You would think that, generally speaking, banks are staffed by people who have a modicum of common sense.

On the following evidence, you might be inclined to change your opinion…

This is because the great and good staff of Lloyds TSB have been mailing debit cards direct to children as young as 11 without telling their parents.

Not essentially a huge huge problem if the children were buying nice things like toys, CDs and DVDs; unfortunately, this little glimmer of financial freedom saw a 15 year old buying cigarettes, alcohol, Viagra and porn videos over the internet!

• Visa enabled cards

In the past, any child aged 11 to 15 who held a current account was limited to debit cards that could be used only in cash machines or at bank branches.

The new cards could let them spend large sums on the web, potentially emptying their accounts, and all without their parents' knowledge (which is probably the whole point for them surely?)

The new cards are Visa-enabled, meaning they can be used anywhere that displays a Visa sign. The bank takes a fee from the retailer every time a card is used.

Lloyds TSB insists it is the parents responsibility to keep a check on how their children use the cards and says there are safeguards to ensure they cannot be used on adult websites.

But the 15-year-old clearly had no trouble buying goods supposedly restricted to adults!

His parents found out only when they received a Customs demand for duty on the cigarettes, which had been bought from a foreign websites.  The boy's father contacted Lloyds TSB, who then admitted that other parents had also complained.

Consumer groups and MPS have reacted with horror; LibDem Treasury spokesman Vince Cable said:  

'You would have thought banks might have learned some lessons from their irresponsible lending on credit cards and mortgages.

'But now they seem to be compounding the problems by adopting the grossly irresponsible policy of encouraging youngsters to spend on these debit cards.'

Chris Tapp, director of the money education charity Credit Action, said:

'It goes against common sense for banks to cut parents out of the loop... Parents need to have some control over how children are spending their money.

'Children may be swayed by advertising or other influences to make an impulse buy. Some may end up buying things that are unwise.

'We all know about the monsters that lurk on the internet in terms of the things that you can access with a card.'

• “Its up to the parents”

The father of the 15-year-old, who asked not to be named, believes Lloyds TSB is promoting illegal activity. He said:

'I pointed out to them that by enabling children to purchase goods illegally over the internet, they were aiding and abetting a crime.

'Their response was that it was not down to them to monitor other people's children, and that teenagers who were brought up well would not abuse this facility.

'It was not their policy to inform parents as they would expect the children to do so.'

Yes, and of course every child is going to tell its parents that its racking up dodgy purchases on debit card they probably shouldn't have,  aren’t they?

Lloyds TSB could not say how many cards have been sent out but it is thought to be many thousands; it also says it has a special system to prevent purchases from adult sites. It also said it was willing to investigate how the 15-year-old boy could buy cigarettes, Viagra and a fake ID despite the safeguards.

• A few questions to think about

The main point of this issue is that Lloyds TSB has been sending out cards without telling the parents or guardians of the children.

Lloyds TSB's excuse is that: 

'We don't always have the parents' contact details or know the family's circumstances. There are cases where the child might bank with us but the parent might not.'

It seems highly unlikely the bank has never had contact with these people. Think about it; do children go by themselves to open an account or do they go with an adult? 

Also, does the bank open accounts without checking with the parent and verifying things such as a home address? Or does it take the word of an 11-year-old? Unlikely; it speaks to the parents or guardians and if that is the case, then that’s the database Lloyds TSB should be using when pushing Visa-enabled debit cards onto children!

And if it can't get authorisation from a parent before issuing a card, for whatever reason, then tough! Lloyds TSB won't be able to set up a Visa account with that child so it shouldn’t be a huge loss.

Isn’t is odd that when you break your overdraft limit by just a few quid, the banks track you down quicker than Jason Bourne and hits you with penalties? Why the heck can’t they apply the same sort of urgency to locate children's parents?

Perhaps, if they dim we wouldn’t have children getting into bad financial habits (or worse!) at an early age.

So. whose at blame in this little situation? Is it Lloyds TSB for giving cards to kids who are going to misuse them? Or is down to the parents to monitor what their kids are doing with them?

Should children even be given Visa cards? Let us know your thoughts!

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Mortgage approvals are down, but it's not deterring the big banks, who are snapping up as much as much business as possible right now…

Whilst the banks are taking market share from traditional building societies, the overall number of mortgages approved for house purchases dropped sharply last month to the lowest level since records began back in 1993, new figures have shown. 

The Bank of England (BoE) said 42,000 mortgages were approved for purchases during the month, down from 58,000 in April and 63,000 in March. This is the thirteenth month running that approval rates have fallen and the figure for May is 64% below that for the same period in 2007.

Remortgaging, which has been making up the bulk of lending, was also down over the month, with the number of of you switching mortgages down 10% on April's figure.

A total of 90,000 remortgages worth £12.1 billion were approved in May, accounting for almost 60% of the £18.5billion of mortgages approved overall.

Looking to remortgage? Speak to an impartial adviser who can help.

Philip Shaw, chief economist at Investec was succinct about the figures saying they were:

"Terrible. There is no other way of describing them. It is really symptomatic of what is going on the housing market. The real danger is there is a knock-on effect to consumer activity."

Just £5.8 billion was advanced to those of us wishing to buy houses last month; this compares to 16.9 billion a year ago.

However, the interesting thing that has emerged is that the main high street banks have increased their share of the new mortgages despite lending us less money!

Their market share has grown from 56% in October 2007 to 77% in May 2008.  Two years ago, during the market boom, the new mortgage market was fairer when banks had about half of the market.

David Kuo, Head of Personal Finance at impartial website Fool.co.uk, says:

“The increasing dominance of banks in the market for new mortgages is a worry for anyone looking to step onto the housing ladder.

“The once level playing field that borrowers could count on for competitive rates has been tilted in favour of banks. Even worse, banks are offering unattractive deals knowing that customers are faced with little option but to accept them. 

“Fool.co.uk urges banks to treat customers fairly at this difficult time. The pendulum of power has swung in their direction, but they need to remember that a pendulum swings both ways. If they exploit their privileged position now, then they need to be ready to duck for cover when the pendulum swings back the other way.”

So, as banks expand into the mortgage market, are they playing fair when they provide our mortgages, especially when we are left with little choice?

Even if you don’t think they are, what can we do about it?

Let us know your comments.

Information © Fool.co.uk 2008

The appeal by the banks against the penalty charges ruling concerned a few of you.

But now there has been some good news!

This is because Barclays Bank says it will cut its penalty charges before the courts decide whether to the force banks to make cuts.

It is dropping its bounced payment charges from £35 to £8 and offering a buffer zone averaging £250.

If you stray into this zone, you will be charged a flat £22 for any five day period but you avoid the bounced payment charges. Go beyond it and you face up to five penalty charges a day, costing a total of £40.

The change, which takes effect in August, comes as 8 banks prepare to defend the fairness of their bank penalty charges in the high-profile High Court case.

Marc Gander, of the Consumer Action Group, gave the cut in charges a cautious welcome saying:

It vindicates our stance that the charges have been wildly excessive. It shows that for years they have been milking their customers for nearly £30 more than they needed."

But Andrew Hagger, of comparison firm Moneynet.co.uk, says:

"It is preempting what might happen after the court decision but it is a move in the right direction."

Claim back your bank penalty charges

The revamped current accounts are aimed at appeasing those of you who get hit with large penalty charges when you occasionally or accidentally go into the red.

From 18 August, the bank is launching its "Personal Reserves"; a buffer zone of about £250 which will be an authorised overdraft for five days.

All 11 million of you with a Barclay's current account will be told in advance of the new Personal Reserve for £22 for each five days you use it. You will not pay any additional interest payments.

If you go beyond this limit, (whether you choose the buffer or not), you will be charged £8 for each unauthorised payment you make while in the red; up to a maximum of £40 per day.

Currently, bounced payments prompt a charge of £35 a day. Guaranteed payments are charged £30 (up to a limit of £90 a month).

BARCLAYS' CURRENT OVERDRAFT CHARGES

• £30 for each guaranteed but unauthorised payment (up to three a month)
• £35 per day for bounced payments above overdraft limit
• 27.5% interest rate when paying back each unauthorised payment

BARCLAYS' NEW OVERDRAFT CHARGES

• £22 for each five-day use of the Personal Reserve
• £8 for each guaranteed but unauthorised payment
• £8 per day for each bounced payments above overdraft limit (up to five per day)

"If customers continue to run their accounts as they are now, we will earn less money than before from overdraft charges," said a Barclays spokeswoman.

If you are customer with a basic account or poor credit history, then you are excluded from the buffer zone deal.

Those of you potentially facing bigger bills from these new charges are those of you using the new buffer zone that have previously never exceeded your overdraft limit, and those of you making more than four unauthorised payments a day.

Barclays said that you would receive more advice about moving to a more suitable account if you repeatedly trigger the five-day Personal Reserve, at a cost of £22 each time.

The Office of Fair Trading (OFT) estimates that the banks make £3.5 billion a year in unauthorised overdraft charges. In 2007, Barclays paid out £116 million to those of who claimed back your penalty charges from them.

Peter Vicary-Smith, chief executive of consumer association Which?, said he hoped other banks would follow Barclays' lead, saying:

"We've long said that people want simple and transparent banking and Barclays is going in the right direction. We welcome the reduction in unauthorised overdraft charges and a simplification for customers. It would have addressed a lot of customers' problems if this had happened years ago. We are pleased to hear Barclays' commitment to fee-free current accounts, and hope that other banks will follow their lead."

The question is, will other banks follow suit and drop their penalty charges to a more acceptable level?

Also, are Barclays new charges fair or should they be even lower? (considering the true cost is more like £2 an item)

Better yet, should we all still wait and see what happens next in the High Court case?

Why not let us know what you think in the comments?

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Today was the deadline for the banks to appeal against the ruling that was handed down by the High Court last month.

And they have appealed successfully!

Mr. Justice Andrew Smith granted eight banks leave to appeal the court ruling over overdraft charges that looked set to allow thousands of you to reclaim your money, it was confirmed today.

The appeal by the banks against the OFT's jurisdiction in this matter is likely to be held by the Court of Appeal this autumn and a final ruling will be made by Christmas.

The original ruling opened the door for the OFT to challenge the controversial fees, which are charged when you go over your agreed overdraft limit or a cheque or payment is bounced.

Naturally, many of you had hoped that this would lead to a cap on the fees and allow you to reclaim excess penalty charges paid over the last six years.

• OFT to blame?

The Judge said uncertainty about the length of the OFT's investigation risked being unfair to people whose penalty charge refund claims are currently suspended in the courts.

"How long should we hold up the county court litigation?" he asked. "Are we talking months, years or weeks?"

"We are facing a lot of litigants who have not had their claims struck out and who should be in a position to pursue their claims."

When asked if the OFT would conclude its investigation this year, the regulator's barrister Richard Coleman said he did not know.

"The investigation is ongoing and substantial further work and consultation with the banks has still to be undertaken," he said. He explained that recent changes to the terms and conditions of some banks' current accounts had extended the timescale for the OFT investigation.

Later, however, the OFT said it would share its initial findings with the banks in mid- to late July.

The regulator and the banks agreed that if they could not agree on a fair level of charges, the issue would go to the High Court before Christmas for a ruling.

• What happens next?

In the meantime, your claims to have your penalty charges refunded will stay on hold.

The consumer group Which? said the decision to appeal was a "kick in the teeth" for those of you wishing to claim your money back.

Which?'s chief executive, Peter Vicary-Smith said:

"It'll be at least another year before people start to get their money back, during which time the banks will hit us with up to £3.5 billion in overdraft charges. The banks should do the right thing now, throw in the towel and start reimbursing the customers they've been overcharging all this time."

But let's face it, if you were a bank, you are not going to give up yet are you? Not when you can make an extra £3.5 billion and keep everyone on hold while doing so!

According to the OFT, banks earn up to £3.5 billion a year in unauthorised penalty charges; that equates to roughly £10 million a day. They make that by charging up to £39 for each bounced payment, when the actual cost may be as little as £2.

Is it any wonder this issue has struck a nerve with so many of you?

Over a million of you downloaded claim letters from consumer help websites to reclaim your penalty charges.

Many of you managed to win back thousands of pounds from the banks, who refused to contest the claims in court. Overall, it is thought that banks have repaid around £550 million so far. Since last summer the Financial Services Authority has allowed all current account providers to put complaints over charges on hold.

• Keep claiming!

Fool.co.uk commented on the banks appealing against the ruling on unfair charges, with David Kuo, Head of Personal Finance at Fool.co.uk, saying:

"The BBA has confirmed that banks will appeal against the High Court ruling on unfair charges. Customers can't stop them from doing this. But they can stop the clock from counting down the time allowed to submit their own claims.

"Currently, bank customers can reclaim unfair charges plus interest that occurred in the past six years. (Six years is as far back you can go in the courts.) But as each day passes, it's another day that they are missing out on what is rightfully theirs if they don't submit a claim.

"Therefore, anyone who plans to appeal should write to their bank to ask for the charges to be refunded. Follow up with a letter threatening court proceedings. Many courts will probably stay the majority of claims, but at least the six-year limitation on your claim will be halted too.

"Banks know that time is money, which is why they are appealing - they want to hang on to your money for as long as possible. But bank customers can get their own back. Submit your claims without delay so you can get your refund in full when banks run out of time and options."

So, time is money; don't delay in submitting your claim for unfair bank charges!

So, how has the banks' leave to appeal left you feeling?

What do you plan to do next?

Claim back your bank penalty charges

Claim back your credit card fees

Claim back your mortgage exit fees

Claim back your Payment Protection Insurance

After the saga of Northern Rock, it is not surprising that a few of us have lost confidence in our banks.

Now, nearly 1 in 7 of us need convincing their bank won't go bust as the credit crunch continues to roll ever onward.

As more and more British banks write off humungous sums of money related to the American sub-prime mortgage fallout (HSBC have just written off £2.55 billion), many of us are weighing up our banks' abilities to weather the credit turmoil.

• Who are Britain's most worried bank customers?

According to a banks customer confidence poll by money website Fool.co.uk, 1 in 7 of us are not entirely convinced that our bank won't go under (although we're sure the Government will probably bail them out anyway!)

However, fear of the unknown can play unwelcome tricks on our better judgment. For instance, 27% of us who have a mortgage or loan with Abbey (which also owns Cahoot) expresses concern. This is a bit weird, especially when you consider Abbey is part of Banco Santander; the third biggest bank in Europe.

Meanwhile 37% of you who have Alliance & Leicester as your bank of choice are anxious it might not get through the credit crisis too.

And the gang of you with the banking giant that is HBOS (owners of Halifax, Bank of Scotland and Intelligent Finance) also worry about its abilities to get through the credit crunch; over 20% of you are worried it may not survive.

• Who are Britain's least worried bank customers?

Of the "Big 5" banks, those of you with a loan or mortgage with the Royal Bank of Scotland, HSBC and Barclays are feeling the least anxious; only around 10% of you with these banks are having sleepless nights about them.

In addition only 14% of you with Lloyds TSB are breaking into a sweat about what the future holds for the Black Horse.

• Oh to be young and carefree

If you a bank customer between 18 and 25 then you are among the most laid back of customers; only 10% of you are anxious about your bank. This contrasts with half as many more people (16%) over the age of 50 who are frightened their banks won't survive the future.

David Kuo, Head of Personal Finance at Fool.co.uk, says:

"Banks can play a huge part in calming customers and avert a run on another British bank. We therefore urge them to come clean over the size of bail-out that they accept from the Bank of England's special liquidity scheme.

"Under the scheme, the Central Bank will pump over £50 billion of taxpayers' money into the credit market in exchange for mortgage debt. But it is vital that banks remember it is taxpayers' money they are accepting.

"They need to bear in mind that their solvency depends on their perceived solvency. In other words, any bank can encounter problems if enough customers believe it may be in trouble, as seen with Northern Rock. It isn't what people say that's damaging, but what they whisper."

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