Landmark Court case may see end to unfair bill charges - Page 3

Angua · 30-03-2008, 08:43

Although £5 is high it is probably also set high enough to try & discourage non DD payments.

BenMcr · 30-03-2008, 12:21

But there is the rub. If it is a penalty charge which it would be if Virgin used it to discourage non-dd payments, then it is completely different to an administration charge which is a fair reflection of the actual costs involved in processing non-dd payments.

This is where the banks became unstuck. The current crop of court cases and regulatory reviews were never about the charges themselves, it was whether they were fair. I.E. Should a bank charge £30 for a failed d/d when it costs them maybe £3 to process.

arcamalpha2004 · 30-03-2008, 13:13

Quote:

Originally Posted by BenMcr

But there is the rub. If it is a penalty charge which it would be if Virgin used it to discourage non-dd payments, then it is completely different to an administration charge which is a fair reflection of the actual costs involved in processing non-dd payments.

This is where the banks became unstuck. The current crop of court cases and regulatory reviews were never about the charges themselves, it was whether they were fair. I.E. Should a bank charge £30 for a failed d/d when it costs them maybe £3 to process.

What is the true cost to VM in terms of processing a Non DD payment?

BenMcr · 30-03-2008, 13:26

Haven't a clue.

But not only do you have to take into account the actual charge Virgin get from their bank, but you also have to factor in the credit control staff, the payment processing staff, the amount Virgin have to pay paypoint to run that payment method, the postage on the reminder letters, the cost of printing those letters in the first place and I'm sure quite a few other things as well

arcamalpha2004 · 30-03-2008, 13:32

Quote:

Originally Posted by BenMcr

Haven't a clue.

But not only do you have to take into account the actual charge Virgin get from their bank, but you also have to factor in the credit control staff, the payment processing staff, the amount Virgin have to pay paypoint to run that payment method, the postage on the reminder letters, the cost of printing those letters in the first place and I'm sure quite a few other things as well

Ok, so if as you said before that a bank, with more overheads imo, should charge say £3 instead of £30 where does that leave VM'S £5 penalty fee?

BenMcr · 30-03-2008, 13:47

Please don't twist my words. It it very annoying

I have no clue how much it cost a bank to do it either. the £3 was a guess.

Maybe it costs them £5 same as Virgin. or maybe it costs them £10

If it does cost them £10, where does THAT leave Virgin?

And the £5 charge is not a penalty fee, it is an administration charge

arcamalpha2004 · 30-03-2008, 14:19

Quote:

Originally Posted by BenMcr

Please don't twist my words. It it very annoying

I have no clue how much it cost a bank to do it either. the £3 was a guess.

Maybe it costs them £5 same as Virgin. or maybe it costs them £10

If it does cost them £10, where does THAT leave Virgin?

And the £5 charge is not a penalty fee, it is an administration charge

I am not twisting your words Ben, dont say that I am.

So ok lets say a guess of £3 instead of £30 for the bank, which is 10% difference?

So 50p should be about fair for VM in my opinion.

Sorry Ben in my opinion it is a penalty fee.

BenMcr · 30-03-2008, 14:36

Quote:

So ok lets say a guess of £3 instead of £30 for the bank, which is 10% difference?

Thats a 90% difference.

You can't take one situation and apply it to another.

What if the bank have put a £27 mark up on the figure and Virgin mark it up by £0? Should Virgin still have to reduce the figure?

Would you prefer if they put up everyones services UP by £5 and then offered all those customers who pay via direct debit a £5 discount?

The end result is the same but it would then be a discount not a charge

Other companies, such as Gas/Water/Electric companies already do this. You pay one rate if you don't pay via d/d and another (lower) rate if you do

arcamalpha2004 · 30-03-2008, 15:08

Quote:

Originally Posted by BenMcr

Thats a 90% difference.

You can't take one situation and apply it to another.

What if the bank have put a £27 mark up on the figure and Virgin mark it up by £0? Should Virgin still have to reduce the figure?

Would you prefer if they put up everyones services UP by £5 and then offered all those customers who pay via direct debit a £5 discount?

The end result is the same but it would then be a discount not a charge

Other companies, such as Gas/Water/Electric companies already do this. You pay one rate if you don't pay via d/d and another (lower) rate if you do

The point is ben if the bank can charge £3 instead of £30 then that leaves VM able to charge less than £5.

What I would suggest is people who are agrieved by this to send them five cheques each one for £1, let them work for the money, what other companies do isnt the issue here, we're talking about virgin media.

BenMcr · 30-03-2008, 15:22

Again, why are you talking about the £3 figure. It was a guess!!! A made up figure that came from nowhere. It was not based on anything.

And if you want to send Virgin 5 £1 cheques please do so

WHISTLED · 30-03-2008, 15:57

Quote:

what other companies do isnt the issue here, we're talking about virgin media

Of course it is, market practice is driven by competition. What other companies do directly impacts what VM does.. Thy were not the first to introduce teh charges, if all competitors dropped it they woudl be forced to do so.

The simple fact is the charge is part of the terms of service - The consumer is empowered to make a choice on if they wish to have that charge imposed.

I think its expensive as I said and I have made that known many times in work but VM want everyone on DD this is the best way of driving that change an covering all costs involved.

bomb #21 · 30-03-2008, 16:36

Quote:

Originally Posted by BenMcr

Again, why are you talking about the £3 figure. It was a guess!!! A made up figure that came from nowhere. It was not based on anything.

"We asked two professors of banking and a former NatWest executive to estimate the banks' costs. The highest figure they concluded that banks could justify was £4.50 - much lower than what the banks currently charge."

http://news.bbc.co.uk/1/hi/business/6169539.stm

So, £3 = not too bad as guesses go.

foreverwar · 30-03-2008, 16:39

But that is for a "penalty" charge, not a "manual payment" charge - different process.

bomb #21 · 30-03-2008, 16:47

Quote:

Originally Posted by foreverwar

But that is for a "penalty" charge, not a "manual payment" charge - different process.

Yes, I know; I was just applauding Ben's guess.

Do you believe it costs VM anything like £5 extra to process a non-DD payment?

foreverwar · 30-03-2008, 16:50

Having working in Telecoms and Cable billing in the past, I do know there is a lot of manual and additional systems processing needs to be done for non-DD payments, which involves not only the running costs, but also the set up costs and lost of revenue whilst cheques etc are being processed (interest on money in accounts).