OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

[Amethyst]

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.

Charges are usually 'core terms' and therefore exempt from the test of fairness, however this is not so with default charges.

and more importantly

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 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

[EXC]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Excellent Ame.

[Budgie]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Sorry but the thread title and the first post content appear to imply that ONLY default charges pre April 2006 may be regarded as unfair under UTCCR 1999.

The introduction of the £12 level was not intended as a FAIR level of charge it was only intended as a marker, above which the OFT would consider intervention.

All credit card default charges, whenever applied, are capable of being regarded as unfair because a FAIR level of charge has not actually been set. Furthermore, all credit card default charges remain capable of being regarded as penal under common law.

Claimants are therefore justified in reclaiming ALL DEFAULT charges WHENEVER they have been applied to their credit card accounts, additionally Claimants may claim for the return of any interest levied on the account as a direct result of the application of those charges. Additionally, Claimants are justified in claiming compensatory interest on all such monies actually paid across to the credit card companies and there is absolutley no reason why the compensatory interest claimed should not be compound interest rather than simple statutory court interest.

[Amethyst]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Its not meant to imply that it is stating that the OFT have confirmed in writing that was their view of charges pre April 2006. I havent mentioned interest. Without being tested in court with the exact costs of the individual card issuers a fair charge cannot be come to...however the OFT report indicated that could be fairer than the HIGHLY unfair pre april 2006 charge levels. It is still all reclaimable until its tested in court, obviously.

Basically it poos on the card issuers pretend argument that £12 is fair and they only have to refund back to that amount, when in fact the entire charge is obsolete and should be refunded. I know WE know that anyway but its another official view to quote at the banks.

Think it may be worth adding those statements into the prelim/lba/poc of cc claims?????

[Budgie]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Yes it would be good material to include in letters and POC.

However, I think we an come up with a better phrase than "poos on" PMSL

xx Hug XX

[Amethyst]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

humbugs :kiss:

[Amethyst]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR Test Cas

A bump for interest regarding cases taking place at the moment in London and the BIS consultation on credit and store cards.

[Amethyst]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Bump for consideration under the supreme court judgment.

[Budgie]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Yesterdays Supreme Court judgment makes absolutely no difference whatsoever to credit card claims.

Credit card charges are reclaimable in their entirety together with statutory or compound interest.

Depending on the tactics of the Credit Card Company claims are usually settled within a matter of days of reciept of your letter requesting a repayment or shortly after you have filed a court claim.

If you haven't already done so - FILE YOUR CLAIM ASAP.

Start a thread and request assistance if you are unsure about how to get things started.

Budgie

[EXC]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Yesterdays Supreme Court judgment makes absolutely no difference whatsoever to credit card claims.

No but in an odd way it could - at least in the unlikely event the Supreme Court judgment means the OFT stop pursuing bank charges, as it is fairly clear they didn't go the whole hog with credit cards to take up the Bank charges issue and the sticking plaster that was the £12 threshold only meant to last 3 years and so it's due to get picked up again about now and hopefully with a full UTCCR investigation.


''In the credit card default charges investigation we decided that, in the circumstances, the best way to achieve a swift reduction in fees across the market was the use of the threshold for intervention.

This avoided heavy handed, time consuming regulation and brought significant benefits for consumers in a relatively short timeframe. Following the credit card issuers’ decision to reduce their default charges, we concluded that further intervention in this area was no longer a priority for the OFT.

We were then able to direct our resource to the consideration of similar charges in the personal current account market.''


March 2006
''The Board was advised that the OFT will be publishing a statement on default
charges by the end of March, proposing a threshold. Although this approach is
not seen as a permanent or ideal solution (expected to last around 3 years), it
should improve the working of the market.''

[Budgie]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Probably the last thing we want at the moment is for the OFT to start playing around in the credit card charges arena again, unless of course it is somehow linked to a new UTCCR1999 action which includes bank charges ref regulation 5 and 8.

[Amethyst]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

http://www.parliament.the-stationery...sy/125/125.pdf

Just for interest 2003

2004 http://www.publications.parliament.u...sy/274/274.pdf




HBOS disclosed that the OFT’s decision on credit card penalty fees
cost it £25 million in 2006 (it implemented lower fees in August
2006). HBOS added that the decision would cost it an estimated
£60 million in 2007.

http://www.paymentscardsandmobile.co...ard-report.pdf

[leclerc]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

Part 3 of that report looks at the regulatory framework. That is the last link from page 51

[EXC]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

HBOS disclosed that the OFT’s decision on credit card penalty fees
cost it £25 million in 2006 (it implemented lower fees in August
2006). HBOS added that the decision would cost it an estimated
£60 million in 2007.

Blimey so if it cost HBOS alone £60m in a year, I wonder what the industry figure was. Sounds like it could exceed the £2.6b for overdraft charges in 2006 - despite the OFT claiming that they saw overdraft charges as causing greater consumer detriment.

[Curlyben]

Re: OFT confirms Credit Card Default Fees were HIGHLY UNFAIR under the UTCCR

How is this "cost" quantified.
Are they working on actual lose, or is this lose due to the reduce penalties, ie reduced income from fleecing their customers ??