The banks have won a battle, but not the war

October 15th, 2008

There has been a set back in the ongoing court case against unfair bank charges since the banks have won the latest round of the High Court battle.

Judge Mr Justice Andrew Smith says most customers will not be able to use common law to challenge bank charges levied mostly between 2001 and 2007. However, NatWest customers might still have this legal avenue open to them after he failed to give their terms a clean bill of health.

The OFT wants legal confirmation that it can rule if these charges of up to £35 are fair or not. Customers have complained they have been unfairly overcharged hundreds, and sometimes thousands, of pounds when falling into the red.

Strangely, the banks want to protect the estimated £2.6bn a year of income they gather by charging people for going overdrawn.

The judge’s ruling followed a three-day hearing in July. His ruling has an impact on the thousands of claims for the refund of overdraft charges which are frozen in county courts.

These county court hearings were suspended last year when the Office of Fair Trading and eight banks agreed on a test case to clarify the situation with overdraft charges. After today’s ruling, they are likely to remain frozen for the foreseeable future.

The judge’s latest ruling focused on whether historic bank terms were unfair penalties under common law, and if customers who had been charged for going overdrawn could challenge them.

He decided that customers could not challenge Barclays, Clydesdale, HSBC and the majority of Abbey’s terms. A Barclays spokesman said they were ‘pleased’ with the decision.

The same was true for HBOS, except for Intelligent Finance’s terms which required more examination. More discussion was also needed regarding the terms and conditions of Lloyds TSB’s accounts.

The judge said that Royal Bank of Scotland Group, which owns NatWest, needed to provide clearer arguments about their terms before he could give them clearance.Bank ‘relief’

‘Some banks will be breathing a sigh of relief as the judge appears to have decided that these charges were not penalties under common law,’ said Marc Gander, of the Consumer Action Group.

An OFT spokesman said: ‘This is another staging post in a complex legal process. We are progressing our investigation as quickly as possible and are in continuing discussion with the banks about our provisional views on the issue of fairness.’

The judge did indicate that, even though common law largely could not be used to challenge historic overdraft fees, the OFT has the authority to examine these fees under the 1999 Unfair Terms in Consumer Contracts regulations.

There are other legal avenues for customers to explore and they may still get their money back.

The banks will appeal against the OFT’s initial High Court victory in April . The High Court ruled that the OFT can assess whether fees are unfair. Another High Court hearing is expected to start in the new year on the substantive issue of whether or not bank overdraft charges are unfair.

Only after these hearings, and any possible subsequent appeals, will people finally know whether they can claim back overdraft charges.

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I’m not political but…

October 10th, 2008

The Prime Minister of the United Kingdom and Northern Ireland, First Lord of the Treasury and assorted other titles, Mr. Gordon Brown, really has no shame whatsoever.

Today he called for the recent falls in the price of oil to be passed on to UK consumers, claiming that ‘oil prices are now beginning to come down because of actions we have taken…’

The prime minister also said, ‘I want these price cuts passed onto the consumer, and passed on as quickly as possible.’

The price of oil has plummeted from a high of $147 a barrel for US light crude this summer to $82.24 at midday on today. This will be a relief to many UK consumers who are struggling with high energy bills and petrol prices. The price of oil has been falling due to concerns that the economic slowdown will lead to a fall in global demand.

Already, some supermarkets, from whom other retailers take their lead, have cut prices. Tesco announced on Friday it was cutting petrol and diesel prices by 3p a litre, with immediate effect. Asda cut its prices by a penny last week.

Morrisons has cut prices by five times since July, with the latest drop just last week, their website says, ‘when the cost of crude oil and refined product falls, we pass the benefits on to our customers as quickly as possible.’

So far all well and good. But here is the rub, Brown claiming to have influenced the fall in oil prices is total rubbish, and he is conveniently ignoring the fact that most of the price of petrol is made up of an extortionate tax rate.

The RMI Petrol Retailers Association pointed out this anomaly, suggesting that it is the prime minister himself who makes the real difference to prices. ‘Gordon Brown always has the ability to reduce fuel prices through a fuel tax reduction, but avoids it.

I am no friend of large multi-national oil corporations and I’m sure they would bilk consumers for as much as they could given half a chance.

However, for Brown to appeal to voters in this way is simply disgusting. For a start claiming to have brought the price of oil down is lying. He had nothing to do with it and is claiming he did to make himself look more important than he is in the global scheme of things.

Secondly, pretending to be on the side of the poor put upon consumers while raking in their money is hypocritical and cynical all at once.

It takes someone as intellectually repulsive and politically duplicitous as Brown to make me side with the multinationals. My worry is that British voters will start to fall for the arguments that spill from his mouth like its a diseased sewer. Please, people ofBritain, prove me wrong.

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Getting cash advance loans: the lastest situation

October 7th, 2008

Unsurprisingly given the global financial situation, banks are proving increasingly reluctant to lend money. Rates for cash advance loans have increased by 9% in the past four weeks.

Eight providers have increased their rates while the number of loans available has dropped from 56 to 52, according to the price comparison site Uswitch.com

Black Horse has increased rates by up to 9 per cent, so loans of between £1,000-£2,999 now cost up to 36.9 per cent. For loans of £5,000-£7,499 the rate is 25.9 per cent.

The increase highlights the growing reluctance of lenders to offer money in an increasingly uncertain economic climate.

Interest rates on personal loans are at a seven-year high, according Moneyfacts, another personal finance website.

Others that have increased cash advance loans rates in the past 28 days include Bank of Ireland, Bradford & Bingley, Lloyds TSB and Marks and Spencer.

In contrast, banks are boosting saving rates with many, including West Bromwich, Kaupthing Edge and Manchester Building Society offering more than 6.5 per cent. Fixed rate bonds from the likes of the AA, and the Indian bank ICICI, top 7 per cent.

Personal loan ‘best buys’ are changing every day which demonstrates just how unpredictable and volatile the current climate really is.

The best loan at the moment for £10,000 over five years is from Yourpersonalloan.co.uk which offers a rate of 7.6 per cent. The repayments would cost £200.76 a month.

As ever, the advice for those seeking a loan is to shop around to find both the lowest rate of interest and a company that best fulfills personal circumstances.

However, borrowers should always remember that adding payment protection insurance (PPI), which is often sold alongside a loan, will make the loan even more expensive. Repaying £5,000 on a Barclaycard loan would cost £155.71 a month without insurance, or £179.11 with cover.

PPI has been heavily criticised, by both me and more eminent financial experts, for being overpriced and riddled with exclusions. Which?, the consumer group, says that a third of borrowers who have taken PPI with a loan would be unable to claim on the policy.

It is a fallacy that in the current climate getting a loan is impossible. It just means that potential borrowers have to be well informed, understand the pressures on banks and, most of all, be realistic in their expectations.

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