The long awaited announcement of the ruling by the supreme court, formerly the law lords, on the question of whether the OFT could test the fairness of bank charges was given this morning and it came as a considerable shock to many thousands and perhaps millions of UK citizens.

The judgement was that on the very specific and precise ruling that was required as to whether the OFT was entitled under the law to investigate if bank charges were fair, it was not.

This will be a great disappointment to millions of people around the country who believe that bank charging systems are totally unfair in that people who may be struggling financially to meet their bills are being required to subsidise those people who are able to maintain their bank account for free thanks to the these payments.

Several comments by the Judges make interesting reading.

Lady Hale stated that it might be open to question whether it is fair to subsidise some customers whose accounts always remain in credit by levies on others who experienced events they did not foresee when they opened their accounts.

Lord Walker pointed out that banks accepted that “the system of “free if in credit” banking prevalent in
this country involves a significant cross-subsidy (amounting to about 30 per cent of the
banks’ total revenue stream from current account customers) provided by those customers
who regularly incur charges for unauthorised overdrafts (a cohort, we were told, of the
order of twelve million people) to those customers (a cohort of about 42 million people)
who are in the fortunate position of never (or very rarely) incurring such charges.”

There seems little doubt that while the ruling on the technical issue of whether the law allowed the OFT to investigate the fairness of the bank charges has come down in favour of the banks the story is not over yet.

The ruling pointed out that while this specific point did not allow the OFT to investigate there may be other avenues open to it to investigate under and the OFT have responded by saying they will study the ruling and consider what options are available to them.

There is clearly huge public concern about bank charges and penalty fees. It is clearly unfair that people who have difficulty meeting their bills are being taken advantage of in order to subsidise people who are able to afford their bills. Nobody is suggesting that it is a good thing for anyone to go overdrawn beyond their agreed limits but the way the banks operate so that they can screw the maximum out of people who are already struggling and push them further into debt is immoral and should be illegal.

The government should act and they could act today by demanding that the banks that are majority owned by the taxpayer act in a moral and fair way towards their customers. The ruling by the supreme court raised questions about the fairness of the way the banks operate and it is only reasonable to expect action by the government to enure that the public are treated fairly and honestly by the banks.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

In an interesting development ahead of the soon expected ruling from the new supreme court on whether the FSA can challenge the fairness of bank charges and fees, one bank has announced a new account that will not make apply a fee for unauthorised overdrafts or bounced payments.
This has clearly been in the planning process for some considerable time and it seems unlikely that mere coincidence is the reason for this announcement only days before the supreme courts decision is announced.

Santander will offer the new bank account from January 2010 to their mortgage customers. The account will have an interest charge of 12.9% applied to overdrafts regardless of whether it is an authorised or unauthorised overdraft.
In offering a fairer and more honest way of charging customers Santander are likely to attract customers who are sick to death of the way charges have previously been applied. Unless other banks respond they can expect to lose customers to Santander though the fact that the bank account will only be offered to mortgage customers will limit the numbers of applicants.

It is a shame that it has taken so long for the banks to start thinking about their customers and it has taken a long running court case to move forward but it would seem that we are seeing the beginning of a fairer and simpler way of managing bank accounts and for that we should be thankful.
It will take a long time for the banks to earn any respect from customers and we know they cannot be trusted to care about their customers but this would seem like a good start from Santander.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

The increase in unemployment due to the recession and the need to find the money to pay credit card debts will make many people interested in the idea of making a little extra money with a part time job.
Not all jobs are everything they seem to be and there are warnings today from the website, www.getsafeonline.org about innocent people looking for work being used as ‘mules’ in internet fraud.

Being conned into becoming a ‘mule’ is a sophisticated type of online fraud that could leave you with a frozen bank account and facing criminal charges but it all starts with an innocent looking email message offering a job.

Responding to these advertisements offering what seems like well paid work for important sounding jobs such as ‘money transfer agent’,'shipping manager’ or as a ‘mystery shopper’ to carry out simple tasks. Once the innocent job seeker has been recruited by a fraudster, the mule carries out transfers of the money illegally gained in one country to another country quite unaware that they are carrying out illegal transfers.

Once they have been ‘recruited’, money mules are persuaded to share their bank details which would not seem unreasonable if their wages are to be paid into their bank. The ‘mule’ is then unwittingly used to launder the profits of the fraudsters’ criminal activities.

This is a particularly worrying trend as at any given time, it is estimated that there may be 100 known mule recruitment sites targeting the UK and each of these may have lured up to 50 innocent people into being active mules. By allowing their bank accounts to be used to receive and transfer illegal funds the mules are breaking the law – even if they don’t realise it.

Mules may then become part of a police investigation and are most likely to be the easiest part of the criminal chain to track down with a fair likelihood of being caught. Once they have been caught money mules will probably have their bank accounts suspended and they may even find themselves liable for all the proceeds of the fraud.

The ease of use of the internet and the relative ease of setting up what looks like a legitimate company online makes these scams a dangerously easy operation to set up and and easy one to fall prey too if you are short of money and looking for work. Be very conscious of the possible risks and make sure you check the credentials of any potential employer offering and online job.
If you have reservations about any job offer or any other online services or offerings take a look at the website at www.getsafeonline.org and read more about avoiding scams and identity theft and online credit card fraud.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)