Negotiating Line for the Consumer Rights Directive unfair charges ..... RESPONSE

[Budgie]

Re: Consumer Rights Directive consultation - unfair charges

My view is that whilst the charges themselves are levied in exchange for the package of services, the terms that trigger them are contingent. And it must be the terms - and not the charges - that count. This must be the case as most consumers don't pay the charges and even the banks themselves tell you that the charges are entirely avoidable. The charges are by there nature levied on a contingency.

But I don't think the question is relevant anyway as the consultation is seeking views in order to form new legislation - not to enshrine existing case law. Besides I doubt that the Supreme Court will be a consultee in the process.

Para 47 of the Supreme Court judgement

47. I can state my opinion much more briefly on the second main issue in the appeal, that is the application of Regulation 6(2), properly construed, to the facts. Charges for unauthorised overdrafts are monetary consideration for the package of banking services supplied to personal current account customers. They are an important part of the banks’ charging structure, amounting to over 30 per cent of their revenue stream from all personal current account customers. The facts that the charges are contingent, and that the majority of customers do not incur them, are irrelevant. On the view that I take of the construction of Regulation 6(2), the fairness of the charges would be exempt from review in point of appropriateness under Regulation 6(2)(b) even if fewer customers paid them, and they formed a smaller part of the banks’ revenue stream. Even if the Court of Appeal’s interpretation had been correct, I do not see how it could have come to the
conclusion that charges amounting to over 30 per cent of the revenue stream were (para 111) “not part of the core or essential bargain.”

The consultation is seeking views to shape the UK's negotiating position when discussions on the new European Directive start again in September.

Whatever eventually ends up in the new Directive will obviously depend on amendments that are raised, discussed and agreed between the members states from September onwards.

At the moment, if no amendments are made to the proposed new directive then we will end up with a new directive that contains the same potential problem as the existing UTCCR's. So whilst I agree it's important to get the basic answer back to the UK Govt that contingent/ancillary/non transparent charges MUST be capable of being assessed for fairness in all Consumer related contracts, it's also important to remember that as far as PCA's are concerned, whether we consider the terms or the charges themselves to be either contingent or ancillary is not born out by the Supreme Courts decision. Something needs to be included within our submission to reflect our views that the terms / charges are contingent/ancillary/non transparent so that this issue can also be raised ( used as a discussion point ) as part of the September negotiations.

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

Para 47 of the Supreme Court judgement

The facts that the charges are contingent, and that the majority of customers do not incur them, are irrelevant.

So they are contingent so if contingent charges become accessible as in Australia, then bank charges automatically fall under that ? or am I being over simplistic there. At the moment, as the law stands, them being contingent is irrelevant as they are part of the core price, but the proposal is to make contingent charges assessible even if part of the core ?

[EXC]

Re: Consumer Rights Directive consultation - unfair charges

That confirms it then. They're contingent.

I must say reading that piece again really winds me up:

''I do not see how it could have come to the
conclusion that charges amounting to over 30 per cent of the revenue stream were (para 111) “not part of the core or essential bargain.”

The 'bargain' in a consumer contract is surely what the individual exchanges in return for the services he receives. How can the 'bargain' be defined by the level of a particular element in the suppliers revenue stream. It's just complete bo****s.

[Angry Cat]

Re: Consumer Rights Directive consultation - unfair charges

Sounds like the CCD consultation:
http://webarchive.nationalarchives.g...page29927.html

UK, will fit to suit...

[EXC]

Re: Consumer Rights Directive consultation - unfair charges

So they are contingent so if contingent charges become accessible as in Australia, then bank charges automatically fall under that ? or am I being over simplistic there. At the moment, as the law stands, them being contingent is irrelevant as they are part of the core price, but the proposal is to make contingent charges assessible even if part of the core ?

As I understand it, one of the main questions in the document and in fact the purpose of the whole exercise is to examine items that are both contingent and core with a view to treating them essentially as either core or contingent.

[Budgie]

Re: Consumer Rights Directive consultation - unfair charges

You can, of course, have contingent terms which form part of the core terms of a contract, or part of the "bargain" that's perfectly normal and usual.

However, it's the nature of those contingent terms which is the important issue. Remember, that the Supreme Court appeal focussed on really narrow issues.

The nature of PCA's is so different to most other types of Consumer contract that I feel they need to be covered by either totally separate Consumer legislation or by particular legislation within any new "all encompassing" Consumer legislation.

The Aussies have gone some way towards solving the problem but personally I don't think they've gone far enough.

PCA's are such an important type of Consumer contract, relevant to Consumers all over the EU that I feel they could easily be made an exceptional case and specialist legislation could be specifically geared to them.

Question 3 of the Consultation is quite important :-

3 Are there matters the Government should consider in terms of the interpretation of concepts such a contingent, ancillary, non-transparent terms or “essential bargain” or other terms which are relevant?

[EXC]

Re: Consumer Rights Directive consultation - unfair charges

Question 3 of the Consultation is quite important :-

3 Are there matters the Government should consider in terms of the interpretation of concepts such a contingent, ancillary, non-transparent terms or “essential bargain” or other terms which are relevant?

Indeed and this is posing the question of a further defining of 'contingent/ancillary' in order to distinguish it from 'core/essential bargain' so they can give it it's own category.

[Angry Cat]

Re: Consumer Rights Directive consultation - unfair charges

Indeed and this is posing the question of a further defining of 'contingent/ancillary' in order to distinguish it from 'core/essential bargain' so they can give it it's own category.

The Gov. will fit to suit, as stated, prior!

[EXC]

Re: Consumer Rights Directive consultation - unfair charges

At the moment, as the law stands, them being contingent is irrelevant as they are part of the core price, but the proposal is to make contingent charges assessible even if part of the core ?

Yes, the Executive Summary in the consultation document seems to make that clear:

''6. The Government believes in principle that an economic case may exist to regulate charges which, from the consumer’s perspective, do not form part of the “essential bargain” between the trader and the consumer''

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

My understanding is, in PIL, and please correct me if this is over simplified too far,

The UTCCR in England currently allows only prices other than the main price to be assessed for fairness.

So, the prices involved in having a bank account (ignoring the Supreme Court Judgment for the sake of simplicity)

CORE/MAIN PRICE = Monthly charge for having an account (£9/£12/£25 a month regardless)

ANCILLIARY PRICES = Prices of things like Monthly / Copy statements, Cancelling Cheque fees, Ordering a bankers draft, replacement card etc - things which are services available in addition to the main price that you may or may not use.

and

CONTINGENCY PRICES = Prices for something happening like you go overdrawn, bounce a cheque, don't pay a certain limit in for the month etc.


The Core/Main price is the headline, what consumers look at, when choosing an account - that can be driven by competition. The banks can't collude to raise them because of competition law, and consumers wouldnt stand for it.

All the ancillary and contingency charges have to be fair and thus proportional to cost under the UTCCR.

Back to the supreme court judgment again, the issue was that contingency and ancillary charges could be argued to be PART of the main price for a contract. With the proposed changes, even if the contingency and ancillary charges are deemed as part of the main price, as in bank accounts above, they can STILL be assessed for fairness.



If that is so, then bloody excellent and its how it should have been from the start anyway IMO. The SCoJ showed up a flaw in the directive/UK interpretation of such, and they are now fixing it.

[WendyB]

Re: Consumer Rights Directive consultation - unfair charges

Well, have had a quick skip through, and I am of the opinion that......






I agree with everything you lot have already said!

[enaid]

Re: Consumer Rights Directive consultation - unfair charges

CORE/MAIN PRICE = Monthly charge for having an account (£9/£12/£25 a month regardless)

ANCILLIARY PRICES = Prices of things like Monthly / Copy statements, Cancelling Cheque fees, Ordering a bankers draft, replacement card etc - things which are services available in addition to the main price that you may or may not use.

and

CONTINGENCY PRICES = Prices for something happening like you go overdrawn, bounce a cheque, don't pay a certain limit in for the month etc.


The Core/Main price is the headline, what consumers look at, when choosing an account - that can be driven by competition. The banks can't collude to raise them because of competition law, and consumers wouldnt stand for it.

All the ancillary and contingency charges have to be fair and thus proportional to cost under the UTCCR.

Well how can they be fair and proportional to cost when you can get a SAR for £10 all your statements back for £5 and then be charged £28 for going overdrawn by £1.
I am sure there is more involved in getting all your info to you cost wise, than a machine clocking up that you have overspent.

[leclerc]

Re: Consumer Rights Directive consultation - unfair charges

Enaid, the cost of a SAR I believe is set down legislatively ie via the law. The other charges are certainly not set down in law.

[Angry Cat]

Re: Consumer Rights Directive consultation - unfair charges

http://ec.europa.eu/consumers/rights...placing_en.htm


Directives to be replaced by the Directive on Consumer Rights

• <LI class=texte>Sale of consumer goods and guarantees (99/44/EC) <LI class=texte>Unfair contract terms (93/13/EC) <LI class=texte>Distance selling (97/7/EC)
• Doorstep selling (85/577/EC)

[enaid]

Re: Consumer Rights Directive consultation - unfair charges

Enaid, the cost of a SAR I believe is set down legislatively ie via the law. The other charges are certainly not set down in law.

Well I thought this was all about, getting them set down in law, or have I got it all wrong?