For info: PIL aspects which the banks were refused leave to appeal

[Amethyst]

Four Banks requested permission to appeal the follow parts of the Judgement. the Judge turned them down, but its interesting to see what the banks are worried about with regards the judgement.

Abbey, Barclays, HBOS and Clydesdale


These are the extracts from the Judgement for ease of reference


Abbey’s terms

130. Abbey National plc was converted to a public company in 1989 and acquired in 2004 by Banco Santander, SA, Spain’s largest financial services group. It offers a range of different accounts to customers, and now has two main types of personal current account for new customers, the Abbey Current Account and the Basic Account. This judgment, as I explained at paragraph 37 above, is concerned only with the former, the account used by about 80% of Abbey’s personal current account customers. Accounts of this kind are opened by customers over the telephone, online or – most commonly – by completing an application form at a branch. However the account is opened, it is Abbey’s practice to provide the customer with three documents: a booklet called “Abbey Bank Account Terms and Conditions”, a leaflet called “The Abbey Personal Current Account Key Features and Price List”, and a User Guide. The current contractual documentation was introduced by Abbey last year, being sent to customers in late July and early August 2007 and coming into effect on 10 September 2007. (There have since been some immaterial revisions by way of up-dating, but I need not be concerned about them.)

131. It is stated at the start of the Terms and Conditions booklet that those conditions and “the written details explaining the key features of your current account … and the Price List… form the terms of your contract with us with regard to your current account”. This is confirmed by an entire agreement provision in condition 13.12 of the Terms and Conditions. Thus the User Guide is not a contractual document.

132. The Terms and Conditions booklet states that a customer, by opening an Abbey Personal Current Account, “can take advantage of the following main services”, which are identified as the “Deposits services”, allowing payments into the account, the “Overdraft services” and the “Payments services”, allowing customers to make withdrawals and payments to others. The “Overdraft services” is described in these terms: “you can request an overdraft and, if we agree to your request, you can borrow that money from us”. The customer is referred to condition 3 for his rights and obligations relating to the Overdraft service.

133. The OFT argues that the statement of the “main services” is not contractual, but just “some promotional introduction”, and characterises as “self-serving” the use of the expression “service” here and elsewhere. I accept that it is not always easy in this document, or indeed in many of the documents produced by Abbey and other Banks, to distinguish what is and what is not contractual, but (if it matter) I would regard this part of the booklet as being of contractual effect. I also find the use of the term “service” in this context natural and do not regard it as strained or contrived.

134. Condition 3 of the Terms and Conditions explains that there “are two different overdraft services available” on an Abbey Personal Current Account: the “Advance Overdraft service”, where the customer arranges an overdraft facility (or an increased overdraft facility) before seeking to overdraw, and the “Instant Overdraft service”. In the case of the former, an Advance Overdraft Fee is payable for the facility whether or not it is used. No charges are incurred for actual use of a facility, although interest is payable upon borrowings.

135. The focus of the OFT’s criticism of Abbey’s Relevant Terms is condition 3.3, which reads as follows:

“3.3 Instant Overdrafts
3.3.1 Without contracting us at all, you may also request an overdraft by trying to make a payment from your current account, where that payment would:
(i) cause your current account to go overdrawn without an Advance Overdraft in place; or
(ii) cause your current account to go over any Advance Overdraft limit we have previously agreed with you.
In either case this is referred to as an Instant Overdraft request.

3.3.2 You will be treated as making an Instant Overdraft request to us automatically if you do not have enough money in your current account, or enough unused Advance Overdraft with us and you do any of the following:
(i) you try to purchase goods or services using your debit card or by cheque;
(ii) you try to withdraw money from your current account;
(iii) you try to make a payment from your current account against a cheque which is later returned unpaid or against any other deposit in your current account which has not been processed; or
(iv) an automated payment you have set up, such as a Direct Debit or a standing order, is requested to be paid.

3.3.3 An Instant Overdraft Request Fee will be payable by you each time that you use the Instant Overdraft service. The Instant Overdraft Request Fee is payable regardless of whether we agree to give you the Instant Overdraft requested.
�� Important: Payment of the Instant Overdraft Request Fee may result in you becoming overdrawn (or, if you already have an overdraft, further overdrawn) even if we do not agree to give you the Instant Overdraft.

3.3.4 We may give you an Instant Overdraft or we may refuse to do so. If we agree, we will give you an Instant Overdraft to cover the amount of the withdrawal or the payment involved. An Instant Overdraft Monthly Fee will by (sic) payable by you monthly for every calendar month in which you have used our Instant Overdraft service (including where you continue to use an existing Instant Overdraft facility). Interest will also be payable by you at the Instant Overdraft Interest Rate on any money you borrow by way of an Instant Overdraft. If we refuse your Instant Overdraft request but your account is in credit or, if you have an Advance Overdraft and your account still has some unused Advance Overdraft on it, then you will not have to pay the Instant Overdraft Monthly Fee.”

136. Thus, by clause 3.3.1 a customer is said to make a request for an Instant Overdraft when he seeks to make a payment which would cause his account to become overdrawn without, or in excess of, an Advance Overdraft facility. An Instant Overdraft Request Fee is incurred whether or not Abbey agrees to the request. An Instant Overdraft Monthly Fee is contractually payable once in a statement period (a period equivalent to a calendar month) in which Abbey agrees to an Instant Overdraft request.

137. It is a feature of Abbey’s Terms and Conditions booklet that it includes a number of boxes interspersed among the conditions, these boxes containing notes marked by a picture of a finger pointing to the note and introduced by the word “Important”, such as that under condition 3.3.3 that is set out above. Another such note, which is the object of some criticism from the OFT as a “fanciful” extension of the concept of the customer requesting an instant overdraft, appears in condition 5, which is headed “Interest Rates and Service Fees” and explains that Abbey will take from the customer’s account the amount of Service Fees and Interest owed on the account. It is placed after condition 5.1.2 and reads:
“�� Important: If you do not have enough money in your current account, or enough unused Advance Overdraft with us to cover any Service Fees or Interest when we take from your current account the money to pay those Service Fees or Interest, you will be treated as having made an Instant Overdraft request and we will be entitled to charge you an Instant Overdraft Request Fee. An Instant Overdraft Monthly Fee and Interest at the Instant Overdraft rate will be payable.”

138. It is Abbey’s contention that these notes are not contractual, but are explanatory or advisory. Certainly this is true of some of them: for example, one states, “We consider cases of financial difficulties sympathetically and positively, and we have a specialist team that can help”. However, there are also statements in the conditions themselves which similarly are advisory: for example condition 5.1.3 states:
“You can discuss at any time any Service Fees or Interest you have incurred on your current account, or why your have paid them, by speaking to us in any of our branches or by calling us on …”.
There is not a demarcation between contractual conditions and non-contractual boxed notes. For example, in condition 6, which deals with joint accounts, there is a boxed note under condition 6.1.2 which reads:
“�� Important: if you open a Joint Account, you will both be liable to us for all money owed to us in relation to your Joint Account including any overdraft balance (whether an Advance Overdraft or Instant Overdraft), Service Fees and/or Interest, regardless of whether it is incurred by you or by your Joint Account holder.”It is true that this duplicates what is found in the conditions themselves, but I cannot accept that it is not of contractual effect. I consider that the note under condition 5.1.2 is also contractual.

139. I refer to condition 4.2 of the Terms and Conditions, which appears under the heading “Clearance of payments from your current account”. As far as material it reads as follows:
“4.2.1. When you give us an instruction to make a payment by internet or by phone, or if you instruct us to make a payment by cheque, the money will normally be taken from your current account on the same working day we receive your instruction. However, it will normally take 3 working days for the payment to reach the account of the person you want to pay and it may take longer than 3 working days for payments to be paid into accounts held with some financial institutions.
4.2.2 Automatic payment instructions, such as Direct Debits and standing orders, will usually be taken from your current account at the beginning of the working day that they are due.
4.2.3 There may be a delay between you using your card to make payment from your current account and the time on which that payment is taken from your current account. It is your responsibility to check that there are no payments pending against the balance on your current account before you request a withdrawal or payment from your current account
4.2.4 If you are in any doubt as to how long a payment will take to be processed, or whether or not a deposit will be available to cover it, you should speak to us at any of our branches or telephone us on ...”.

140. The Information about Instant Overdraft Request Fees in the “Key Features and Price List” leaflet states: “The Instant Overdraft Request Fee is dependent on the size of the transaction which triggers the request for the service (not the size of the Instant Overdraft you request)”. It then sets out four levels of fee, ranging between £5.00 (for a transaction up to £9.99) and £35.00 (for a transaction of £30 or more). The leaflet continues: “Instant Overdraft Monthly Fee (charged per calendar month during which an Instant Overdraft is used)”, and states a fee of £25.00.

141. Thus, adopting the OFT’s categorisation, the Relevant Charges for the Abbey Personal Current Account are these:

These charges are by way of the Instant Overdraft Request Fee. No special terms apply when a Relevant Instruction is supported by a cheque guarantee card, and Abbey levies no Guaranteed Paid Item Charge that is distinct from the Instant Overdraft Request Fee.
iii) An Overdraft Excess Charge, which is charged on a monthly basis at £25 per month.

142. The OFT criticises Abbey’s Terms and Conditions on the basis of “available funds” uncertainty, “timing” uncertainty, “Relevant Instruction” uncertainty and “scope” uncertainty”.

143. “Available funds” uncertainty: the OFT complains that Abbey’s terms and conditions do not sufficiently define what funds are available to cover payments, and specifically submits that, while condition 4.2.3 explains that there may be a delay between the time when a debit card is used to make a payment and the time when payment is taken from the customer’s account, the customer is not told when a payment will be taken. I reject both the specific and the general criticism: the time when payments are taken from the account depends upon when the payee claims payment from Abbey. Uncertainty of the kind of which the OFT complains is inevitable, and is not properly attributable to Abbey’s terms being unclear.

144. “Timing” uncertainty: the OFT complains that Abbey’s Terms and Conditions do not enable the customer to know at what time in the working day funds have to be in the account in order to cover a payment which the customer has mandated. The answer to this complaint is, to my mind, similar to that about available funds uncertainty. Abbey is not obliged to deal with the customer’s instructions or other processes affecting the balance of available funds at any particular time of the day, and the uncertainty of which the OFT complains is inherent in the operation of the banking systems and the freedom that the contract allows Abbey about how it operates the account, and is not attributable to lack of clarity in its Terms and Conditions.

145. “Relevant Instruction” uncertainty: the OFT says that Abbey’s terms do not make clear whether, if an Instant Overdraft Request Fee is debited to the account, this in itself constitutes a further “request” for an Instant Overdraft, which in turn would incur a further fee. It is not stated in condition 3.3.2 that this gives rise to a fee, and if it did, then the string of fees could continue indefinitely. However, condition 3.3.2 cannot be read as providing an exhaustive list of when a customer is to be treated as making a request for an overdraft: for example, it does not include when a customer issues a cheque to make a gift. Moreover, the note in the box under condition 5.1.2 states that if interest or charges are not covered by funds in the account or an arranged borrowing facility, the customer is treated as having made a request for an unarranged overdraft and is liable for an Instant Overdraft Request Fee and an Instant Overdraft Monthly Fee accordingly.

146. Abbey says that in fact an Instant Overdraft Request Fee is not levied in the circumstances contemplated by the OFT. It says that the information given in the boxed warning under condition 5.1.2 is wrong, but this is not a contractual term and the error does not mean that the contractual terms are not in plain intelligible language.

147. I do not accept that the boxed warning is not contractual and even if it were, I would not consider that this provides an answer to the OFT’s criticism. After all, even if the warning were non-contractual, the typical consumer reading the booklet would be seeking to understand the terms themselves in light of the warning; and neither condition 3.3.2 nor any other term provides the customer with specific information about the question that the OFT raises. As a result condition 3.3.2 is not expressed in language that is plain and intelligible in its context. It is irrelevant that (as I accept) Abbey does not in fact impose a Relevant Charge in these circumstances. In so far as a term is not in plain intelligible language, Regulation 6(2) does not prohibit an assessment of fairness.

148. The OFT makes a second criticism that the effect of condition 3.3.2 is obscure. Condition 3.3.2(iii) states that the customer is treated as making such a request if a receipt into the account is reversed and as a result there are not funds covering payment instructions that the customer has given. It is to be observed that the reversal of a single credit to an account might take away funds that would have covered several payment instructions given by the customer and the OFT says that the Terms and Conditions do not make clear whether in these circumstances the customer is treated as having made a single request (because the credit from one receipt is reversed) or whether the number of payment instructions determines how many Instant Overdraft Request Fees may be charged.

149. I am unable to accept this criticism. It seems to me that condition 3.3.2(iii) is clearly couched by reference to the payment instructions given by the customer and the number of “requests” is dictated by the number of payment instructions are not covered by available funds as a result of the credit being reversed. Abbey’s Terms and Conditions are in plain intelligible language on this point.

150. “Scope” uncertainty”: the OFT makes two further criticisms of the clarity of Abbey’s terms and conditions. (It is not important whether these criticisms are best regarded as “scope uncertainties” or fall into some other category.) First, the OFT complains that it is unclear whether a Paid Item Charge is incurred when a payment instruction does not cause the account to become overdrawn but increases the amount of an overdraft; and similarly whether an Unpaid Item Charge is incurred if payment of the Relevant Instruction would not create but would increase the amount by which the account is overdrawn. Condition 3.3.1, it says, suggests that a charge is not incurred in these circumstances, but condition 3.3.2 suggests otherwise.

151. I agree with the OFT’s criticism. To my mind the difference between condition 3.3.1 and condition 3.3.2 means that the terms are not in plain intelligible language.

152. Secondly, it is said that the terms are not in plain intelligible language as to whether an Instant Overdraft Monthly Fee is charged if the customer gives a Relevant Instruction during the month but payment is refused. The trigger for the Instant Overdraft Request Fee (under condition 3.3.4) is that the customer has during the calendar month “used [the] Instant Overdraft service”, but the terms do not specify whether the customer “uses” the service when he makes a request for an Instant Overdraft, even though Abbey in the event declines to pay.

153. Again, I accept the OFT’s criticism. There is an ambiguity in the expression “used [the] Instant Overdraft service” taken in isolation, and in condition 3.3.3 it covers both the position where an Instant Overdraft is granted and where it is refused. I readily accept that the focus of condition 3.3.4 is upon where an overdraft is granted: the second sentence of the condition refers to Abbey agreeing to the request for an unarranged overdraft, and the reference to the customer continuing to “use an existing Instant Overdraft facility” reinforces this. However, this does not provide Abbey with an answer to the point: as Mr Ali Malek QC, who represented Abbey, acknowledged, an Instant Overdraft Monthly Fee is not charged only where Abbey pays upon a Relevant Instruction but also when Abbey refuses to pay upon it and the resultant Instant Overdraft Request Fee takes the account into unarranged overdraft. Accordingly, despite the words in the second sentence of condition 3.3.4, “If we agree”, an Instant Overdraft Monthly Fee can result from the refusal to pay upon a Relevant Instruction. The meaning of the expression in condition 3.3.4 “used our Instant Overdraft Service” does not seem to me to be in plain and intelligible language.

154. I therefore consider that in three respects Abbey’s terms and conditions are not in plain intelligible language:
i) As to whether, if an Instant Overdraft Request Fee is debited to the account, this in itself constitutes a further “request” for an Instant Overdraft, which in turn incurs a further fee.
ii) As to whether an Instant Overdraft Request Fee is incurred when a payment instruction increases the amount of an overdraft; or would do so if paid.
iii) As to the meaning of “used [the] Instant Overdraft service” in condition 3.3.4.

[Amethyst]

Re: For info: PIL aspects which the banks were refused leave to appeal

Barclays’ terms
155. Barclays Bank plc has provided current account services on a “free-if-in-credit” basis since 1985. In 2000 it acquired the share capital of Woolwich plc and until recently offered banking services under the name of “The Woolwich” as well as under its own name. The majority of current accounts held by Barclays’ customers are “the Barclays Bank Account”. Some 5% of Barclays’ current accounts are “basic” accounts, “Cash Card” accounts.


156. When customers open a current account, they are provided with a Retail Customer Agreement (“RCA”) in the form of a booklet, a leaflet about “Our Bank Charges Explained and other important information” and a leaflet entitled “Accounts: Day-to-day banking”. (These are the documents for the Barclays Bank Account. Other types of current account have their own explanatory leaflet, but, apart from basic Cash Card Accounts, they are similar to that for the Barclays Bank Account.) The current RCA is dated February 2007.


157. The RCA states that the agreement between the customer and Barclays is contained in the general conditions in the RCA, in additional conditions and in “the application form or the appointment of bankers signed by you, the customer”. The additional conditions “include our charges and the interest rates…” and are in the leaflet entitled “Our bank charges explained and other important information”.


158. Condition 4 of the RCA is headed, “Credits to and payments out of your account”. Condition 4.5 explains the position if a cheque or other payment into the account is dishonoured or returned in the following terms:
“If any cheque you have paid in is returned to us unpaid or any electronic or other payment you have received is recalled we will debit your account with the amount of that payment, whether or not it goes overdrawn and even if we allowed you to make a payment or to take cash against that item. You may incur charges and interest on any overdrawn amount.”


159. Condition 4.9 provides that Barclays “may refuse to make any payment if you do not have enough money on the account at the close of the working day before the payment is due to be made”. It continues,
“In deciding whether you have enough money we take account of any authorised card transactions, any overdraft limit, any cheques we are treating as cleared, any instructions to make payments and regular payments which have not yet been paid from your account. We may tell you if you can make payments from your account against cheques which are not cleared. We do not have to take account of regular credits or any amounts received after we have decided not to make the payment”.


160. The OFT contends that there might be “potential confusion” in relation to uncleared cheques because condition 4.4 provides, “Your statement balance will show credits when your branch receives them even if they include cheques which are not “cleared”. However the bank can still return the cheque unpaid, eg for lack of funds. If it does so we will debit your account with the amount of the cheque”. However, to my mind it is clear that condition 4.4 is directed to the balance which may be shown in a statement from time to time; it is not to do with how available funds are calculated.


161. Condition 5.3 of the RCA provides:
“We shall be entitled to charge you fees whenever you use any of the services we make available to your account(s) from time to time. You will be given details of our fees for using these services (including our overdraft services, as explained in condition 7) either when you open your account and/or from time to time...”.


162. Condition 7 is headed “Borrowing from us”. Condition 7.1 reads as follows:
“We expect you to keep your account(s) with us in credit. However, we understand that from time to time you may need to ask us to make our overdraft services available to you. It is entirely within our discretion whether we agree to make those services available to you and we shall be entitled to charge you fees for considering whether we do so, as we explain below. ”



163. Condition 7.2 advises the customer that he should request overdraft services before the account goes into overdraft and says that, if the Bank agrees to such a request, it will tell the customer the limit of the overdraft that it is making available and any fees payable that the customer “must pay for this service, as well as the interest rate that applies to the amount of any overdraft that you use from time to time”. It is clear, I think, that in this context the expression “this service” refers to the facility rather than borrowing under it.


164. Condition 7.3 reads as follows:
“If you do not request us to make overdraft facilities available to you in accordance with condition 7.2, you may still request the use of our overdraft facilities by seeking to make a payment on your account (for example by writing a cheque or by using your debit card or making a standing order or direct debit payment) even though there are insufficient funds standing to the credit of your account to meet such a payment. When you seek to make such a payment, or if such a payment would cause you to exceed the limit of an overdraft agreed with you in accordance with condition 7.2, it shall be entirely within our discretion whether we agree to process your payment. Whether or not we do so, we shall be entitled to charge you our fees for considering whether to process each such payment and interest, as set out in our additional conditions. When this condition applies to a guaranteed cheque, you will be deemed to have applied for overdraft facilities for which the fees set out in our additional conditions will be charged. ”


165. Condition 7.4 reads as follows:
“When we make our overdraft services available to you in accordance with condition 7.3, we may ask you to make an immediate payment into your account to reduce the amount of the overdraft we have agreed to make available to you.”
166. I must also set out Condition 12.1 of the section of Barclays’ Terms and Conditions that is headed, “Barclays Bank card conditions”. Condition 12 is headed “Cheque guarantee”:
“You can use the card if the card has a cheque guarantee logo on it and the same sort code as your accounts to guarantee cheques on Barclays accounts in your name. The following conditions will apply:
• You may only use one guaranteed cheque to pay for any one item. The amount of the cheque must not be more than the cheque guarantee limit shown on the card.
• You must not write a guaranteed cheque for more than the amount in your cheque account without permission from your branch.
• You cannot stop payment of the guaranteed cheque.
• You cannot guarantee cheques outside the United Kingdom and Gibraltar.”


167. In the leaflet “Our Bank Charges Explained”, there is a passage headed “If you go overdrawn without an agreed personal overdraft or exceed an agreed overdraft limit”. It advises customers to arrange an overdraft in advance to avoid “unnecessary charges”, and because it is cheaper to do so. It continues:
“You can overdraw up to your agreed limit at any time, but you must manage your account in such a way that the overdraft balance is substantially reduced on a regular basis. However, if you have not agreed or increased a limit with us in advance and go overdrawn or exceed your limit, you will be charged interest at the unauthorised overdraft rate and an administration fee will be charged. This is known as a Paid Referral Fee. Any payments which cause an excess will be paid at the Bank’s discretion and we reserve the right to refuse to pay any item that takes your balance beyond any agreed limit on your account. For customers holding the following accounts: Barclays Bank Account [and other specified accounts], a Paid Referral Fee of £30 is charged when we pay an item which results in your account going overdraft by more than £5 without an agreed limit or by more than £5 above an agreed limit. … The Paid Referral Fee will also be charged if we pay any further items which increase your unauthorised borrowing by £1 or more. However, you will only pay one of these fees per account per day and you will not be charged more than 3 fees per account within any monthly charging period. We will automatically refund the first Paid Referral Fee incurred, provided you have not incurred a Paid Referral Fee in the previous 12 months and have held your account for at least 12 months. If, however, your account does become further overdraft, you will incur additional Paid Referral Fees in line with the above tariff. Going overdrawn without an agreed limit or beyond an agreed limit is at the bank’s discretion”.


168. There is then a heading “Charges on unauthorised overdraft” and under that heading there are two items. The first is “Unpaid fee”, and it is stated: “if you go overdrawn without agreement or if you exceed your agreed limit we may return your cheques, standing orders or Direct Debits”. It specifies a charge of “£35 (maximum per account per day)”. The second item is under the heading “Paid Referral Fee” and reads, “A Paid Referral Fee is charged when you go above your Paid Referral Buffer. [This is a reference to the provision that the fee is incurred only if the customer goes overdrawn by more than £5.] You will not incur more than 3 fees within any monthly charging period”, and a charge is specified of “£30 (per account per day)”. The leaflet then states the interest rates on “unauthorised overdrafts”.


169. The leaflet also states under the heading “Important Information” that “Barclays is a responsible lender and when considering your application for borrowing, your financial circumstances will be appraised”, and advises the customer to contact them if he runs into financial difficulties. Mr Iain Milligan QC, who represented Barclays, submits that this imposes a contractual obligation on Barclays to appraise a customer’s financial circumstances when it receives a Relevant Instruction. Given the context of this statement (for it is with other information that is not contractual) I do not consider that this is of contractual effect, and in my judgment Barclays does not make such a contractual commitment.


170. Thus, Barclays’ Relevant Charges are the following:
i) An Unpaid Item Charge, called an Unpaid Fee, which is £35 and is limited to one charge per day.
ii) A Paid Item Charge, called a Paid Referral Fee, which is £30 a day and is subject to various exceptions and qualifications. Barclays does not levy a distinct Guaranteed Paid Item Charge.


171. Barclays’ terms are criticised on the basis of “available funds” uncertainty and “Relevant Instruction” uncertainty.


172. “Available funds” uncertainty: condition 4.9 of the RCA says that, in deciding at the end of the working day before a payment is due to be made whether a customer has sufficient funds to make it, Barclays takes account of “any authorised card payments … any instructions to make payments and regular payments which have not yet been paid from your account”. The OFT, as I understand the criticism, suggests that a customer might take this to mean that Barclays reduces the available balance to provide for payments which are expected to fall due not on the same day but at some time further in the future. To my mind, that is far-fetched and is not an interpretation of the condition that would be entertained by the typical customer. I cannot accept that the RCA is not in plain intelligible language in this respect.


173. The OFT also makes a criticism of Barclays’ terms that it is unclear what credits are brought into account in deciding whether there are sufficient funds to meet a payment instruction, and in particular about the position if there is a credit item to the account on the day that a payment falls to be made. I reject this criticism of Barclays’ terms: again the position is made clear in condition 4.9.


174. “Relevant Instruction” uncertainty: the OFT argues that under Barclays’ terms it is unclear whether if a cheque is returned or if a payment is recalled and funds are therefore debited from the customer’s account, this is treated as a “request” by the customer for an unarranged overdraft so as to give rise to a Paid Referral Fee. Barclays argues that a Paid Referral Fee is clearly incurred in these circumstances, but I am not persuaded that this is made clear to the typical customer. After all, the name “Paid Referral Fee” connotes that it is a fee payable because an instruction is “referred” for consideration before being paid, and then (in the words of the “Our Bank Charges Explained” leaflet) an “administration fee will be charged”. No payment will be “referred” before being made if the account becomes overdrawn as a result of a credit being reversed. Of course, condition 4.5 tells the customer that he might incur charges “on” the overdrawn amount, but it does not specifically refer to
charges being incurred because of the process whereby it becomes overdrawn. I agree with the OFT that the reference to “charges” in condition 4.5 is not plain and intelligible in this respect.


175. The OFT makes a further criticism of the clarity of Barclays’ terms. It observes that in condition 7.3 it is said that the customer might request use of overdraft facilities “for example, by writing a cheque … or making a standing order or direct debit payment”, and suggests that the customer might not appreciate that what is important is whether there are funds when the payment instruction falls to be paid, rather than when the customer issues the payment order. I consider it unrealistic to think that a customer might be so confused.


176. In my judgment, condition 4.5 of Barclays’ terms is not in plain intelligible language, but I reject the other criticisms of them.

[Amethyst]

Re: For info: PIL aspects which the banks were refused leave to appeal

Clydesdale’s terms


177. Clydesdale Bank PLC is a member of the National Australia Bank Group. It does business under both its own name and as Yorkshire Bank. Clydesdale offers several different types of current account but the majority of its current account customers (some 85% of the Yorkshire customers and some 80% of the Clydesdale customers) have a “Current Account Plus”. Leaving aside the customers with its basic “ReadyCash Account”, the other current accounts do not, I understand, materially differ from the Current Account Plus.


178. The Clydesdale’s practice is to give all new Current Account Plus customers a booklet entitled “Managing Your Current Account”. It describes the Current Account Plus as “an account that gives you straight forward day-to-day banking” and indicates that among its features an overdraft is available “subject to status”.


179. The conditions that govern the operation of Clydesdale’s current accounts (including Current Account Plus) are set out in a folding leaflet. Condition 2 explains that the conditions are split between “Product Specific Conditions”, which apply only to the particular account that the customer has, and “Universal Conditions”, which apply to all relevant types of current accounts. There is also a tariff leaflet, entitled “Current Account tariff for personal customers”, which contains contractual provisions. If the customer has a bank card there is a third relevant contractual document called “Account card”.


180. The conditions leaflet states that a Current Account Plus customer may ask to borrow from the Bank by overdraft, and continues at condition 3.2.2 and 3.2.3 as follows:
“On this account
3.2.2 you may ask to borrow from us by overdraft (see Condition 8)
3.2.3 if you make a request for Unplanned Borrowing under Condition 8.3, the fees applicable to your Current Account Plus under that Condition are:
(a) if we refuse your request, the Returned Item Fee; or
(b) if we agree to your request, the Daily Unplanned Borrowing Fee, the Monthly Unplanned Borrowing Fee and the Cheque Card Overdraft Fee, where relevant. In addition, we will charge you interest on any borrowing under Conditions 8.4 and 9; and … ”.
Unplanned Borrowing means “borrowing which is the result of our agreement to a request from you under condition 8.3 for a temporary overdraft or a temporary increase to an existing overdraft to cover a Payment Item for which you do not have sufficient Available Funds”, and “Payment Item” means “any cheque, standing order, Direct Debit, cash withdrawal, Card transaction or other payment instruction relating to your Account”.



181. Condition 7.1 provides that payments will be made from the account provided they are duly authorised by the customer and “either there are sufficient Available Funds or we agree to make the payments in accordance with condition 8.3”. The term “Available Funds” is defined as meaning “funds that have been Cleared for Use plus any undrawn amount available to you on the Account under an overdraft facility arranged with us in advance under Condition 8.2”. “Cleared for Use” in turn is defined as referring to “the point at which funds from a cheque, or other order, paid into an Account can be drawn upon”.


182. Condition 8 states that the customer may make a request to borrow by overdraft in two ways (provided the “Product Specific Conditions … applicable to your type of Account say that you may ask to borrow from us by overdraft”). The leaflet advises that the customer should “normally discuss with Your Branch any overdraft that you need, and get our agreement to your request, in good time before your Account becomes overdrawn”. This wording was criticised by the OFT as “self-serving propaganda” because a contractual provision is unnecessary to allow the customer to make a request of the Bank. While that is undoubtedly so and therefore this provision does not add to the parties’ contractual rights or obligations, it does not seem to me unnatural or objectionable that Clydesdale should in this way draw together for the customer how overdrafts can be obtained on a current account. The leaflet explains that if the Bank agrees to the request this will “usually be cheaper… than to request it from us under Condition 8.3 by trying to make a payment for which you do not have sufficient Available Funds”. Condition 8.2 explains that if the Bank agrees to the customer having an overdraft facility on his account, it will confirm the terms of the arrangement in writing and “may charge you an arrangement fee for this service”.


183. The charges which are the subject of this litigation arise from requests under Condition 8.3, which reads as follows:
“You may also request that we make a temporary overdraft available to you (or temporarily increase the amount of your overdraft ) simply by attempting to make a payment from your Account (for example, by writing a cheque, or using your debit card, or making a standing order or Direct Debit payment) for which you do not have sufficient Available Funds.

8.3.1 We do not have to agree to your request made in this way. If we do not agree to your request, we will charge you a Returned Item Fee for dealing with your request and for returning the Payment Item unpaid….
8.3.2 If we do agree to your request made in this way, we will pay the Payment Item and make funds available on your Account temporarily for that purpose. We will charge you where appropriate the fees stated in the Product Specific Conditions (see Condition 3) applicable to your Account for this service. These fees are:
(a) The Daily Unplanned Borrowing Fee
…
The Daily Unplanned Borrowing Fee will be charged on [Current Account Plus and other accounts] for each day on which we make a payment in response to a request from you under Condition 8.3 and where the borrowing on your Account at the end of that day exceeds the Available Funds by more than the Buffer Amount stated in the Tariff. This Fee will be debited to your Account as it becomes chargeable, without any further notice to you.
(b) The Monthly Unplanned Borrowing Fee
…
The Monthly Unplanned Borrowing Fee will be charged on [Current Account Plus] for each calendar month in which your Account is at any time overdrawn, unless your overdraft remains at all times during that month within any relevant overdraft limit that we have agreed with you in advance under Condition 8.2. The Buffer Amount does not apply to the Monthly Unplanned Borrowing Fee. We will notify you of the Monthly Unplanned Borrowing Fee at least 14 Days before it is debited to your Account; and
(c) The Cheque Card Overdraft Fee
…
The Cheque Card Overdraft Fee will be charged on [Current Account Plus and other accounts] whenever we make a payment in response to a request from you under Condition 8.3 which we would have refused but for the fact that your request was made by use of a cheque backed by a cheque guarantee Card. This Fee will be debited to your Account as it becomes chargeable, without any further notice to you.
The amounts of these fees are shown in the Tariff.”



184. The term “Buffer Amount” is defined as meaning “the amount in excess of any Available Funds by which you may overdraw the Account without incurring the Daily Unplanned Borrowing Fee”.



185. I should also refer to the Account card leaflet, the leaflet that covers the terms and conditions governing the use by the customer of a card issued by Clydesdale, that is to say a card that may be used to withdraw cash at an ATM or to guarantee cheques or as a debit card to pay for goods or services. Condition 3.3.2 explains that where a supplier agrees to accept payment by an Account card, and has sought authorisation from Clydesdale before completing the transaction, the amount available to the customer in his current account with Clydesdale is correspondingly reduced, even though the amount might not have been debited to the account.



186. Condition 6.1 of the Account card leaflet states under the heading “Payment and Charges”:
“Charges for the use of the Card will be contained in the Tariff and/or in any other document containing Card charges which we may send to you. Charges for additional services will be advised at the time you request the service or when you ask.”



187. The tariff leaflet states a debit interest rate for planned borrowing and (at a rate of interest more than double that for planned borrowing) unplanned borrowing. It states that the daily unplanned borrowing fee is £25.00, and that the monthly unplanned borrowing fee is also £25.00. The Cheque Card Overdraft Fee is £35 per item. A note refers to the buffer amount and states that unplanned borrowing within the buffer amount will not attract the daily unplanned borrowing fee, the buffer amount “currently” being £25.00. The tariff leaflet also states under the heading “Other Day to Day Charges” that the “Returned Item Fee: Standing Orders, Direct Debit and Cheques which you authorise but which we return unpaid” is £35.00 per item.



188. Thus, Clydesdale’s Relevant Charges are:
i) An Unpaid Item Charge, called a Returned Item Fee, which is £35.
ii) A Paid Item Charge, called a Daily Unplanned Borrowing Fee, which is £25, subject to the “buffer” and a limit of one per day.
iii) A Guaranteed Paid Item Charge, called a Cheque Card Overdraft Fee, amounting to £35. This is charged only when, but for the payment being covered by a cheque guarantee card, Clydesdale would have refused payment.
iv) An Overdraft Excess Charge, the Monthly Unplanned Borrowing Fee, which is £25.



189. The OFT criticises Clydesdale’s Terms on the basis of “available funds” uncertainty, “timing” uncertainty, “Relevant Instruction” uncertainty and “scope” uncertainty.


190. “Available funds” uncertainty: the OFT’s complaint is that the expression “Available Funds” is defined by reference to funds that have been cleared for use, but the definition does not say when payments reduce the amount of Available Funds. As a result, it is said, the meaning and effect of condition 3.3.2 of the Account card terms is obscure, because it is unclear how the amount of Available Funds might be reduced by use of the customer’s Account card before the funds are debited from the account.


191. I reject this criticism. Any customer would realise that the amount of Available Funds would be reduced by payments made from the account. Condition 3.3.2 deals with the position where a supplier has had the Bank authorise the payment of a particular debit card transaction, and where therefore the Bank is committed to making the payment. It is readily understandable that, in those circumstances, funds are committed to the transaction, and that the calculation of what further funds are available in the account for other payments takes account of this. I consider that the language of condition 3.3.2 is plain and intelligible to the typical customer.


192. “Timing” uncertainty: the OFT says that the meaning and effect of condition 8.3 of Clydesdale’s conditions is unclear because, while it refers to the request for an unarranged overdraft being made by the customer “attempting to make a payment” (and so indicates that it is made when he makes the attempt to pay), the position is then obscured by the examples provided of when such an attempt is made, for example “by writing a cheque”.


193. I reject this criticism also. It is obvious that the balance of a customer’s account cannot be affected before the cheque is presented, and I cannot believe that any typical customer would suppose otherwise. The examples are clearly directed to how a customer might attempt to make a payment and not to the timing of the attempt, and I do not accept that the uncertainty that the OFT identifies is a real one.


194. “Relevant Instruction” uncertainty: the OFT says that it is unclear whether a Monthly Unplanned Borrowing Fee is incurred if the account goes into overdraft because interest or charges are levied. The complaint is again about condition 8.3: the first sentence refers to the customer’s request for a temporary overdraft and indeed condition 8.3.2 opens with further reference to the customer’s request. The statement about when the Monthly Unplanned Borrowing Fee is charged, however, refers simply to the account being overdrawn and no reference is made to the customer requesting a temporary overdraft.


195. The position is the more confusing for customers, the OFT argues, because the account might be taken into unarranged overdraft because an Unpaid Item Charge is debited to it; in other words, because Clydesdale has refused to pay upon a Relevant Instruction. However, the opening words of condition 8.3.2 suggest that the charges to which that condition relates, including the Monthly Unplanned Borrowing Fee, might be incurred if (and only if) the Bank agrees to the customer’s request for an overdraft.



196. Clydesdale does in fact levy the Monthly Unplanned Borrowing Fee when the account goes into overdraft because interest or charges are debited. The Bank argues that condition 8.3.2 makes it clear that it is entitled to do so whenever the account goes into unarranged overdraft, and it makes no difference why it does so.


197. The position, it seems to me, is not as straightforward as either the OFT or Clydesdale acknowledged in their submissions. As I understand it, the OFT suggests that the effect of Clydesdale’s terms might be that no Monthly Unplanned Borrowing Fee is incurred unless the account first goes into unarranged overdraft as a result of a payment instruction given by the customer. To my mind, nobody could reasonably so interpret Clydesdale’s conditions. The question is rather whether a fee is incurred if the account would not have gone into unarranged overdraft at any time during the month but for interest and charges being deducted from the account.



198. I agree with Clydesdale that the natural interpretation of the terms is that the fee is incurred wherever the account is in unarranged overdraft at some time during the month. This, it seems to me, is the true interpretation of the terms, notwithstanding that under Regulation 7 the meaning most favourable to the customer is to prevail if there is doubt about the meaning of a written term. I am, however, unable to accept that the position is clear as Clydesdale submits. In my judgment, the inconsistency in the wording of condition 8.3 that the OFT identifies is a real one, and as a result a typical customer might understandably be confused about the position. In my judgment, the condition is not in plain intelligible language in this respect.



199. “Scope” uncertainty”: the OFT further says that Clydesdale’s conditions do not make it clear when an Unpaid Item Charge is levied, which in turn might determine whether the account goes into unarranged overdraft, so as to lead to a Monthly Unplanned Borrowing Fee being incurred. (There might be debate whether this complaint is properly categorised as “scope” uncertainty, but that is unimportant.) Although the OFT acknowledges that the customer would probably suppose that the Unpaid Item Charge would be debited immediately, the OFT submits that Clydesdale’s terms do not make this clear, whereas in the case of other fees the customer is specifically told when the charge will be debited. (For example, in the case of the Daily Unplanned Borrowing Fee, he is told by clause 8.3.2(a) that the fee “will be debited to your account as it becomes chargeable, without any further notice to you”.)



200. I do not consider that Clydesdale’s terms are unclear about this in any real sense. In my judgment, it is plain that the Bank is entitled to debit the Unpaid Item Charge once it is incurred, and I reject the OFT’s contention about this.



201. I therefore conclude that Clydesdale’s terms are in plain intelligible language except in respect of the “Relevant Instruction” uncertainty.

[Amethyst]

Re: For info: PIL aspects which the banks were refused leave to appeal

HBOS’s terms
202. HBOS plc is the holding company of the HBOS Group, which was established in September 2001 by the merger of Halifax Group plc and The Governor and Company of the Bank of Scotland.


203. HBOS offers customers a variety of current accounts: a High Interest account, an ultimate reward account, a money back account, and a student current account as well as a standard current account. When a customer opens a current account, HBOS provides him with a brochure called “Bank Accounts, Special Conditions and Bank Account Conditions”, and an Interest Rates and Account Charges leaflet which is referred to in, and incorporated into, the conditions. HBOS’s conditions are dated October 2007 and came into force on 1 December 2007. (Similar documentation was
provided to existing customers, but for them the information in the brochure and the leaflet was gathered together into a single brochure.)


204. The brochure explains that all HBOS’s current accounts offer certain main services and facilities, which are referred to in the brochure as “Main Services”. They include these:
i) “You may specifically request, and we may agree to provide, an Arranged Overdraft which will allow you to borrow money from us up to a certain limit”
ii) “You may make an informal request for an Unarranged Overdraft, by instructing us to make a payment which, if we chose to comply with it, would make your account exceed (or further exceed) its overdraft limit, or if you have no Arranged Overdraft, cause your account to be overdrawn (or further overdrawn). (Unless we have guaranteed to a third party that we will make the payment, we do not have to comply with an informal request for an Unarranged Overdraft).”


205. Under the heading “Fees for our services” the brochure states that the Bank’s current fees are summarised later in the brochure and set out in the Interest Rates and Account Charges leaflet, and then “highlights some of the fees that you may have to pay for our Main Services and Additional Services”, and goes on to state this under the heading “Main Services”:
“If your account remains in credit, and we do not receive an informal request for an overdraft, then at present you will not usually have to pay any fees for having the benefit of the Main Services.
If your account remains within your overdraft limit and you do not make an informal request for an overdraft, then you will not usually have to pay any fees for having the benefit of the Main Services. You will have to pay interest on the amount by which you are overdrawn at a rate applicable to arranged overdrafts.
If you make an informal request for an overdraft then you will have to pay the following fees for having the benefit of the Main Services on your account:
1. If we comply with an informal request for an overdraft, then we are entitled to charge you a fee (called a ‘Paid Item Fee’). If we do not comply with an informal request for an overdraft, then we are entitled to charge you a fee (called an ‘Unpaid Item Fee’)
2. If you have an Unarranged Overdraft then we will charge you a fee every month (called an ‘Unarranged Overdraft Fee’) for so long as your account remains overdrawn or (if you have an Arranged Overdraft) overdrawn beyond your overdraft limit. We will also charge you interest on the amount of any Unarranged Overdraft at a higher rate applicable to unarranged overdrafts.”


206. There is then (after reference to Additional Services) a heading “What can you do to avoid or reduce overdraft fees?”, and the advice under it includes this:
“Contact us to seek to arrange an overdraft. If you require an overdraft, or an increase to an Arranged Overdraft, it would be in your interests to contact us to discuss your borrowing requirements as it will be cheaper for you to have an Arranged Overdraft rather than to make several Informal Overdraft Requests.”
The expression “overdraft” is defined in the Conditions as a “facility allowing you to borrow money from us on your account”, and an “Unarranged Overdraft” is defined as “an overdraft that has not been organised with us before you go into overdraft”.


207. The OFT criticises these provisions as devised to suggest that HBOS is providing a service when it is not in reality doing so. Thus, for example, it is said that the description of an “unarranged overdraft” as a “facility” (rather than simply a loan) is designed to present an unreal equivalence between an arranged overdraft and an unarranged overdraft. I am unable to agree that it is unnatural or misleading so to use the terms “overdraft” and “facility” in this context.


208. Condition 21 is about when HBOS can take money from the customer’s account. It states that it can do so, inter alia, to cover “any fee that you owe us on your account (including Unarranged Overdraft Fees, Paid Item Fees and Unpaid Item Fees)” and that HBOS may debit funds so whether the account is in credit or is overdrawn or goes into overdraft because of the debit.



209. Condition 23 introduces the provisions that set out when fees and charges may be levied, and condition 23.1 reads as follows:
“We can charge you charges and fees on your account for the services and facilities that we provide for you. Fees for overdrafts are explained in conditions 27, 28 and 29. Full details of our current charges and fees are contained in our Interest Rates and Account Charges leaflet. Please ask us for a copy of that leaflet. ”



210. Conditions 27, 28 and 29 are under the heading, “Borrowing from us”. Condition 27 is about “Arranged overdrafts”, explaining that interest may be charged on any money borrowed but not mentioning an arrangement or facility fee. Condition 28 is about “Unarranged overdrafts”, but before setting it out I should say that the expression “instruction” is defined as follows:
“An instruction is made by you when you tell us, by any means, to pay money out of your account. Your instructions may include card transactions, Direct Debits, standing orders, writing a cheque, ATM mobile telephone top-ups, CHAPS, international payments or any other payment instructions,
including those made through the telephone or on-line banking service.”
Condition 28 reads as follows:
“28.1 You may also make an informal request for an overdraft by giving us an instruction to make a payment which, if we complied with it, would make your account exceed or further exceed its overdraft limit or, if you have no Arranged Overdraft, cause your account to be overdrawn or further overdrawn. An overdraft which has not been arranged with us in advance is called an Unarranged Overdraft.
28.2 Whenever you make an informal request for an overdraft, we will consider it and decide whether or not to comply with it. We do not have to comply with any such request, unless we have guaranteed to a third party that we would make the payment requested.
28.2.1 If, on considering an informal request for an overdraft, we decide not to make the payment, we will inform you of our decision by letter, and we are entitled to charge you an Unpaid Item Fee. This fee will be collected from your account automatically 15 days from the date of the letter.
28.2.2 If, on considering an informal request for an overdraft, we decide to agree to it, or we have to make the payment because it has been guaranteed to a third party, we will inform you of our decision by letter and we are entitled to charge you a Paid Item Fee. This fee will be collected from your account automatically 15 days from the date of the letter.
28.3 We are also entitled to charge you a fee (called an Unarranged Overdraft Fee) for every month in which you at any time have an Unarranged Overdraft, which will be collected from your account automatically at the end of the following month. This is in addition to any other fees which arise under condition 28.2.
28.4 If you have an Unarranged Overdraft, we will charge you interest at the rate we set for Unarranged Overdrafts on that proportion of the amount which is unarranged. This rate will usually be higher than the rate we set for an Arranged Overdraft. This is in addition to any other fees which arise under conditions 28.2 and 28.3.”


211. Condition 29.1 states that interest rates and fees for overdrafts are set out in a leaflet, and advises where it can be obtained. Condition 29.5 provides, “At any time we may require you to pay us the whole or part of any overdraft, interest and fees or charges which you owe on your account”. At paragraph 29.7, HBOS give this advice:
“If you do require an overdraft or an increase to an Arranged Overdraft, it would be in your interests to contact us to discuss your borrowing requirements as it will be cheaper for you to have an Arranged Overdraft rather than to make several informal requests for an overdraft.”



212. The Interest Rates and Account Charges leaflet is entitled “Halifax Bank Accounts, Interest rates and account charges” (and, in the case of existing customers who were notified of HBOS’s new terms in November 2007, this information is set out in section 4 of the Conditions brochure). It provides for a Paid Item Charge of £35, for an Unpaid Item Charge of £35 (from 1 December 2007) and for an “Unarranged Overdraft Fee” of £28, this Fee being described as follows:
“An overdraft administration fee is applied when your account goes overdrawn without a pre-arranged facility or when it exceeds an arranged facility.”
(There are different rates for students, which I can leave aside: the differences are immaterial for present purposes.)



213. HBOS’s Relevant Charges therefore are:
i) An Unpaid Item Charge. This is £35 for most customers, subject to a limit of three charges on any day.
ii) A Paid Item Charge. This is £35 for most customers, again subject to a limit of three charges on any day. HBOS does not have a distinct Guaranteed Paid Item Charge.
iii) An Overdraft Excess Charge, called an Unarranged Overdraft Fee, which is payable on a monthly basis if there is a movement in the balance that creates an overdraft without, or in excess of, an arranged facility. This is a charge of £28, no more than one charge being levied in any month.



214. HBOS’s terms are criticised in respect of Relevant Instruction uncertainty and scope uncertainty.


215. Relevant Instruction uncertainty: the OFT complains that the customer is not told clearly whether Relevant Charges are chargeable when the account goes into unarranged overdraft because charges or interest is debited to the account or because a receipt previously credited to the account is reversed. It is said that the customer has to draw inferences from a number of clauses in order to ascertain the position (because, as I understand the OFT’s point, there are definitions of some relevant expressions, including “instruction”), and that the meaning and effect of the terms are
obscured by the introduction of the unreal concept of the customer making a request for an unarranged overdraft.



216. I am not persuaded that HBOS’s terms are unclear because certain terms are defined. The definitions are not surprising or difficult to understand, and the customer is not unduly diverted from the operative provisions by having to refer to definitions. I also cannot accept that there is any want of clarity (because of the references to the customer making requests or for any other reason) about whether Relevant Charges are incurred when the account goes into unarranged overdraft because interest or charges are debited to it or because a credit is reversed. In the case of Paid and Unpaid Item Charges, the terms clearly state that the charge is levied if the customer gives an instruction to pay money out of the account: there can, as I see it, be no doubt that these charges come about when the overdraft is the result of an instruction given by the customer and not otherwise. In the case of the Unarranged Overdraft Fee, on the other hand, the terms explain equally clearly that this is incurred when the customer has an unarranged overdraft. Although the terms contemplate that the customer might informally request an unarranged overdraft, there is nowhere any suggestion that this is the only way in which an unarranged overdraft can come about. Indeed, condition 21 makes it clear (if there were room for doubt) that charges may be levied if the account goes overdrawn because of sums taken by the Bank from the account.



217. I consider that it would be clear to the typical customer that HBOS may levy the Unarranged Overdraft Fee if the overdraft comes about because of charges or interest debited to the account or if a payment into the account is reversed, but may not impose other Relevant Charges in these circumstances. I reject the criticism of HBOS’s terms on the grounds of Relevant Instruction uncertainty.



218. Scope uncertainty: the OFT submits that there is inconsistency between HBOS’s terms and its Interest Rate and Account Charges leaflet about when Unarranged Overdraft Fees are charged. The terms refer to the fee being levied for every month in which the customer has an unarranged overdraft. The leaflet refers to “when your account goes overdrawn” which, the OFT argues, would not entitle HBOS to levy a charge if an account remains overdrawn, having become overdrawn in the previous month.



219. HBOS disputes this: it says that the contractual provisions must be read together, and then it is clear that an Unarranged Overdraft Charge is levied for every month in which the account has an unarranged overdraft. I agree that the Terms so provide, both in the description under the heading “Main Services” of when an Unarranged Overdraft Fee is charged and in clause 28.3 itself. However, it seems to me that the description in the leaflet of an Unarranged Overdraft Fee obscures the position: indeed its more natural meaning is that the fee is charged only for the month in which the account goes into unarranged overdraft. If a customer were seeking to find out when the fee is charged, he might understandably and reasonably go to the leaflet and, believing that he has found the answer there, look no further. If the leaflet is misleading (as I consider it to be), it is to my mind no answer that the position would be explained to a customer who looked elsewhere in the contract. In any case, taking the Terms and the leaflet together, to my mind the position is not set out in plain intelligible language.


220. I conclude that HBOS’s terms are not in plain intelligible language in this respect and only in this respect.