Following a Freedom of Information request to the OFT, by Legal Beagles' EXC, regarding the OFT April 2006 Investigation into Credit Card Default Charges , the OFT, on 21 February 2006, have stated the following.
and more importantly
The document confirms an in depth analysis of costs of administering defaults took place with at least 6 of the 8 major credit card issuers. This analysis lead to the decision to implement the £12 threshold for intervention.
The UTCCR 1999 states
Effect of unfair term
8. - (1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.
(2) The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.
Therefore this is evidence that most default fees incurred in credit card terms and conditions predating April 2006 ARE UNFAIR and the entire term is UNENFORCEABLE. This would be a highly persuasive argument in court and as the OFT nor the FSA have restropective powers to force a refund of those charges we hope that following the OFT v Abbey National & Ors test case, the OFT will ask the high court for a declaration of the same, and credit card companies will be proactive in returning consumers money to put them back in a position had those unfair terms never existed.
You can read the full Freedom of Information request here - That Wild Billy Letter - FoIA request to OFT and ICO decision - Page 3 - Legal Beagles
The final response and heavily redacted documents can be found - Legal Beagles - View Single Post - That Wild Billy Letter - FoIA request to OFT and ICO decision
Charges are usually 'core terms' and therefore exempt from the test of fairness, however this is not so with default charges.
Following consultation with eight leading credit card issuers we have concluded that default charges in most credit card contracts across the sector are highly unfair in terms of the Unfair Terms in consumer Contracts Regulations (UTCCRs) and therefore unlikely to be enforceable against consumers
The UTCCR 1999 states
Effect of unfair term
8. - (1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.
(2) The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.
Therefore this is evidence that most default fees incurred in credit card terms and conditions predating April 2006 ARE UNFAIR and the entire term is UNENFORCEABLE. This would be a highly persuasive argument in court and as the OFT nor the FSA have restropective powers to force a refund of those charges we hope that following the OFT v Abbey National & Ors test case, the OFT will ask the high court for a declaration of the same, and credit card companies will be proactive in returning consumers money to put them back in a position had those unfair terms never existed.
You can read the full Freedom of Information request here - That Wild Billy Letter - FoIA request to OFT and ICO decision - Page 3 - Legal Beagles
The final response and heavily redacted documents can be found - Legal Beagles - View Single Post - That Wild Billy Letter - FoIA request to OFT and ICO decision
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