employment that doesn’t exist now .

Employment is the highest it has been for a long time. However, we do not know the situation, not entitlements. Nor whether he talked to his bank. I would reiterate it is not a bank’s job to distribute benefits to anyone – that is everyone’s money. Everyone’s money in taxes is paid to the state to distribute benefits. So we should be criticising the social security system if this is not being fairly applied.

My experience is that an income of about £65 is typical for anyone currently unemployed and on job seekers allowance. Our welfare system expects that any such people such solve their financial plight by finding a job – but that assumes that suitable jobs are available within the range of a practicable commute.

On such low incomes, it is very hard to make ends meet – and all sorts of unpaid pills will end being passed onto debt collecting companies, as illustrated by Neil’s case.

Anyone who might want to hear more about this, could do a lot worse than to check out the books and blogs written by Jack Monroe.

Is it the amount of the CHAPS transfer charge you object to or the prinicple of having to pay anything at all for the service, Peony?

In a property transaction the Clearing House Automated Payments Service [CHAPS] enables your solicitor or conveyancer to transfer the balance of the purchase price [that you have already remitted and is held in their client account or will be met from the proceeds of a sale of your property] to the seller’s solicitor or conveyancer on the day of completion of the property purchase for settlement within the same day. No other system in use in the UK can achieve the same result. It protects both parties as your money is not released until all the ends have been tied up [including any proceeds from a concurrent sale] and the seller does not get access to your money until their property is ready to be conveyed. The service is rapid, executed within the same day so long as instructions are given in time, is extremely reliable, is secure, does not require advance action subject to the buyer’s funds being available, and copes well with a chain of transactions where the money for a purchase may be dependent upon a sale. The current cost is around £40 which in the scale of things seems reasonable to me, especially given the advantages noted above.

While a BACS [Bankers’ Automated Clearing Service ] payment from one account to another can now be done on the same day, and usually for no charge dependent on the customer’s bank, there can be a time delay between the instruction being received and the money transferring. As an automated service it does not have the intervention of senior bank staff at each end of the transfer to check and approve the transfer so any error in amount or account number could delay the transfer or end up with it going to the wrong account-holder as happened recently with a correspondent to Which? Conversation. So the CHAPS process is regarded as being safer and better controlled. Solicitors prefer to use CHAPS but presumably it is possible to instruct them not to although I suspect they would make a charge for using any payment transfer system. The solicitor accepts responsibility for executing the payments and receipts transfers correctly and on time so at the end of the day it might be best for them to decide on the most suitable process.

I have a feeling that if things were that straightforward the banks would be operating in that way, if only to save themselves the grief and condemnation they receive whenever this subject crops up.

Be careful what you wish for. Certainly cases in the news suggest banks could do more to check the bona fides of destination accounts. Nowadays when opening an account we have t jump throng all sorts of hoops to prove we are who we say we are yet faudsters still manage to open accounts to operate their nefarious activities.

So imagine the restrictions you propose are in place. You owe a friend some money and they give to their account details for you to pay the money into their account. How will you provide satisfactory “proof of the beneficiary” in order for you to pay in the money? Or will your friend have to provide this proof before the money can be credited to his account? Who will pay the costs of this process?

Not only that, but the proposed “government issued document (passport, photo driving licence or photo ID card” could easily be forged by the averagely competent fraudster, so it really resolves nothing.

The charges associated with overdrafts should be clear (with my banks they are) and customers should be free to choose a bank where the charges are acceptable to them. One way to avoid charges on unauthorised (or unarranged) overdrafts is to arrange an overdraft facility. I would expect Which? to recommend that route to consumers. If they are refused the facility it may well be because the bank considers them unsuitable. Their prerogative surely; there may be problems expected in repaying the overdraft, or it may not be in the customers interests to be “loaned” money. It may be a responsible action to prevent the customer getting into debt that they would have difficulty with.

Perhaps one solution is for withdrawals that would take a client into an “unarranged” overdraft should not be permitted.

The pay day loan comparison might be true in a few exceptional cases but I do not believe it realistically characterises the norm. My personal view is that headline-grabbing, but unrepresentative, examples such as this tends to devalue Which?’s standing, that should give a fair and objective picture. I can leave sensationalism to certain newspapers and politicians.

The banks are in the best position to know what overdraft fees are needed to cover their costs, taking into account that some of those who get into debt will never repay. However, if the banks remain free to set their overdraft charges it seems likely that providing overdrafts will remain a profitable service. I’m ever the optimist but I doubt that we have seen the end to punitive charges for their overdraft services.

Arrange a facility with your bank if you are likely to require a temporary overdraft. That avoids penalty charges. As the CMA has reached a decision I would hope we would move forward to looking at how we can help those who have difficulty keeping their finances in control. The banks could offer a service to show vulnerable customers how to budget, plan income vs. expenditure, and so on. Maybe software to make it easier. Which? could offer a free booklet through a tv advert to give guidance, and who to approach for help when finances become difficult. Practical action and help could well prevent many from making a problem worse.