Banks; still one of my favourite institutions!

The decision is out! The Supreme Court has decided! The financial regulator cannot decide if bank charges are unfair. Having looked at the case report the court explains at the very start that they cannot decide if the charges are fair merely whether the OFT can decide whether the charges are fair.

Well before we get to that concept lets look to see for amoment whether the charges are fair:

First, the concept that someone is a moron because they let their bank over run by (usually a few pound) is ridiculous. Most people (including myself) have a buffer of about at least £100 but there are some people who by nature of their income do not have this luxury. All it takes is for someone to bank a few cheques late or for a bill to be a little bigger than expected and even the most fustideous financial manager can go a few pounds over.

The second point is that after this they charge you up to £35. In terms of interest this obviously works out as several hundred to thousand per cent APR. Some also change £3 per day for each day you're over. As a figure of interest this is vastly higher than most 'loan sharks'. Who amusingly could have their contract terms struck down by the court under UCTA 1977.

Oh and if you account is empty obviously you don't have £35 to give them in the first place. If you did it would be in your account to pay the bills. Sure some may have just failed to take money from their savings account and put it in their current, but this is higly unlikely.

Third and finally, if one was a complete idiot, took out a huge loan, bought everything on credit card (because one doesn't have dicipline self-control or a brain), then kept getting bigger an bigger loans. Once they'd piddled away £15,000 the governement would step in and help their retarded backend out of trouble with an IVA, which would prevent further interest and force the banks to accept really good terms for their behalf... so basically if you're an utter waste of space to society who needs to get a grip, the government will happily help you out, but if you're just a hard working bloke, who tries to stay in the black and not squander money irresponsibly, but had a unexpected bill come early the government currently will let you hang...

Just to compound this in the current financial crisis we (the public) currently have to bail out the banks because they have gone not £3 overdrawn but several billion pound. Do they get a penalty? No, they are still paying themselves millions and therefore their greater incompetance has resulted in no detriment whatsoever.

If you wanted to define 'injustice' to someone who had no concept of the word, you wouldn't be far off using this example. In fact I think there was a famous historical figure who gave a similar exmaple:

23 Therefore the kingdom of heaven is like a certain king who wanted to settle accounts with his servants. 24 And when he had begun to settle accounts, one was brought to him who owed him ten thousand talents. 25 But as he was not able to pay, his master commanded that he be sold, with his wife and children and all that he had, and that payment be made. 26 The servant therefore fell down before him, saying, ‘Master, have patience with me, and I will pay you all.’ 27 Then the master of that servant was moved with compassion, released him, and forgave him the debt.
28 “But that servant went out and found one of his fellow servants who owed him a hundred denarii; and he laid hands on him and took him by the throat, saying, ‘Pay me what you owe!’ 29 So his fellow servant fell down at his feet[d] and begged him, saying, ‘Have patience with me, and I will pay you all.’[e] 30 And he would not, but went and threw him into prison till he should pay the debt. 31 So when his fellow servants saw what had been done, they were very grieved, and came and told their master all that had been done. 32 Then his master, after he had called him, said to him, ‘You wicked servant! I forgave you all that debt because you begged me. 33 Should you not also have had compassion on your fellow servant, just as I had pity on you?’ 34 And his master was angry, and delivered him to the torturers until he should pay all that was due to him. (The gospel of Matthew 18 NKJV Thomas Nelson Press)

Just incase you don't know the exchange rate Denarii is like pence (cents) and talents is a bit like pounds (dollars).

Hmmm, so if you're not getting this by now I'm not exactly in favour of the bank charges.

So the decision was wrong? The Justices are a bunch of idiots right?

Well not quite. While I was seething when I heard the decision the press is sort of protraying the case incorrectly. All the Supreme Court has decided is that the OFT can't regulate it using the regulation they wanted. If you read the regulation you can see that they have interpreted it accurately...

But then the courts rarely let little things like accuracy get in the way of their decisions before so why are they starting now?

Maybe there is a good reason... I'll be sure to discuss it when the consumers/OFT bring the next case!