Friday, April 25, 2008

Who doesn't think this will end badly?

Yah! Yet another victory for the consumer. Read here about the apparent victory for the common man against the big banks. Well, it maybe seen as a big victory but it is not as black and white as it is made out.

I do agree that banks charging £25 when you try and withdraw £10 over the limit is a bit OTT but at the same time that is their fees and you sign up to them when you join. In addition you don't seem to have much choice either as the banks are the nearest thing to a cartel where they all do the same things but with slightly different rates for each item and there doesn't seem to be that much competition between them at all.

However, that is an old problem and one I can't see us fixing either. The main issue I have with this ruling, if it works out this way, is that if banks have to limit their charges for certain items such as overdrafts and so on then they will have to look elsewhere for charges. They still are businesses and have to make profits so it could be that trying to overdraw means you don't get any funds when the account would dip below zero plus the government approved fee. I also find it ironic that the government who charge hundreds of pounds, albeit through our taxes, for their unwanted services are going to decide what is a reasonable fee for a private company. The biggest threat of course being that bank accounts will no longer be free and a fee could be charged and the penalties for those that abuse the accounts are reduced or removed. In addition we could be vetted before we can open an account as they will not want the people that continually go overdrawn and then complain about the fees.

In the end I have never seen anything end well when the government sticks its nose into commercial businesses. From what I understand it could be government interference in private business that enabled the current sub prime situation that could very well have increased the impact of the next recession.

I don't know how this will end, if the banks will roll over or the government will press for more regulation and legislation but one thing I am sure about. Ordinary people like me will be worse off.

On the plus side of course many people who will not be able to afford the new fees will move back to cash making the surveillance society take a small step back. There is usually a plus side to most things.

7 Comments:

At 1:42 am, Blogger UBERMOUTH said...

This comment has been removed by the author.

 
At 10:17 am, Blogger Henry Crun said...

Don't get me started on the banks. They are grasping bastards all.

The 3-4 day clearance period is a joke. If Third World banks can operate on real-time clearance systems, why can't we?

 
At 1:09 pm, Blogger Semaj Mahgih said...

From what I understand it could be government interference in private business that enabled the current sub prime situation that could very well have increased the impact of the next recession.

Or else it could be plain old simple greed.

 
At 2:30 pm, Blogger Bag said...

Uber, err... I think I will stick with my little bit of interest on my current account.

John, Everytime I think about that clearance period I keep thinking it will have to go soon but it still keeps in there. Soon though.

James, I agree that greed and the easy access to credit are a bit contributor to this recession but if it wasn't for that Gordos bubble would have collapsed a long time ago. I just found it interesting that the government was forcing banks to approve loans where they would have been too risky for the banks to normally approve. These are the people most likely to renege on the payments and it looks like that policy has backfired at the slightest hint of a recession. Government could not organise a small drinking party in a brewery.

 
At 2:42 pm, Blogger UBERMOUTH said...

This comment has been removed by the author.

 
At 8:17 pm, Blogger John East said...

The banks have been operating on the sound psychological principal that the feckless, the irresponsible, and the stupid were far more likely to tolerate being clobbered than their more sensible customers. Whilst I agree they were acting badly the law of unintended consequences will once again be invoked by this legal ruling. The prudent and responsible might have to pick up the bill, although with the dire state of the bank’s finances today, I daresay that the prudent and responsible are in line for a good clobbering anyway.

If charges came in I would move my finances to a building society. With any luck the threat of this on a large scale will force the banks to back off. Time will tell.

 
At 12:53 pm, Blogger Henry Crun said...

"Government could not organise a small drinking party in a brewery."

Or fellatio in a house of ill-repute

 

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