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responseS to MSE template letter

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  • responseS to MSE template letter

    from MSE


    Dear Mr Smith,

    We refer to your further letter regarding your complaint relating to unarranged overdraft charges. We note that your complaint appears to be based on a template. We consider your complaint to be about the level and, accordingly, the fairness or lawfulness of these charges.

    We are authorised and regulated by the FSA and are subject to routine monitoring by the FSA and work closely with them to ensure we adhere to all of the FSA's Principles.

    Your further letter raises a number of arguments. We do not accept that any of these arguments, whether taken together or individually, could give rise to a finding that our unarranged overdraft charges are or were unfair or otherwise unlawful. We respond to your arguments individually below.

    Your complaint now alleges that the level of the unarranged overdraft charges can still bechallenged under Regulation 5(1) of the UTCCRs on the grounds that the Supreme Court judgment considered a separate regulation, namely Regulation 6(2). This is a misunderstanding of the judgment and the UTCCRs.

    Regulation 5(1) sets out the basis on which terms within a contract may be assessed for fairness under the UTCCRs. Regulation 6(2) sets out exceptions to it. The Supreme Court found that Regulation 6(2) prevented the level of unarranged overdraft charges from being assessed for fairness under Regulation 5(1), in so far as the relevant terms are plain and intelligible. Given that your challenge is essentially that the unarranged overdraft charges are too high, your complaint is directly affected by the Supreme Court's judgment.

    Your complaint further alleges that the level of the charges gives rise to an unfair relationship under section 140A of the Consumer Credit Act 1974("CCA"). In our view, this argument proceeds on a false premise. The Supreme Court ruled that the charges are part of the price for the current account package as a whole. Under the CCA, therefore, as under the UTCCRs, the level of the charges must be assessed against all of the benefits which can be, or are, received under the current account contract. On this basis, our view is that the relationship, including the unarranged overdraft charges, is notunfair under section 140A. It is notable that the OFT also indicated in its December 2009 statement that a generic section 140A challenge would not have good prospects of success. Your complaint discloses nothing which would alter your prospects from those as assessed by the OFT.

    Your complaint further alleges that the application of unarranged overdraft charges creates an unfair cross-subsidy between those customers who pay these charges and
    those who do not.
    We do not consider that your argument is capable of justifying the conclusion that the charging terms give rise to a significant imbalance, to the detriment of the customer. As the OFT concluded, in its December 2009 statement, the allegation of cross subsidy has little prospect of success because it is not based on relevant considerations. The relevant approach is to assess the rights and obligations of the parties to the contract. The comparison is not between the bank and the whole body of its customers or between different groups of customers. The potential for some customers to pay more and others less is also clear on the face of the contract, and is the same for all customers when they enter into the contract; it is the manner in which the customer operates the account that determines how much is paid.

    Your cross-subsidy argument is also precluded by Regulation 6(2)(b) of the UTCCRs, which exempts the level of the price paid by customers, in exchange for services supplied, from being assessed for fairness under Regulation 5. Your argument amounts to an allegation that, for the customers who pay the charges, they are too high in relation to the banking services supplied. However, the Supreme Court has ruled that current account customers receive a package of services and unarranged overdraft charges are part of the price paid by customers in exchange for that package. Accordingly, since your argument is about the level of the price, as against the services supplied, it is precluded by Regulation 6(2)(b), in so far as the relevant terms are plain and intelligible.

    In addition, we do not consider that your argument is capable of justifying a finding of unfairness under section 140A of the CCA. The test of fairness under section 140A involves an assessment of the fairness of the relationship in each individual case. The issue of cross-subsidy therefore does not arise.

    Your complaint further alleges that charges are designed to multiply or to force customers into a cycle of debt. In our view this challenge relates to the level of the charges and is therefore precluded by the Supreme Court judgment.

    In any event, the relevant terms are similar to terms found to be in plain and intelligible language by the High Court, and therefore we do not accept that they can trap customersin any way. By finding our charging terms to be plain and intelligible, the High Court found that they were "sufficiently clear to enable the typical customer to have a proper understanding of them for sensible and practical purposes." Further, our notification services provide customers with the information they need to avoid repeat charges. We therefore do not accept that this argument can result in a finding of unfairness.

    Your complaint further alleges that the terms relating to unarranged overdraft charges are incomprehensible, and that this is unfair. We consider that this argument must fail, because terms similar to those about which you are complaining were found by the High Court to be in plain and intelligible language. In particular, the High Court accepted that a detailed explanation of the complex procedures required to operate a current account did not need to be made to customers, might detract from the information customers needed to know and would in any event not allow customers to know precisely how much money is in their account at any time, given uncertainties not within the bank's control such as when third parties (such as retailers) present transactions for payment. By finding our charging terms to be plain and intelligible, the High Court found that they were "sufficiently clear to enable the typical customer to have a proper understanding of them for sensible and practical purposes."


    Your complaint further alleges that we concluded the contract with you in bad faith. We maintain that in all of our dealings with our customers, we act in good faith.

    Your complaint further alleges that there is a lack of competition in the personal current account market. The OFT noted in its own report that it has found evidence of competition in the personal current account market and that banks can also demonstrate high consumer satisfaction. We do not therefore agree with you that there is no competition in the market. Irrespective of this point, however, we do not accept that any lack of competition could mean, of itself, that unarranged overdraft charges were unfair. Competition issues are regulated by the competition authorities, and are not an appropriate ground for the bringing of unfairness claims under consumer legislation.

    Your complaint further alleges that the charges were excessive in comparison with the level of borrowing which triggered the levying of the charges. In our view this challenge relates to the level of the charges and is therefore precluded by the Supreme Court judgment.

    In any event this argument overlooks two important issues. The first is that the costs of unarranged overdraft services are largely independent of the size of the overdraft. The second is that it is clear from the Supreme Court judgment that this comparison proceeds on a false premise. Given that the unarranged overdraft charges are part of the price for the personal current account package as a whole, they should be assessed as against all of the services available under that package, rather than being treated as payments made in exchange for the provision of credit on particular occasions.

    In light of the above, we are satisfied that the charges you seek to reclaim were properly charged and the outcome of the legal proceedings confirms our position. We are therefore not upholding your complaint and will not be refunding the unarranged overdraft charges you have complained about. You may consider this to be the Bank's final response.

    Should you remain dissatisfied you have the right to refer your complaint to the Financial Ombudsman Service and can do so for six months from the date of this letter. I enclose a copy of their leaflet for your convenience. Before you decide whether or not to take your complaint to the Ombudsman Service, you may find it helpful to consider the information about this subject on the Service's website at:

    Please be assured that the Bank will co-operate fully with any review they may choose to undertake.

    Yours sincerely,
    #staysafestayhome

    Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

    Received a Court Claim? Read >>>>> First Steps

  • #2
    Re: Natwest response to MSE template letter

    They are arguing the case wrongly imho or the letter is being interpreted incorrectly. They are not arguing fairness but price. That is the problem with 5(1) (e) because the word "disproportionate" can be interpreted as price rather than in the correct interpretation of the word.

    Wikipedia for example: "Not in fair or equal terms"

    Comment


    • #3
      Re: Natwest response to MSE template letter

      Odd that ALL the banks seem to be misinterpreting the letter. Kinda makes me think that they have had a get-together to decide on a common defence to anyone continuing with their claim

      Comment


      • #4
        Re: Natwest response to MSE template letter

        This is the key term:

        "5. – (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer."

        I am not sure whether (e) is a good enough fit necessarily.
        To remind us all "
        (e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;"


        Having re read the Directive I have to concede that I believe that (e) is in fact about price and therefore excluded.


        I don't think that you should refer to "the grey list" with regards to this but should be looking at where a transaction causes the bank not only to decide not to pay but where that charge then causes an unofficial request for an overdraft. That is where perhaps we need to think about significant imbalance in that the decision not to pay causes the consideration of extending the overdraft. Having re read the EC Directive UTCCR 5(1) (e) on the grey list is about price and is excluded(to clarify....point (e) should be excluded because of price).

        Comment


        • #5
          Re: Natwest response to MSE template letter

          Spot on Jester and nattie (well my opinion anyhows) -

          1. Jester'S right - i saw this letter for the first time today and then read some of the responses on MSE - it seems that banks are responding in the same manner, which means they must have sat down and thought it through - this is going to be a bitch of a fight with the resources they have at their disposal.

          2. The key nattie - is indeed the "term" - the term in the contract that permits the charge can only be argued on price or reasonablness. We've been there with the price - the defence to which was it's all part and parcel of the service....argue that...
          Disclaimer - This information about the law is designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although I go to great lengths to make sure my information is accurate and useful, I recommend you consult a lawyer if you want professional assurance that my information, and your interpretation of it, is appropriate to your particular situation.

          Comment


          • #6
            Re: Natwest response to MSE template letter

            We refer to your further letter regarding your complaint relating to unarranged overdraft charges. We note that your complaint appears to be based on a template. We consider your complaint to be about the level and, accordingly, the fairness or lawfulness of these charges.

            But isn't that what their response is...... a template letter ? It seems to me that its all they are capable of and are not answering anyones individual complaint or am I barking up the wrong tree as usual ?

            I thought that all the banks had agreed to look at each complaint individually and with sympathy, ho hum, obviously not if they are using templates.

            Comment


            • #7
              Re: Natwest response to MSE template letter

              What they say and what they do are two completely different things - or is it one thing, oh bugger can never remember....
              Disclaimer - This information about the law is designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although I go to great lengths to make sure my information is accurate and useful, I recommend you consult a lawyer if you want professional assurance that my information, and your interpretation of it, is appropriate to your particular situation.

              Comment


              • #8
                Re: Natwest response to MSE template letter

                Exactly, confuses the life of me too hun.

                Comment


                • #9
                  Re: Natwest response to MSE template letter

                  What the hell does it matter to Natwest if the letter WAS based on a template!

                  I think they have flagged up this "template" issue simply to intimidate, I find the whole letter rather intimidating.

                  :tinysmile_hmm_t2:

                  Comment


                  • #10
                    Re: Natwest response to MSE template letter

                    Originally posted by hicskis View Post
                    Spot on Jester and nattie (well my opinion anyhows) -

                    1. Jester'S right - i saw this letter for the first time today and then read some of the responses on MSE - it seems that banks are responding in the same manner, which means they must have sat down and thought it through - this is going to be a bitch of a fight with the resources they have at their disposal.

                    2. The key nattie - is indeed the "term" - the term in the contract that permits the charge can only be argued on price or reasonablness. We've been there with the price - the defence to which was it's all part and parcel of the service....argue that...
                    Price is definitely out since the level of charges cannot be argued and whilst I agree Regulation 5 is in the equation, the grey list (e) is not relevant since it talks specifically about price "disproportionate sum". It is about a significant imbalance in the contract and it is contrary to good faith. You have to argue on each and every single charge levied on a particular day. I suspect the letter could run for pages and pages if done rightly.

                    Comment


                    • #11
                      Re: Natwest response to MSE template letter

                      I can also see this being a huge problem - I think the banks have calculated their strategy very carefully and have sucked all and sundry into this void - it might be necessary to step back and re-think our strategy.
                      Disclaimer - This information about the law is designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although I go to great lengths to make sure my information is accurate and useful, I recommend you consult a lawyer if you want professional assurance that my information, and your interpretation of it, is appropriate to your particular situation.

                      Comment


                      • #12
                        Re: Natwest response to MSE template letter

                        Really shows that people HAVE to use their own situations and specific instances of unfair treatment, and their own words, to complain.

                        I can't see templated ANYTHING working including POCs. (Hence not having any for bank charges any more)

                        First thing anyone considering a claim or complaint is go through statements and banking history and pick out personal specific examples and see if they have a case.

                        If you have only had one or two charges over the six years then you really won't have a case, unloess they were actually incorrectly applied.
                        #staysafestayhome

                        Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                        Received a Court Claim? Read >>>>> First Steps

                        Comment


                        • #13
                          Re: Natwest response to MSE template letter

                          By Amethyst:
                          "If you have only had one or two charges over the six years then you really won't have a case, unloess they were actually incorrectly applied."
                          Then i recommend you see my thread "Is This Unfair" in the OFT section...

                          If you want a template that is?

                          http://www.legalbeagles.info/forums/...ad.php?t=21893
                          Last edited by hicskis; 24th February 2010, 08:14:AM.
                          Disclaimer - This information about the law is designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although I go to great lengths to make sure my information is accurate and useful, I recommend you consult a lawyer if you want professional assurance that my information, and your interpretation of it, is appropriate to your particular situation.

                          Comment


                          • #14
                            Re: Natwest response to MSE template letter

                            Havent read that yet Hicskis, just working down the new posts list.
                            #staysafestayhome

                            Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                            Received a Court Claim? Read >>>>> First Steps

                            Comment


                            • #15
                              Re: Natwest response to MSE template letter

                              I received the same letter except for the templated bit from RBS, I wrote back with clarification and they've responded by stating that's their last word go complain to FOS so naff off Mr great unwashed.

                              It is about a significant imbalance in the contract and it is contrary to good faith.
                              I agree with Ame this is such a subjective statement only individual case by case assessments should be attempted.

                              In the mean time I've SAR'd RBS and I'll be going thro' all the info with a comb that has fine teeth
                              Light travels faster than sound. This is why some people appear bright until you hear them speak.

                              Nemo me impune lacessit - No one provokes me with impunity. (Motto of the Kings of Scotland)

                              Comment

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