There is anecdotal evidence which
suggests that overcharging by banks is a problem for business customers.
Instances are reported of interest margins being incorrectly calculated
on overdrawn accounts, or of increased overdraft limits being agreed
over the telephone without clarity about the rate being charged
on the increased limit....Unfortunately this information has to
remain anecdotal as bank audit agencies were unwilling or unable
to give the Review any information on which to judge:
whether overcharging
is balanced by an equal amount of undercharging, implying that
simple bank errors were the cause; or
the scale of the discovered
part of the overcharging problem.
Nevertheless, the fact that the UK can sustain
a number of viable businesses which rely on bank errors for their
livelihood suggests that there is a problem of some scale.
Our Comments
We do not "rely on bank errors for our livelihood",
since our range is much broader, but if the Review had wanted more
information it could have asked us, especially as one of our members
had taken the trouble to submit evidence on other issues.
All our members have in our time been real live
Bank Managers. Interest is calculated by banks' computers, and they
get the sums right if they are given the right information. But
human error or delay can mean "garbage in, garbage out".
Mistakes can arise through sloppy practice by
the Bank, as the Review points out.
Occasionally of course an error is deliberate,
but this is relatively rare.
Here It Is - The Information Cruickshank Couldn't Get
In several years of operation we have found
only one undercharge. However, this does not mean that "simple
errors" were not usually to blame.
Banks' systems usually revert to their high default rates of
interest after a time unless they are told not to. So "simple
errors" would not lead to "an equal amount of undercharging".
We are quite open about the scale of overcharging
among the accounts we audit - the information on this page was
already freely available.
But we do not go on to say that 70% of bank customers with borrowings
suffer from these errors. Our clients are businesses which already
felt they might have cause for concern about the competence
of their branch.
