Source: Daily Telegraph

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'Cash martyr' takes BT to court for fees

By Harry Wallop, Consumer Affairs Correspondent
Last Updated: 3:31am GMT 13/02/2008

A solicitor is taking BT to court over the charges the telephone company levies on customers who pay their bills by cash.

* Why are cash customers penalised?

Ros Fernihough, 62, who has been dubbed the "cash martyr" by her supporters, claims the company is unfairly penalising her for refusing to pay her bill by direct debit.

Mrs Fernihough, like 5.5 million fellow BT customers, chooses not to pay by direct debit. As a result her monthly line rental costs £13.25 a month, compared to £11.75 a month.

She said: "On a £10 note, it says quite clearly 'I promise to pay the bearer on demand the sum of 10 pounds', not '10 pounds, plus a £1.50 handling fee'. This is not a spurious claim. BT's position won't wash."

The grandmother of seven said she has paid her telephone bill in cash ever since she became a BT customer in 1964. She goes to the local branch of her bank in Sutton Coldfield and either pays in notes and coins or by transferring cash electronically to BT's account.

Since May last year, BT has levied a £1.50 handling charge on cash or cheques; the company insists, however, that direct debit customers have always enjoyed a discount on their line rental, but it is not made clear on their bills.

Mrs Fernihough said: "I don't care whether BT calls it a charge or a discount. They are charging extra people who use the Queen's currency."

Mrs Fernihough is bringing the case under the Unfair Terms in Consumer Contracts Regulation of 1999, the same regulation under which bank charges are being considered by the High Court.

The case will be heard next month at Walsall County Court. District Judge Hearne has already ruled that her claim is "of considerable public importance".

If Mrs Fernihough were to win the case, it could force companies to lift the charges that they levy on customers who pay by cash.

BT insists its charges are "fair and legal". A spokesman said: "We will be defending the case."

Mrs Fernihough is one of many readers who contacted The Daily Telegraph to call for an end to charges after last week's story highlighted how customers who paid their bills in cash had to pay an extra £300 each year.

Gas and insurance companies, as well as telephone companies, charge substantially more if their customers take a standard policy rather than an online account.

David Miller, a property manager and another reader, said he was backing Mrs Fernihough's legal bid.

He said: "Good on her. I will stand outside the court waving my 'Free the Cash Martyr' placard if needs be."

Henry Katz, an independent financial adviser, said: "I don't like direct debit. I pay my bills by electronic transfer on time every month. Utility companies do not have to handle any cash or cheque. And yet they still charge me more. Why?"

Campaigners argue that elderly people are particularly hard hit. David Sinclair, Help the Aged's policy director, said: "For older people access to cash is vital. Chip and pin and the internet, have made access to cash more difficult and many people are struggling to cope."

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See also an interview with Ms Fernihough on BBC Breakfast here. They quite rightly point out that whilst BT charges £18 per year for non-Direct Debit payments, Virgin Media charges £60.

BT are wriggling.

Just had their latest "changes to BT's pricing and terms & conditions"

They say that they set up a separate company (BT Payment Services - BTPS), wholly owned of course by BT, who will from now on process all non-direct debit payments.  By paying a bill by any means other than direct debit one automatically agrees to enter into a separate contract with BTPS. Part of the contract is that one agrees to pay a fee for the service BTPS provide, i.e. for the handling of the payment.  

Perhaps a manouvre forming part of their tactics to defend the action against them?

>:(

I note Ros Fernihough is a solicitor. Is there any solicitor in the country who would take on BT on behalf of the millions of customers who object to having a gun pointed to their heads saying : Pay by Direct Debit or else".
Whatever happened to customer care?
Is the customer and his opinion of no interest to BT?
Like Hanry Katz, I pay on line direct to BT's bank - thus incurring no additional cost to BT than paying by DD.
I have had an admission from a BT employee that that is the case - no extra cost involved by BT - so why the charge?
[smiley=angry.gif]

Peter_Reed wrote on Feb 15^th, 2008 at 5:05pm:

I have had an admission from a BT employee that that is the case - no extra cost involved by BT - so why the charge?

Sounds much like bank charges in that they are charging more than it actually costs them.

I think VirginMedia should be top of the list as they charge an extra £5 per month last I heard (£60 a year) for those not paying by direct debit.

There are the following ways to pay a BT bill:

1. by cheque, posted to BT
2. cash at a Paypoint outlet (and presumably also at a bank using bank giro credit)
3. electronically through the banking system

It is possible that 1 and 2 involve a small additional cost over direct debit payments, but 3 does not.

I think it is important not to treat all three methods of payment the same way and concentrate on method 3 where the chances of success in any litigation are the most likely.

I am delighted to hear that someone is taking BT to task over their unfair charges. I asked for information about how they arrived at this £1.50 per month charge over a year ago, and got a pathetic answer saying that others do the same so it's OK.
I have refused to pay it, I deduct it from the bill and pay the balance, and so now incur a late payment charge in addition, which I also refuse to pay. As I do not use BT to make calls (only for line rental), this 'late' payment charge actually relates to 'advance charges - BT charge in advance for line rental, so it is not 'late' at all. Another unfair practice that should be outlawed too in my opinion.
Am I right in think that BT now charges a connection fee for every call made? It used to be a minimum charge, it seems it's now an extra fee. I found a note to this effect tucked away in the small print on the last page of their BT Update booklet that came with my last bill. Is this another hidden extra that has gone unchallenged or have I misunderstood them?

Be careful, you could end up with a dodgy credit reference if you don't pay what you owe. You can always get your line rental from someone else, if you feel that strongly about it. BT don't have the monopoly any more.

Quote:

Am I right in thinking that BT now charges a connection fee for every call made

Yes you are right.  Since 1 August 2007 there has been a 6p call setup fee. Furthermore, from 1 April 2008 daytime call charges to geographic numbers will go up from 3.25p/min to 4p/min (a 23% increase).

KfromKent wrote on Feb 16^th, 2008 at 2:17pm:

I have refused to pay it, I deduct it from the bill and pay the balance, and so now incur a late payment charge in addition, which I also refuse to pay. As I do not use BT to make calls (only for line rental), this 'late' payment charge actually relates to 'advance charges - BT charge in advance for line rental, so it is not 'late' at all. Another unfair practice that should be outlawed too in my opinion.

So why haven't they cut you off or threatened county court action so far?

With all due respect to those who make a big issue out of paying by Direct Debit I really think this is largely a luddite movement as the way Direct Debit operates if you ever get a bill you object to (call charges are billed after the event on the next bill and not beforehand) you can always cancel the Direct Debit before it is paid and then send a cheque minus the charges that are in dispute.

I really think this kind of energy should instead go in to fighting the real unfair charges of having to pay a covert premium phone rate to contact the customer services and technical support lines of vast numbers of UK companies.

Of course if this lady is successful then perhaps I could enlist her help against the Post Office HomePhone for still insisting on calling 0845 numbers Local Rate and National Rate on my phone bill.

Further to the suggestion that fighting against Direct Debit is a luddite action, I have had 2 bad experiences with DD whereby firms took a larger amount than they should have done and had not notified me in advance.
The actual wording of the mandate in effect says " 'x' company can take what they like when they like from my bank account". In other words you give 'x' company control of your bank account.
I have no objecvtion to Standing Order whereby I say "I will give you x amount when I say - eg every month".
That way I keep control of my bank account.
I do not trust banks and their guarantees.

That's all very well but with D/Ds, they have to tell you what the new amount they are going to take before they take it. So you do not have to keep settiing up new S/O every year, it is all done for you. The guarentee is enshrined in  law. I have been using d/d fo 40 years and have never had a problem. Actually the banks don't create the amounts but the people who you are paying. Also, you can cancel d/ds yourself, very eay to do it on line, where as you can't with a s/o, so you actually have far more control with a d/d than a s/o.

As stated, I have had 2 bad experiences with DDs where companies took more money without notifying me.
As you say it is the companies who generate the amount - ie they can take what they want out of my account. Ie also the company has control of my bank account.
As stated I do not trust bank guarantees.

I agree with Peter Reed - I HATE Direct Debits, I see them as giving a licence to an outsider to plunder my account.   We do use one per month, albeit reluctantly, because it suits us and we know the person concerned.   As I do not use online banking (don't trust the banks etc, have heard too many disaster stories), that is of no use to me at all.   Standing Orders are very convenient, we have total control over when and what is paid.   Some banks (HSBC for example) are obstructive and make a difficulty over everything, as well as being totally incompetent but Nationwide, to whom we have moved almost all our business, are very helpful and can even do things in branch (unusual, these days).   I prefer having to write a letter to set up/cancel such items as then I have written proof of what I requested and I ALWAYS require written confirmation that the action requested has been taken.   Banks and businesses can't be trusted, for example a friend recently asked her bank set up a payment to go from a/c A to a/c B - guess what?  They set it up to go in the opposite direction, potentially causing her to suffer penalities and they HAD been given the instruction in writing so at least she had proof!

Barbara wrote on Feb 23^rd, 2008 at 2:23pm:

I agree with Peter Reed - I HATE Direct Debits, I see them as giving a licence to an outsider to plunder my account.   We do use one per month, albeit reluctantly, because it suits us and we know the person concerned.

I have around 12 direct debits taking monthly payments and have never had any trouble with them.  Those of you who seem to fear anything that stops you initiating the payment yourselves need to check the terms and conditions of the direct debit scheme.  If for any reason the payment taken is not correct they have to return it based on your say so even if the retailer doesn't like it.  The retailer then has to try to recover the returned money from you directly if they still believe it is owed.  Also if you do not generally use direct debit do you not then find yourself being hit with penalty fees when you overlook initiating a manual bill payment sooner or later?

However what you should avoid at all costs is setting up continuous credit card authorities as these actually do have all the pitfalls that you and others in the forum wrongly seem to believe apply to Direct Debit.  With a continuous credit card authority you cannot stop it and you must persuade the merchant with your card details to cease taking the payments.  Also very strange things happen with these continuous credit card authorities carrying on even when you change the card number to try to stop such fraud.  Online payment by Switch is also again similarly not recommended because it is in effect like using cash and cannot be put in dispute.

Also Barbara without wishing to appear critical a number of the payment errors you are experiencing is surely because you are relying on fallible bank/building society human beings to rekey your data and they periodically make mistakes.  Whereas if you use online banking you set up the payment and enter the details and it is therefore much less likely that a mistake will occur.  I used to have endless trouble with the Inland Revenue getting things wrong in calculation till I started submitting the data directly online myself and thus cut out the possibility of data keying errors.

I agree with you about Nationwide being entirely preferable as a banking organisation to the sharks at NatWest, HSBC and Lloyds TSB etc.  It is worth switching to Nationwide for the fee and commission free overseas debit card cash withdrawal and the foreign exchange rate levy free Visa Credit Card.

Barbara wrote on Feb 23^rd, 2008 at 2:23pm:

I agree with Peter Reed - I HATE Direct Debits, I see them as giving a licence to an outsider to plunder my account.   We do use one per month, albeit reluctantly, because it suits us and we know the person concerned.   As I do not use online banking (don't trust the banks etc, have heard too many disaster stories), that is of no use to me at all.   Standing Orders are very convenient, we have total control over when and what is paid.   Some banks (HSBC for example) are obstructive and make a difficulty over everything, as well as being totally incompetent but Nationwide, to whom we have moved almost all our business, are very helpful and can even do things in branch (unusual, these days).   I prefer having to write a letter to set up/cancel such items as then I have written proof of what I requested and I ALWAYS require written confirmation that the action requested has been taken.   Banks and businesses can't be trusted, for example a friend recently asked her bank set up a payment to go from a/c A to a/c B - guess what?  They set it up to go in the opposite direction, potentially causing her to suffer penalities and they HAD been given the instruction in writing so at least she had proof!

There are people out there who refuse to put their credit card details over the internet as they fear something will go wrong. Actually it is much safer than the same people who will willingly give the same details over the phone which is not encrypted.

Direct debit is a very safe way of paying your bills as NGM explains. When you think about it something like your membership to the AA will be continuous with D/D. If you forgot to renew your S/O you could be in a bit of a fix if you broke down, just as one example.

My life run's on direct debit all my bills are paid that way and i find that its very convenient, but i have elderly relatives that wouldn't  touch it  a barge poll, and also a not so elderly relative who lives from day to day cash wise and couldn't cope with DD if they wanted to, all the companies i pay my bills to  required me to sign up-to DD when i joined that was fine by me, but for companies who have been fine with cash to suddenly start charging what are in many cases long standing customers i find wrong, why should someone have to pay extra because all of a sudden a company finds cash bill payments inconvenient. Also don't forget there a re companies that have a legal right to restart a canceled DD and a few have done so when they have had no legal right, and its been a hassle to sort out.

janitor wrote on Feb 24^th, 2008 at 12:52pm:

My life run's on direct debit all my bills are paid that way and i find that its very convenient, but i have elderly relatives that wouldn't  touch it  a barge poll, and also a not so elderly relative who lives from day to day cash wise and couldn't cope with DD if they wanted to, all the companies i pay my bills to  required me to sign up-to DD when i joined that was fine by me, but for companies who have been fine with cash to suddenly start charging what are in many cases long standing customers i find wrong, why should someone have to pay extra because all of a sudden a company finds cash bill payments inconvenient. Also don't forget there a re companies that have a legal right to restart a canceled DD and a few have done so when they have had no legal right, and its been a hassle to sort out.

When BT currently allows those who receive a paper bill in the post but pay by DD to receive the full DD discount I agree that is unfair when customers who pay by online transfer they initiate or initiate at a bank branch are charged extra.  BT is unfortunately saying that they believe all cash customers are a worse risk of default and that is why they are charging extra.  What they should perhaps do is allow customers to pre-pay in advance in cash and charge them no extra for doing so and perhaps pay a modest but not market leading rate of interest (eg 4% or something) on the cash held before it is used.  Also they should give a discount to those customers who accept email or online only billing and pay by DD compared to those who insist on paper billing as there are obvious real cost savings there to them as a company not to mention to the environment.

Sadly many of those who can only pay by cash are considered such poor credit risks that they cannot get conventional bank accounts or credit cards.  Interestingly there is now a mastercard you can get without an address or credit score just by paying cash over the counter in various Paypoint type stores.  This works well for non credit worthy people online but unfortunately BT and various utility companies only accept direct debit because it is cheaper than credit card and being near monopolies they don't have to worry about losing customers due to only taking direct debit.

As to security worries about use of DD sadly it is age ralated by and large.  My parents were very sceptical for some years but eventually found they had to take the plunge and having done so were amazed by its reliability compared to frequent errors by bank staff made over the years when in keying in the amounts from hand written cheques.

The banks don't allow companies they think will disappear with the money to have a DD setup because if any criminal or fraudulent activity is conducted the banks are liable for refunding all the money on DDs taken for goods and services not provided.

NGM is determined to defend BT from all comers.
Perhaps he could explain what extra cost is involved by BT in accepting a payment on line direct to BT compared with a DD paid direct to BT.
As stated before I have a quote from a BT customer services person that there is NO EXTRA CHARGE involved for BT. So why is the customer being charged for something that doesn't cost BT anything??

I thought that the main benefit of a DD was that the payee controlled the timing (and amount, subject to the DD guarantee and terms) of the payment. They would then know of "bounced" and refused ones within two or three days, with only a very tiny percentage coming back to bite them later on.

I had always therefore assumed that this prompted the differentiation.

Just as the terms for credit and debit cards are different and so I should expect to pay less with a debit card.

Peter_Reed wrote on Feb 28^th, 2008 at 8:09pm:

NGM is determined to defend BT from all comers.

I hold no brief for BT and am one of their fearcest critics, especially over blatant ripoffs like their false accounting to Ofcom that pretends they cannot afford to maintain aged copper wires to phone exchanges for less than around £35 per quarter standing charge.


Quote:

Perhaps he could explain what extra cost is involved by BT in accepting a payment on line direct to BT compared with a DD paid direct to BT.

BT clearly find that as a class those who prefer to pay by cash, cheque or electronic transfer contain a far higher percentage of bad debtors.  Whilst you are one of the tiny techno allergic minorithy who refuse direct debit because of an inherent mistrust of computers the majority who will not pay by direct debit tend to do so because they live from hand to mouth and have bad credit records that means they have no overdraft facilities with their bank and do not have direct debit because they may not have the money to pay a bill when it arrives.  Thus the BT view is that a far higher percentage of those who refuse to pay by DD default on payment of phone charges they have accrued.  It is for that which they seek to charge extra.  I think their method is probably not scientific enough and they should probably make the highest charge for paying in note and coin (undoubtedly the method most favoured by those with the worst credit rating) and then a lesser amount for chequer (which there are still higher handling charges for by the banks) and perhaps nothing extra for online electronic payments from another bank account.


Quote:

As stated before I have a quote from a BT customer services person that there is NO EXTRA CHARGE involved for BT.?

I think your customer service person is making it up as they go along as most of that species do. The suggestion of Douglas Adams was that they should all deported from Earth on the B Ark and that nobody would miss them.

The reality is that note and coin and cheque now definitely incur higher handling charges by banks than direct debit.  I do not believe this is the case for an electronic transfer from one bank account to another though.  So perhaps there should be no extra charge for paying by that means as long as you pay by the due date.

I am involved with an organisation collecting rents by direct debits and for us, using direct debits is much more efficient and accurate.  There are around 100 properties.  We used to use standing orders.  Under the old system, the banks were asked to make the individual payment on the Monday of each week.  This resulted in that number of entries on our bank statement.  There was a credit every day of the week even though the Monday payment day was specified.  Rents were increased once a year and errors were always made – payments being made twice, payments not being made, changes being made at the wrong date etc.  It normally took 3 months to rectify the situation.  If a payment was stopped, it was easy to miss this fact.

We now collect by direct debit.  I set up the DD claim, the debit to the tenant’s account and credit my account happen on the same day and there is only one entry on my bank statement rather than 100 previously.  If a payment is rejected, the amount is reclaimed 2 days later.  If a direct debit authority is cancelled, BACS tell me immediately.   When the rents increase, it is a simple matter to change the DD claim.  For me, DDs are much more efficient.  For the tenants who are elderly, it is much easier as they don’t have the trouble of rectifying their banks’ errors.  One should always remember the Direct Debit Guarantee which covers the repayment of items collected in error.  

As a business which uses direct debit (we have around 1000 customers) I can assure you the 50 or so who are not on direct debit require twice as much effort to process than the whole 950 who are on direct debit. In other words a non DD customer is 40 times more costly! This is even if they pay electronically. The key benefit of taking direct debit is that your accounts system becomes exception based. I.e. you get alerted when a DD fails and you can take action where it's required.

With non DD we have to match up payments, mistakes are made, incorrect amounts are paid this all costs money. In short humans make mistakes and that costs money.

DD is totally safe. One call to your bank and the money is back in your account in minutes, no questions asked.

A number of points -
1) I take exception to the claims in some posts that only old people don't want to use DD, the implication being that they are too old 9or not intelligent enough) to understand them - THIS IS NOT THE CASE and I find the inference quite insulting.   Many, many people of all ages either have personal experience of DD going wrong or know of others who have.

2)  It should be remembered that the people who use BT or whoever are CUSTOMERS and, as such, should have a CHOICE!   BT are NOT doing them a favour by letting them have a phone or phone line, the customer is doing BT a favour by using them and paying them for a SERVICE!   I am sick of people fogetting that.

3)   The point made by the landlord illustrates my point, that is is ALL for the convenience of the person providing the service, not the customer.   IF customers choose to use DD, fine, if they do not, that choice should also be respected.   As I said in my first post on this matter, DD hands control to the bank/company.   If I use SO or pay a bill when I get it (the inference that only people with debt problems do this is way out of order!), that should be my right of choice.   With DD, if a mistake is made with a decimal point or in the bill itself, it is such a problem to resolve (see my posts under Orange Shop for example), if one cancels a DD to resolve a problem, technically one is in breach of contract (ref Consumer Direct), often, if an overpayment is taken, the company will only reimburse it to the account not to the bank account of the wronged customer (eg Orange will not refund overcharges to a bank account only an Orange account).  This could leave a customer overdrawn & facing bank charges through no fault of their own and hundreds of pounds out of pocket for months while the overpayment works through the system.

One of the main platforms of the sayno campaign is, surely, customer choice - the choice to use a telephone number, as a customer, which best suits them.   This should, in my view, apply to payment methods.

A last point - sometimes, customers are led to believe that they have to pay by DD but may find challenging it brings the response that you can pay by another method if you choose.  An example was our endowment policy - we were paying by DD because we thought we had to, when we were caught in the underperforming policy trap, we did not want to continue this as it allowed them to raise the premiums as they wished, we challenged it & now pay by SO so we fix the premium by MUTUAL agreement (& we got the mis-selling resolved as well!)

I agree Barbara, and I don't like NGM'sG denigration of people like me who do not like DDs.


Quote:

BT clearly find that as a class those who prefer to pay by cash, cheque or electronic transfer contain a far higher percentage of bad debtors.  Whilst you are one of the tiny techno allergic minorithy who refuse direct debit because of an inherent mistrust of computers the majority who will not pay by direct debit tend to do so because they live from hand to mouth and have bad credit records that means they have no overdraft facilities with their bank and do not have direct debit because they may not have the money to pay a bill when it arrives.

I dislike DDs for 2 reasons:

1) Because I have had bad experiences with wrong amounts being plundered from my accounts, and then the bank or BS does everything they can to avoid conforming to the rules for the DD guarantee!


2) I keep as little funds as possible in current accounts, because I keep as much as possible in high interest yielding accounts. When I need to pay bills I transfer the funds to current accounts - not before. This is not because I live hand to mouth - indeed quite the reverse. I am extremely prudent and manage my resources to the most favourable effect, getting large amounts of interest!

I wrote a long and detailed response to dorf and Barbara and then was a victim of a major long term technical failing with the forum software that used to afflict me more in the days when I used a dial up connection.  That is to say that when I first posted my computer was not connected to the internet due to my wireless router thowing a wobbly and that in this situation the lousy YaBB forum software merely loses your post even if it is a long and complicated one.   Grrrrggghhhhh!

Better forum software merely reports that the connection is offline and takes you back to the posting screen with the post you are writing still intact.

To summarise to dorf and barbara neither of you are bad payers or irresponsible people but are caught up in using a method of payment now favoured largely by those temporarily resident in the country with no credit history, by young people with no financial track record and by people who deliberately opt for non DD payment so that they can use the goods and then commit ID fraud etc to try to pay for them.

The companies find this method of payment costs them more and so they quite rationally try to dicourage it.  This then in turn reduces the manual payers to an even narrower hard core of unreliable credit risks, even though caught in with that is a small hard core of those of you who wish to make a point that you like to be in control of making the payments and using the method you have been used to all your lives.

Whilst you say I am wrong to make an age related point I think you will find very few people under 30 indeed have an issue with DD, whereas a lot of people over 50 do because in their youth cash was king and it is unthinkable to them it has now become a less favoured form of payment.  Ditto if we look at those who most mistrust online banking (leaving aside issues of not also having the training or the equipment that are again age related) any research is going to show you it is mainly the over 45s who distrust it.

If one uses internet security products and also takes precautions like clearing the temporary internet cache and cookies before making online financial transactions then in my experience problems can be avoided.  Also I distinctly recall that in the days when the credit card system and bank system was more manual there were regularly problems with human induced errors that happen far less these days.

Of course I would advise anyone who has a problem with companies who cannot be trusted to ever bill accurately like TalkTalk to instantly leave those companies for another supplier if they have a choice.  Unfortunately TalkTalk and Tiscali attempt to counter their utter incompetence and disorganisation as companies by using their corporate muscle they have to provide prices nobody else can beat but for what is generally a third rate (especially in broadband which is not a homogeneous product of a single quality) service.

I would like to ask Dorf or Barbara what they think happens to their money when they make a payment by standing order.  It will debit their account on day one, say a Monday and it might not be until Friday when the money appears on the receivers bank statement.  Where's the money during the intervening days?  I know with direct debiting that the debiting and crediting happens on the same day.  

I can assure you that checking bank statements for individual credits is much slower than receiving the total you claim by way of direct debit.  It therefore follows that those people paying by direct debit should have some benefit for this.  

By way of information, there will be a rent increase soon and it's just taken me about ½ hour to change 100 rents.  All I need to do now is for another person double check toconfirm that I have entered the correct amount.  When we used standing orders, it took very much longer.

As for the direct debit guarantee, if the banks are slow in acting on the guarantee then it is an issue for the banking ombudsman.  I recently had a case where a resident paid their rent twice, once on the old cancelled authority and again on the new authority.  I was unable to return the payment made in error in case the bank reclaimed it off me.  I even wrote a letter on behalf of the payer moaning about the efficiency of the bank and asking for £25 compensation.  Eventually, the bank wrote to me asking for the money since they were unable to reclaim it as they should not have paid it in the first place.

According to this Ofcom dont have a problem with the extra charge,s as long as their made clear, and they only include the provider’s extra costs of collecting normal payments and not an opportunity to collect further revenue.


http://www.saynoto0870.com/cgi-bin/forum/YaBB.cgi?num=1204213949

"Charges for paying bills by cash or cheque rather than by Direct Debit

* When providers advertise prices, they must make clear what any extra charges for paying by cash or cheque will be.
* If a provider does not make the extra charges prominent and transparent enough that consumers see them as part of the main price under the contract, then the charges must reflect direct costs only. They should only include the provider’s extra costs of collecting normal payments and not an opportunity to collect further revenue.
* However, where the extra charges are prominent and transparent enough, normal competition – and not regulation – will provide price discipline on behalf of consumers. Customers will then have all the information that they need to know which provider to choose. "

I have to say I think OFCOM have got it wrong on focusing on this issue. Although not a personal fan of DD because I receive a haphazard income and therefore I can't plan for them I can't see anything wrong with BT (or whoever) offering discounts for processes that reduce their costs eg paperless billing, DDs etc. We are all adults, we have been supplied with the info and we can make our choices. It is a straight business decision for BT and us.

This is in contrast to the NGNs which often we do not have a choice over and which have very misleading descriptions attached to them (lies actually).

OFCOM as usual have identified the wrong issue.

I pay my BT bills by electronic transfer from my bank account and would challenge anybody to show that this costs BT £4.50 per bill more than a DD transfer.  ;D

I agree it may not cost them in your case, but with a DD there is a greater degree of certainty. For customers like yourself BT has to have greater numbers of staff to chase for o/s payments. Even if you are not one of them, others are. And after all they have given you the option and you can make the choice.

It is clear and, it is up front and we can make the decision ourselves and we can weight up the pros and cons. Nobody is forcing anyone to do anything.

We can't do any of this with NGN and that is why I think we should keep the focus on this.

Perhaps lompos has never worked in an accounts environment.

A direct debit submission may contain thousands of items but only one total will appear on the bank statement.  Each BACS/electronic transfer will generate an entry on a bank statement.  Each entry will need to be reconciled by one means or another.  Furthermore, bank charges are usually based on the number of entries on a bank statement.  The outstanding accounts list will need to be monitored to see who has paid and who has not.  Chasing letters will need to be sent out to those who have not paid on time.  You must remember that BT require payment by the 11th day after the date of the bill.  Do you always arrange your holidays so that you’re never away when the bill is due?

With a direct debit, it is only necessary to look at the exceptions – i.e. those where the direct debit is rejected or the mandate is cancelled.

Bt provide a service the rice of that service should be the same whether you pay by DD cash or luncheon vouchers, you dont pay a different price for for your weekly shop depending on they method of payment , Bt should work out how much each part of the service costs add there profit on top and that should be the price, irrespective of payment method.

lompos wrote on Feb 29^th, 2008 at 2:34pm:

I pay my BT bills by electronic transfer from my bank account and would challenge anybody to show that this costs BT £4.50 per bill more than a DD transfer.  ;D

You haven't factored in that you are also paying extra for being considered a likely greater credit risk by BT.  Also therefore the greater risk they will have to spend money on chasing you for any unpaid bills.

I know you of course you will say you aren't but they are appying a very sweeping generalisation that by and large those who pay DD always pay their bills and on time and that those who resist DD are frequently people who have issues with paying their bills at all.

janitor wrote on Feb 29^th, 2008 at 4:03pm:

Bt provide a service the rice of that service should be the same whether you pay by DD cash or luncheon vouchers, you dont pay a different price for for your weekly shop depending on they method of payment.

Not true.

If I pay by Egg Money Mastercard I get 1% cash back.  If I pay by several other credit cards I have I don't get any cash back.

Also if I pay abroad for goods using most credit cards I am charged 2.75% foreign exchange rate levy but if I pay with my Nationwide Gold Visa card I don't pay any exchange rate levy.

Easyjet, Ryanair and many other travel companies also now charge more if you pay by credit card than on a debit card.

NGMsGhost wrote on Feb 29^th, 2008 at 4:20pm:

Easyjet, Ryanair and many other travel companies also now charge more if you pay by credit card than on a debit card.

That's because the card companies charge them a % of the amount you're paying (IIRC, it's between 1½% and 4%) and they want you, their customer, to pay the charge they have to pay to receive your money.

It keeps a lot of people in work these days, shuffling electronic money around from one organisation to another.

Heinz wrote on Feb 29^th, 2008 at 4:57pm:

That's because the card companies charge them a % of the amount you're paying (IIRC, it's between 1½% and 4%) and they want you, their customer, to pay the charge they have to pay to receive your money.

But then they make it grossly unfair by charging a flat fee which is an enormous percentage of a low value promo booking for one person but a much lower percentage of a more normal price summer holiday booking for a family of four.  Of course as they make so little profit on the low costs fares unless they sell expensive extras that things are probably deliberately rigged this way.

Janitor,

NGMsGhost beat me to it. I could list a bucket load of cases where you pay different fees depending upon your method of payment. I have just done so with a flight, ski pass and train journey. It is the norm in Europe.

Keith wrote on Feb 29^th, 2008 at 7:58pm:

NGMsGhost beat me to it. I could list a bucket load of cases where you pay different fees depending upon your method of payment. I have just done so with a flight, ski pass and train journey. It is the norm in Europe.

Janitor,

Of course I forgot to mention that if you make many online purchases through the www.quidco.co.uk or www.topcashback.co.uk websites then you can receive large cashback payments of up to £100 or more purely as a result of initiating your transaction through this website introducing and commission paying site.

Again this would no doubt be completely unfair in your book...............

I still stick by what i said,  the price  should be the price which ever way you pay, if your credit card wants to give you cash back for using that fine , how would you then feel if the company said you get cash back for that so i'm charging you 1% extra , if your local supermarket wants to give money off your phone bill vouchers would you want the company to charge you extra for using these vouchers, the way you pay should have no effect on the price .

There has been a lot of talk about how account departments work, late payers, etc. but nobody as yet could justify the £4.50 charge when I pay my quarterly BT bill electronically and on time.

Remember the bank charges debacle. Banks had to justify the actual charge made in trems of pounds/pence. I doubt if anyone could show me that it costs BT £4.50 (and not perhaps twopence) to process my non-DD BACS payment.

Janitor,

You are ignoring reality. Many organisations charge different prices depending upon how you pay. I quoted some examples above. Try booking a Ryan air flight the price will vary in several ways depending upon the payment type. In Europe it is very common. For instance I paid 5 SF to use my credit card to pay for a ski lift pass. If I had used cash there was no charge. Businesses offer discounts on quick payments and surcharges on late payments and discounts on DD and charges on C Cards.

They prefer ceretain types of payment methods so offer incentives for you to use them and disincentives for you not to use others.

If it is open and clear how can you possibly complain.

My parents have been with the same provider for 40 years, they pay the bill the same way they have for 40 years, at the post office the day after the bill arrives, i have a friend who is severely disabled and has to live off benefits, couldn't use a bank if they wanted to, also made harder due to all the high st banks closing the branches any where nearby, so has to use the post-office. Is it fair these people should be forced to pay more just because they can't use DD.

Another thing that intrigues me about the payment charge is that BT charge £1.50 per month - i.e. £4.50 per quarter.
As I pay my bill quarterly, how can there be a payment charge every month. As I don't make any payment during 2 months of the quarter, why am I being charged a payment fee?
>:(

NGMsGhost wrote on Feb 24^th, 2008 at 3:05pm:

Sadly many of those who can only pay by cash are considered such poor credit risks that they cannot get conventional bank accounts or credit cards.  Interestingly there is now a mastercard you can get without an address or credit score just by paying cash over the counter in various Paypoint type stores.  This works well for non credit worthy people online but unfortunately BT and various utility companies only accept direct debit because it is cheaper than credit card and being near monopolies they don't have to worry about losing customers due to only taking direct debit.

Actually, virtually everyone can have a 'basic current account' which offers direct debits and standing orders - however poor their credit rating is.

For those who do not have bank branches near them, you can pay in/withdraw money from these accounts at Post Offices.

Regards
Sunil

janitor wrote on Mar 1^st, 2008 at 12:53pm:

i have a friend who is severely disabled and has to live off benefits, couldn't use a bank if they wanted to, also made harder due to all the high st banks closing the branches any where nearby, so has to use the post-office.

A lot (most?) of banks now offer services via the Post Office.  I'm with A&L and Lloyds TSB and, on both, pay cheques in as well as withdraw cash at my village Post Office.


Quote:

If you have a basic bank account with one of the banks / building societies listed below you can take out cash free at the counter of Post Office™ branches using your card and PIN. Click on the links below to find out more about the services offered.    * Abbey    * Alliance & Leicester    * Bank of Ireland    * Bank of Scotland    * Barclays    * Clydesdale Bank    * The Co-operative Bank    * First Trust Bank    * Halifax    * HSBC    * Lloyds TSB    * Nationwide Building Society    * NatWest    * Northern Bank    * The Royal Bank of Scotland    * Ulster Bank    * Yorkshire Bank

What the latter part of this discussion is overlooking in my opinion is choice. Those of us who dislike DDs for the reasons I have listed previously, which are the usual ones (not anything to do with credit rating or wealth as some have wrongly presumed) will not choose to be a patron of any dictatorial enterprise which makes additional charges for not paying by DD, if they have a free choice. For instance I have chosen my electricity and gas supplier principally because they are one of the few who charge the same price per unit however you choose to pay them, even if you do not want to pay using DD!

It is all about freedom of choice. Just as the issue with non-09 NGNs being used as disguised premium numbers with unlimited chargeable call queuing is about there being no choice for consumers, if entities do not publish their underlying GN to which the revenue-collecting calls are directed, so it is with true line rental, and as it happens also with current water and sewerage services! There is no choice. For me a company which states their honest pricing and does not resort to tricks like attempting to make more revenue from the use of call centres using disguised premium numbers with call queuing will be the one I will choose, and I will shun the others!

Any student of even elementary Economics learns early on that monopoly is a bad thing in a Market Economy, simply because any commercial entity with a monopoly can hold consumers to ransom; it has total control over the price of the product or service which it markets. This is the continuing problem with water, sewerage and line telecommunications services. When they were privatised the implementation was decided upon by complete idiots like Thatcher, who was in reality only interested in panic selling of the nations family silver to try in desperation to reduce the enormous UK budget deficit caused by her government's total economic incompetence. The issue of monopoly was not properly considered for water, sewerage and line telecommunications and that is how we got into the total mess we are in now.

So this issue is really about the continuation of BT's virtual monopoly and SMP which has never been properly addressed, and is used by Ofcom to continue the status quo with their buddies, particularly in their freeing BT from price controls, although they still have virtual monopoly and SMP. Anyone with any business and economic understanding could see that this fatuous and corrupt move of Ofcom would lead to what is now emerging. BT still have in reality a complete monopoly of the PSTN. The fact that they sell some capacity to other providers on a supposedly wholesale basis in reality makes no difference whatsoever, since they can now set virtually all of the prices for their monopoly services on both a wholesale and retail basis. This is why there is hardly any difference in line rental cost between BT and any of the other providers; the other providers cannot compete effectively because BT in reality still control the PSTN pricing base, and use this to distort call pricing. This is why as soon as BT increase their prices for line rental (in the form of their supposed obligatory "Option" packages, now attempted to be disguised as "free calls" packages) all other providers charges for line rental immediately increase by virtually the same amount. BT continue to control the whole pricing structure.

So, the issue of DDs or not is part of this scenario. If there were real choice and real competition a consumer could decide to become a patron of a totally different service with its own independent pricing structure and a policy of not victimizing those who may choose not to pay by DD. (Any related true accounting and collection cost differences can easily be covered by charging interest on late payments.) However there is no such true choice in line telecommunications in the UK, because Thatcher and her puppet ministers clearly did not understand the first thing about real Economics, nor care what they were doing. So that is why some of us resent a dictat of paying by DD or otherwise being charged more - where there is no effective free choice. In my opinion the PSTN should be sequestered from BT and run as a service like TRANSCO. BT should be made to offer a telecommunications service to customers on the PSTN on the same basis as all other providers with no virtual monopoly and no SMP advantage. That is the only way now that the current distortion of competition can be ended. Other providers could then compete on the basis of a true level playing field and some could choose not to penalise their customers in the way in which BT are doing if customers do not agree to what BT dictates, and are able to do only because of their continued virtual monopoly and SMP; we would then see proper competition and BT would have to change their attitude or become a very much smaller player and a relatively unsuccessful company.

This is what is at the base of the true issue here with paying by DDs or not - freedom of choice. There is none effectively in line telecommunications in the UK!

Source: BBC News

http://news.bbc.co.uk/1/hi/england/nottinghamshire/7966625.stm

BT direct debit rebel loses case

A Nottingham man who took BT to court after being cut off in a row over how to pay his bill has lost his case.

Dennis Andrews, 85, refused to pay an extra £4.50 every quarter for not using direct debit, and when cut off sued for breach of contract.

At a preliminary hearing in Nottingham a county court judge ruled BT had acted legally and the case need not proceed.

Mr Andrews, who claimed BT was in effect charging him twice, now faces paying £2,000 in court costs.

BT changed its charging policy in May 2007 so that those paying by cheque faced an annual extra £18 charge.

The company said the charge was fair as it cost the company more to process non-direct debit payments.

Mr Andrews insisted his normal bill, paid by cheque, should cover all services including administration.

But Judge Robert Severn ruled BT had the right to vary the terms and conditions of contracts and Mr Andrews had been properly informed of all changes.

Looks like this judge is an establishment yes man with no concept of consumer rights.

What is alarming about the judicial system is just how unpredictable the interpretation of the law by different judges can be.

Quote:

BT changed its charging policy in May 2007 so that those paying by cheque faced an annual extra £18 charge.

It is not only people who pay by cheque who are penalised but everybody who does not pay by direct debit. I pay by electronic transfer and still have to pay the £4.50/quarter charge.

There may be some justification in BT claiming extra admin costs for handling cheques but it seems to me that electronic transfers are the same as direct debits as far as handling costs are concerned - virtually zero as they are automated.  The only extra cost I can imagine is if somebody doesn't pay and they have to send a reminder.  However this would not justify an annual charge of £18 for everybody

I wonder if the judge would have decided differently if electronic transfer rather than cheque payment had been put to him?

Quote:

It is not only people who pay by cheque who are penalised but everybody who does not pay by direct debit. I pay by electronic transfer and still have to pay the £4.50/quarter charge.

You appear to have missed the workaround.  Set up the Direct Debit payment system but still pay, a few days before, by electronic transfer.

The balance is therefore zero at the time the DD should be called, so it's not called.

People have a misconception about how direct debits work.

Any payment whether by cheque or BACS transfer will result in a single credit to that bank account.  

For direct debits, a whole batch of transactions are submitted by the originator and only one credit will appear on the bank statement.  If an individual direct debit is subsequently rejected, than that will be apparent 3 days after the original submission was processed.

Where the customer personally initiates the payment, the recipient will not be aware of when the funds are to be received and will need to review matters daily.

Direct debits mean much less work for the originators and in a large organisation efficiencies will result.

Below is the direct debit guarantee which all originators must abide by.

•      This Guarantee is offered by all Banks and Building Societies that take part in the Direct Debit Scheme.
The efficiency and security of the Scheme is monitored and protected by your own Bank or Building Society.
•      If the amounts to be paid or the payment dates change Gullands will notify you 28  working days in advance of your account being debited or as otherwise agreed.
•      If an error is made by ***** or your Bank or Building Society, you are guaranteed a full and immediate refund from your branch of the amount paid.
•      You can cancel a Direct Debit at any time by writing to your Bank or Building Society.
Please also send a copy of your letter to us.

Quote:

Direct debits mean much less work for the originators and in a large organisation efficiencies will result.

Can you quantify how much less work is involved in processing Direct Debits compared to electronic transfers or, putting it the other way, does the extra work handling electronic transfers cost £18/year - or perhaps only measurable in pennies?

Has anybody a view on how a court would look at a challenge similar to Dennis Andrews's if the issue raised was payment by electronic transfer rather than cheque? How might BT actually justify the £18/year penalty charge?

I offer a personal view, whilst very ready to hear the arguments from those who do not believe that BT should be allowed to offer a discount to those who pay by Direct Debit. (Discount / surcharge - BT draws its income from customers one way or another, it is simply a question of how this is balanced.)

For some time I was very reluctant to agree to Direct Debits, however my resolve weakened because of the difficulty in remembering to pay every bill at the right time. I have had a number of disputes about amounts collected by Direct Debit. On every occassion, my bank has honoured the spirit of the guarantee, invariably applying the terms with a bias in my favour and providing a refund at its expense. I cannot assert that everyone would always have the same experience with every bank, however I would advise anyone to accept the offer of a payment by Direct Debit, unless they had quite strong reasons not to do so.