OFT's bank charges case 'flawed'

[Happyolddog]

The Office of Fair Trading's arguments on bank charges have "several flaws", the High Court has been told.

Mr Geoffrey Vos QC was defending Nationwide, one of eight lenders who have been accused of levying unfair overdraft charges.
The OFT wants the court to rule it can decide the banks' charges are unfair under consumer contract regulations.
Mr Vos said the building society supported the banks' belief that the rules did not cover their contracts.
Nationwide and the seven banks agreed to the test case to clarify their legal position after a mass of litigation, which has seen hundreds of thousands of consumers claim refunds totalling hundreds of millions of pounds.

Fundamental feature
Mr Vos was addressing the court on the sixth day of the hearing.
The barrister told the judge, Mr Justice Andrew Smith, that overdrafts were a fundamental feature of current accounts. Mr Vos said bank customers across the country drew on their unauthorised overdrafts to the tune of £600m a day, and this was part of the standard service used by millions of people every year.
He said the fact that a huge number of customers went into the red meant that charges for overdrafts were not an aberration, or for an ancillary service as the OFT had claimed.

The arguments put forward by the OFT, he argued, had "several flaws". He went on to set out the specific circumstances of Nationwide current accounts. He said the building society believed there were different contractual positions for customers in credit and those in the red.

Full story.
http://news.bbc.co.uk/1/hi/business/7206447.stm

[Guest]

Re: OFT's bank charges case 'flawed'

I think the Court can see this for what it is.

The UTCCR are concerned with the intention and effects of terms, not just their mechanism. If a term has the effect of an unfair penalty, it will be regarded as such, and not as a 'core term'. Thus a penalty cannot be made fair by attempting to disguise it as a core term. Such terms are not core terms if they are disguised penalties, by definition.

A 'disguised penalty' is a term calculated to make consumers pay excessively for doing something that would normally be a breach of contract - the OFT saw through this some time ago.

They are, conveniently, missing the point and the OFT covered this in April last year in a document entitled Unfair contract terms guidance, Consultation on revised guidance for the Unfair Terms in Consumer Contracts Regulations 1999.