Originally Posted by Marge (Post 34178585)

I've just had a letter today from British Gas advising that they too are introducing a late penalty fee for customers :erm:

Originally Posted by Chrysalis (Post 34178553)

you think they will conclude it costs the same to adminstrate bank account penalties as credit cards? I would be surprised if they do.

Originally Posted by Chrysalis (Post 34178553)

penalty charges are legal but they supposed to be non profitable.

Originally Posted by Mr Angry (Post 34178637)

Marge,

Many thanks.

I would suggest that receipients of this missive write to BG asking for an exact breakdown of the charge in order that they might ask the OFT's opinion of same.

Originally Posted by homealone (Post 34178700)

Good idea, I got the letter, today, too, and while it is unlikely to affect me, due to everything being done DD, it may be politic to let them know we are aware of these things, now ;)

Originally Posted by Mr Angry (Post 34178597)

I'm sorry but I genuinely cannot fathom any logic from what you are asking. You need to revisit the OFT statement of April this year (see the quote / excerpt below). John Fingleton put it on the line to the banks last night when he advised them, and their mealy mouthed Trade Association spokeswoman, "We are prepared to litigate on this matter".



I'm sorry but you are mistaken.

Penalty charges in consumer contracts are illegal - full stop. Liquidated losses (or pre-estimates of the costs involved in addressing a breach of contract) such as those to which you refer are legal as long as they only represent the actual costs incurred. There is a very distinct difference.

Given that not one bank in the UK is prepared to either have their cost structure analyzed or justified in a court of law then it is entirely safe to conclude, as evidenced on the TV last night, that they are penalty charges levied in respect of a contract breach.

That is why the BBC go to the bother of making documentaries, why the banks have never defended a single claim in court and why the OFT couched it's words when saying "....and a court will certainly not consider that a default fee is fair just because it is below the threshold.”

It helps the consumers case, somewhat, when companies shoot themselves in the foot by declaring something to be a "late payment fee". Quite how they might hope to assert that this represents anything other than a penalty charge is beyond me - and the best financial legal minds in the British isles.

I've said it before and I'll say it again. People need to stop believing the mantra of "banks and companies wouldn't do things like this if they weren't legal". Last night's programme showed, quite succinctly, that they do and will continue to do so unless enough people assert their rights.

The banks cannot, reasonably, expect people to believe that they, armed with teams of lawyers, are shying away from court confrontations and refunding monies out of the goodness of their hearts. Kieron from Matrix Chambers hit the nail on the head when he said he does not believe that they can defend their cost structures in court as reasonable administrative charges. They have been caught stealing money from people and there are those who are minded to ensure that justice is done as we would expect in any such similar criminal case of theft.

They've been stealing money and people are getting / claiming it back. Fact.

Originally Posted by Chrysalis (Post 34179243)

Then you are disagreeing with the bbc and the consumer action group site, not saying you are wrong just saying that they are saying that penalty charges are not allowed to xceed the cost of admisitrating the charge, which means in affect you can do a penalty fee but it has to be in line with costs.

Considering they reduced credit card fees to £12 this backs that up.

If fees are illegal full stop then why were the credit card fees reduced instead of removed.

Why did the bbc goto the trouble to do an experiment on how much it costs to bounce a cheque when its not even relevant?

Originally Posted by Mr Angry (Post 34179382)

I am not disagreeing with anyone, I'm simply stating a fact. "Administrative charges" are "administrative charges" up to the point that they exceed the "administrative costs" whereby they become a "penalty charge".

Originally Posted by danielf (Post 34179405)

Seeing that NTL will happily apply a £5 non DD charge for a Broadband account @ £17.99 pcm (roughly 30% of the total charge), it appears to me that they either: have incredibly inefficient billing procedures, or are extracting the urine and have found a little money spinner which may turn out to be illegal.

Originally Posted by handyman (Post 34179451)

If it was a discount for paying by direct debit I think they would get away with it.

Originally Posted by danielf (Post 34179405)

I've asked this before in another thread (and someone's brought this up in this one): I'd be interested in your opinion on the non-DD charges that NTL (and other companies) charge. From what you say above I conclude that, where they are deemed to exceed the actual administrative cost, they would be considered penalty charges, and therefore be illegal.

Seeing that NTL will happily apply a £5 non DD charge for a Broadband account @ £17.99 pcm (roughly 30% of the total charge), it appears to me that they either: have incredibly inefficient billing procedures, or are extracting the urine and have found a little money spinner which may turn out to be illegal.

Originally Posted by Mr Angry (Post 34179382)

I am not disagreeing with anyone, I'm simply stating a fact. "Administrative charges" are "administrative charges" up to the point that they exceed the "administrative costs" whereby they become a "penalty charge".

With all due respect we've been round the houses on this one. The OFT gave it's opinion on cc charges, not the definitive law on same. Had the OFT said it considered the threshold of £6.00 to be fair then the banks would have reduced it to £6.00 . Again I refer you to my quote from the OFT ""....and a court will certainly not consider that a default fee is fair just because it is below the (our suggested) threshold (of £12.00).”

There is a very real difference between the opinion of a Government body and the law - which is why John Fingleton worded his statement in that fashion.

As for the cheques - they are one of the few processes left in banking which require "human intervention" which is quantifiable as an administrative cost.

Originally Posted by Chrysalis (Post 34179775)

Ok I think there has been a misunderstanding then, I was calling it a pentalty fee when I meant admin fee. So its legal to charge for the admin costs involved but not legal to add anything on top for profit and penalise the customer.

Originally Posted by Chrysalis (Post 34179775)

OFT made banks reduce their credit card 'penalty' fees to £12 and i was curious if they would set the bank fees to the same level since if it was set to the same level it would be hard to see how credit card late payments can cost as much as bouncing cheques.

I would love for them to go one step further and stop the banks taking time to clear cheques and make them instant or at least same day clearance since its done electronically now.