Dealing with banks is a necessary evil, but at times they try to get away with appalling behaviour.
Clydesdale Bank is trying to get its borrowers to pay for the bank's own error!
Banks have become almost pantomime villains in the UK over the past couple of years, and sadly they have done a lot to deserve that reputation.
Whether it’s gross incompetence or downright sneakiness, there’s never been a worse time to trust your bank.
Working out mortgage interest
Last week, Yorkshire and Clydesdale Bank confirmed it had made a pretty big error with its mortgage customers. It had miscalculated the monthly payments of 18,000 of its customers on variable mortgages, meaning they had been underpaying each month.
As a result, the borrowers will now have a shortfall on their mortgage account. Yorkshire and Clydesdale have now written to all of the affected borrowers explaining the situation and outlining how much extra these borrowers will need to pay in order to eliminate the shortfall. The bank reckons that for half of the affected borrowers, the total suggested increase will be less than £25 a month.
Staggeringly it’s since emerged that Clydesdale actually knew about the miscalculation last autumn!
However, in my view, this is a bit of a joke. It’s the bank's fault that they were undercharging the borrowers, so why should the borrowers have to pay for the bank's mistake? And what about those borrowers who cannot afford to pay any extra each month? Will their mortgage term be extended, so they end up paying an even larger amount in the long run?
Affected borrowers should take up their case with the Financial Ombudsman Service to see if they really are required to pay the extra money each month, particularly given that on the Ombudsman's website there is a technical mortgage note which includes the following statement: “In cases where the monthly repayment was too low, because the lender made an error which incorrectly extended the term of the mortgage, we will generally decide that the lender is entirely to blame.”
Sadly, banks try to get away with shocking behaviour like this all the time.
What’s your address?
One member of the lovemoney.com team has had an horrific time with Lloyds TSB. She was going on holiday to Cuba earlier this year, and wanted to use her Lloyds card. However, she didn’t have a PIN for the card.
Cue weeks and weeks of phonecalls to Lloyds, during which time they repeatedly claimed they had sent not only letters confirming the PIN, but replacement cards as well. None of these had arrived, however.
It later turned out that Lloyds had been sending the PINs and the cards to an address she had not lived in for three years. What is staggering is that she has lived at two different addresses since then, both of which still receive some marketing material or bank statements from Lloyds, so they have all of the correct address information on file.
Staggering incompetence.
Overdraft charges
Last year saw the Supreme Court surprisingly rule in favour of the banks on the issue of unauthorised overdraft charges.
Your bank will do everything in its power to make money out of you. Here’s how to fight back and win!
For years banks have got away with slapping ridiculous charges on customers who made the mistake of going past their agreed overdraft limit, sometimes by only a few pennies. You may be charged £40 for slipping past your limit, and then a further £20 for receiving a letter informing you that you had done so.
The banks argued that these were not actually fines, but rather a fee for a service, and that those fees enabled them to provide free bank accounts.
The Office of Fair Trading had wanted to investigate the charges, and won a succession of early court decisions. However, the banks managed to win the final decision, saving them billions of pounds. Thankfully, a number of banks have slashed their charges for overdrafts, but they are still far more than they should be.
If you want to find out how to avoid falling prey to such charges, be sure to have a read of Where to find the cheapest overdrafts.
Blank credit card cheques
Fortunately, this type of cheque will be banned at the end of the year, and it can't happen soon enough.
Many banks are only too happy to ship out blank cheques to their customers to entice them to buy things (which, chances are, they don’t really need) on credit. However, it is often more expensive to buy something with one of these cheques rather than using your card, and you won't benefit from the protection usually offered through buying with your credit card.
According to the UK Cards Association, an incredible 50 million blank cheques were sent out to Brits in the space of just three months in 2009, with £537m spent on them. MBNA alone admitted to sending out tens of millions of cheques during 2009, before it confirmed it would be scrapping them earlier this year.
Thankfully this utterly irresponsible practice is now on the way out.
These are just some of the worst things banks get up to, but there are plenty more. Why not share your own experiences of awful bank behaviour with your fellow readers via the comment box below?