Illegal bank charges and penalties net the UK banks around £4.5 billion every year (Daily Mail 8 February 2007).
The website www.penaltycharges.co.uk has helped victims reclaim more than £1 million of this sum. Not much by comparison, but it's a start.
A single mother, Tracy MacInnes, was illegally charged some £515 in excessive bank charges and penalties by the Halifax Bank. She politely requested the return of her hard earned money and the Halifax Bank, of course, refused. So she threatened to take them to court and within four weeks the bank caved in and paid her the money together with £50.98 interest.
Tracy now helps other people get their money back from banks that have overcharged them. As of February 2007 she had secured the return of more than £23,000 to her friends.
Bank charges in the UK are now being investigated by the Office of Fair Trading, so we'll have to see if anything comes of that.
What banks in the UK, and probably most other countries, have been doing is penalising their customers who occasionally go into the red on their accounts. They have been charging between £28 and £40 for each time that a customer is overdrawn on his account. The acutal cost to the bank is closer to £4.50, so multiplied by hundreds of thousands, if not millions, of customers, this is big business.
If you ask any bank staff in a UK bank if you can reclaim bank charges they are under instructions to tell you that you cannot. This, of course, is untrue. The banks want you to think that you can't reclaim the charges, but you can. More and more people are doing just that, and as they do so it is becoming apparent that the banks here in the UK could have to refund as much as £10 billion.
Can you imagine any other section of industry or commerce facing such a prospect with little more that a shrug of the shoulders?
More than seven million people may claim, so that works out at around £1,500 per claim on average.
Only the banking industry could be so greedy as to incur such a liability. And only the banking industry could view such a prospect with such lack of alarm.
Ten billion pounds, did you say? OK, well here's a cheque (yes, that really is how they'll pay it in the end - with money they create by a flick of the pen).
The latest development in the saga of UK banks vs their unfortunate customers is that a district judge in one such case has ruled, perversely, that the exorbitant overdraft charges imposed by banks on their victims are legitimate. Fortunately, this case is not binding, as a district judge does not have sufficient standing in the legal hierarchy. It is to be hoped that more and more people will fight their banks, in the courts if necessary, to get their hard-earned money back from these shameless parasites.
At the same time the Competition Commission has acted to stop the feeding frenzy of the big banks. It has proposed curbs on the way in which banks can charge fees to their customers.
If the role of the banks were to be restored to that of looking after other people's money - money validly created by the government or a department of government (and thereby accountable to the people) - then reasonable charges for their services would be in order. But as it is they want the power of money-creation, with all the economic advantages of being able to lend money and receive repayment with interest, and the ability to penalise customers for the slightest reason.
The only way to resolve this issue in the long run is to restore the issue and control of currency and credit to the government. This would bring almost unimagineable economic benefits and lift the burden of debt and interest payments from ordinary people. It would also deal a death-blow to the culture of sleaze and corruption that pervades nearly all countries dominated by this insane banking system.
Illegal Bank Charges and Penalties
16 May 2007. Mixed news. The Competition Commission is to try and force banks to be honest in telling their customers about charges and to make it easier for customers to change banks without incurring (illegal) penalties. But at the same time the campaign to make banks repay illegally charged penalties and excessive charges has been dealt a blow by a District Judge in Birmingham, who seems to think that any charges charged by a bank are per se fair and reasonable.
Fortunately, according to Marc Gander of The Consumer Action Group, the judgement is not binding on other cases. This must be so, as a District Judge is not very high in the judicial heirarchy. We shall have to wait and see if the banks continue to pay up at the last minute in these cases, or whether they feel emboldened enough to start reisiting them. Personally I think they've already decided to continue settling late in the day as they have too much to lose by actually losing what is bound to be a high-profile case and opening the floodgates even further.
22 May 2007. The UK housing market is on the brink of collapse, according to a report published today in the Daily Mail, and quoting observations from the Council of Mortgage Lenders, British Bankers' Association and Building Societies Association. Lending has topped an incredible one billion pounds a day in recent months.
Now - what a surprise - there have been four interest rate rises in ten months with more to come in all probability. These have added nearly £1,200 a year to the cost of repaying a typical £150,000 loan. Now more and more young couples are struggling to repay their home loans by putting off indefinitely starting a family and keeping up a work regime that makes them virtual slaves to the money system.
13 July 2007. On top of the recent base rate rise on 5 July - up half a per cent to 5.75 per cent - comes a warning from the Financial Services Authority that banks and building societies have been recklessly lending money without making proper checks on customers' ability to meet the agreed repayment schedule.
Prices have been driven up so much that many new borrowers have resorted to lying about their income in order to get the money to pay for the house they need as a secure base for their family. Of course, the idea that the very roof over the head of a family should be treated as merely an asset to be mortgaged at the risk of having it taken away and the family put onto the street is itself ludicrous. But there's no alternative for most people, and they simply have to hope it's never going to happen to them.
Unfortunately it is going to happen to more and more people. In fact, what we now face in Britain is a crunch the like of which has probably never been seen before.
Just consider. What we have facing us is
- A period of high interest rates, with more rises to come. There have now been five interest rate hikes in the last twelve months, and establishment economists are saying more are needed to "dampen demand" (if the government wanted to dampen demand it could stop asylum seekers, Eastern European workers and other immigrants from entering the country). Borrowers who borrowed money to buy a house at 6 per cent just over a year ago are now looking at paying 7.5 to 8 per cent. On a typical mortgage of £150,000 this works out at an extra £2,250 a year, or £187.50 a month. Many people will struggle to manage this, and fall into arrears.
- Property inflation on such a scale that first time buyers have almost been forced out of the housing market. These unfortunate people are having to borrow an average of 3.37 times their gross annual salary. Usually in the case of couples their joint income is used for this calculation, but what happens if they decide to start a family? In many cases they're just not going to be able to afford it. All this in the year we're supposed to be celebrating the abolition of slavery!
- Record levels of stamp duty on house purchase transactions. As ever, the government sees the first steps by young people towards settling down and starting a family - an essential ingredient to a stable, civilised country - as just an excuse to filch more money from these fine people.
- The end of many fixed-rate deals where the interest rate remained unchanged amidst periodic rises for most other borrowers. Now people who took advantage of these offers face a sharp and painful rise in their monthly payments.
- Thousands of houses normally in occupation having been rendered useless or in need of extensive and lengthy repair as a result of the recent floods. This will only increase the pressure in the housing market and drive prices up further. On top of that, developers are going to have to re-think their hair-brained policy (driven by the desire for more profits) of building new housing estates in flood plains. Whilst such areas are safe for perhaps 99.9 per cent of the time, what is liable to happen in the other 0.1 per cent makes such areas uninhabitable, and the sooner that unfortunate fact is accepted, the better.
- No indication that anything is ever going to be done to prevent around 1,500 extra people a day arriving in Britain as immigrants, "asylum seekers" and foreign workers. This island is completely ill-equipped for coping with such a massive influx of people, all of whom need housing, welfare, education (languages, anyone?), jobs, and more.
This whole predicament is only possible because the people who make the laws and interpret them are insulated from the consequences of their actions and look on the plight of ordinary people with callous indifference.
Follow the progress of the Credit Crunch and protect yourself and your family from it at our blog.