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

[Budgie]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

Comments in blue

I don't think the consultation is either all encompassing or discrete. It's clear from the opening paragraph of the Executive Summary that the consultation's main purpose is to deal specifically with bank charges head on.

''The Supreme Court judgement in the OFT v Abbey National plc case in November 2009 held that charges in relation to unauthorised overdrafts were part of the price for the provision of the whole package of banking services received by a personal current account customer, and thus excluded from assessment under legislation on unfair terms in standard form contracts. As a result there is uncertainty as to how UK legislation on unfair terms in consumer contracts applies to charges that are “contingent”, or “ancillary” to the core of the contract. The decision of the Supreme Court has led to calls for the Government to bring forward legislative change, especially to address perceived unfairness in certain bank charges. The Coalition Agreement includes a commitment to “introduce stronger consumer protections, including measures to end unfair bank and financial transaction charges.”

Partially agree on the above but words on paper are fine, we had those from the Gov't during the Test Case and specifically whilst we were awaiting the Supreme Court decision. Didn't help us much then !!

Not quite sure what you mean by ''Why don't we propose that the UK Govt takes a position that clearly details the future nature of PCA's''

What I am a little concerned about is that unless the proposed new European Directive specifically covers PCA's we could basically end up in the same situation as we experienced with the test case, with the banks using the whole package of services argument, when the actual fairness of their charges is challenged in Court.

In our response to the Call for Evidence we will be focussing mainly on the Bank charges aspects. It's surely only one step onward from saying we would like the Govt to negotiate for a European Directive that includes directives in relation to the type of terms contained within PCA contracts to negotiate for a specific stand alone Directive or a section within an all encompassing directive that directly adresses all aspects of PCA's from a Consumer protection viewpoint. Personally I believe that is the approach we should adopt in our response to the BIS.

[Budgie]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

I guess what I am saying in summary is that I feel our response from LB to the Call for evidence should include ( in conclusion ) a call for the Govt to negotiate for a European Directive that specifically covers PCA's.

[EXC]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

I can't help thinking that it would be asking the impossible TBH. Convincing the Government take that that view and then them convincing the EU would be too tough.

On a separate note I've come a across a November 2006 report commissioned by the British Bankers Association - 'The Price Of Banking - An International Comparison'.

Contrary to the OFT's Market Study (focused on the same year) which found that unauthorised overdraft charges made up 30% of the overall price of current accounts, the BBA report did not feature (or even include) the charges as a 'price' as they considered them to be ''administration fees'' - so much for the package of services argument.

''The third point to remember is that this report focuses on typical products used by a typical consumer. This means that premium services where insurance and reward schemes can be combined into the product are not covered, nor are the administration fees that can be levied for the minority of customers who go overdrawn without authorisation (only authorised overdrafts are considered in the study).''

This would seem to suggest that not only are the charges contingent but also ancillary.

Although the report was independent, the data for the UK would have been supplied by the BBA. So in the same year that they submitted the data, they supplied significantly different data to the OFT PCA study.

[Tools]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

Question - How are they going to seperate off penalty fees (common law proportionate argument like credit card charges) and UTCCR disproportionate fees ? Some of those listed do to me seem like they would be arguable under common law - like credit card late payment fees, returning a book late ? or does that not matter and this brings all those charges under the one umbrella and thus confirming the common law into regulation ?

I don't think it matters as common law already exists alongside UTCCR as it is. The directive merely has the potential to widen the scope of UTCCR. But I take your point that if the directive ends up covering most of what common law penalties do now, it kind of makes common law redundant. Having said that I would imagine that bringing a case under common law would still be more straight forward than UTCCR.

The common law on penalties in contracts is relied on primarily and more frequently in business to business contracts and therefore any subsequent EU Directive on behalf of consumers is irrelevant to common law.

Penalties in common law would still have to exist for the protection in business contacts. Most of the caselaw on which we rely, you will note are business to business contracts. This Directive is aimed specifically for the protection of the consumer, which, as Amethyst noted, should ideally be expanded to include micro enterprises , sole traders and Trading As consumers. These are defined by the EU as having a headcount of under 10 employees and a turnover of under 2 Million Euros.

This would bring us more into line with the member states that already include those groups as "consumers" in their definitions and therefore are protected by this legislation.

[Amethyst]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

SSRN-Towards a Sharp Distinction between B2B and B2C? On Consumer, Commercial and General Contract Law after the Consumer Rights Directive by Martijn Hesselink b2b and b2c in the CRD

[Budgie]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

Have moved this evenings posts on the New European judgement onto a new thread

Here **** Important New European Court Judgement - June 2010 - Legal Beagles Consumer Forum

[pompeyfaith]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

http://www.justice.gov.uk/news/newsrelease180810a.htm

PF

[Amethyst]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

Cheers Pompey

1. Call for Evidence
2. Green Paper

18 August 2010
The Government has today launched a Call for Evidence seeking views on the European Commission’s Green Paper on potential changes to contract law.
The European Commission’s Green Paper, which was published on 1 July, sets out a number of proposals for progressing towards a European Contract Law for consumers and businesses. The Green Paper is based on the premise that the variety and divergence of contract laws operating in each of the EU Member States hinders the smooth operation of internal markets and makes dispute resolution across EU borders difficult. It looks at whether such situations require a European Union level response and details seven possible approaches ranging from maintaining the status quo through to the creation of a mandatory common code of contract law.
The UK Government’s Call for Evidence seeks views on the Commission’s proposed options and asks what, if any, changes are needed in cross-border contract law. The views and opinions gathered will help inform the Government’s response to the European Commission in the New Year.
Justice Minister Lord McNally said:
‘Contract law is a crucial aspect of trade and commerce and it is vital that these laws provide an environment of security which allows all parties to trade with confidence. When there is a dispute it is important that there is adequate legal certainty about how that dispute will be resolved. It is vital that we maintain this confidence when operating across EU borders.
‘The Government wants to hear views to ascertain whether changes to cross-border contract law are needed and to assess what the impact of each of the European Commission’s options will be. It is important that the Government provides a well-evidenced response to the European Commission and I encourage all those with an interest to share their views.’
The Call for Evidence seeks views on whether the current regulation of contract law and any divergence of laws at national level present any problems or concerns for businesses and consumers. It also asks for opinions on the advantages and disadvantages of each of the European Commission’s options and what an appropriate response might be.
Notes to editors:

1. The Government’s Call for Evidence on the European Commission’s Green Paper on policy options for progress towards a European Contract Law for consumers and businesses
2. The Government’s Call for Evidence, which has been developed in association with the Devolved Administrations, closes on 26 November 2010
3. The European Commission’s Green Paper on policy options for progress towards a European Contract Law for consumers and businesses
4. For more information contact the Ministry of Justice press office on 020 3334 3536 begin_of_the_skype_highlighting

[pompeyfaith]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

your welcome i have an RSS FEED for the MoJ

[Amethyst]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit


Interesting Response

Fundamentally, the question misunderstands the legal and practical position.
First, page 3 states that, following OFT v Abbey National plc and Others [2009] UKSC 6, “there is now uncertainty as to how UK legislation on unfair terms in consumer contracts applies to charges that are “contingent” or “ancillary” to the core of the contract”. In his Judgment in OFT v Abbey, Lord Walker said –
“…delivery of goods or peripheral extras may be disregarded as ancillary for the purposes of para (a) of Regulation 6(2) [the so-called ‘core terms provision’ or ‘price exemption provision’] but the charges for them, if payable under the same contract, are part of the price for the purposes of para (b).” (paragraph 46)
Lord Walker went on to explain (in paragraph 47) why the charges in question were not ‘ancillary’. Therefore, the Supreme Court has made it clear that charges for unauthorised overdrafts are not ancillary to the core of the contract, yet the Call for Evidence seems to assume that they are.

and

The Call for Evidence fails to identify any such charges in our sector. In broad terms, however, (if the question is intended to address unauthorised overdraft charges) such a change in the law would (i) amount to price control, (ii) detract from consumers’ responsibilities, and (iii) run counter to the interests of the large majority of consumers who manage their affairs prudently, in credit or keeping within authorised overdraft limits. These observations may also be valid in respect of other charges.

Regarding personal current accounts and unauthorised overdraft charges, the Call for Evidence fails to make a valid case for any change in the law. It would be sensible to allow the transparency exercises being carried out by providers and the OFT to complete and have time to bed in before reviewing the matter further. Therefore, we believe that the UK position in Europe should be one of no change.

BIS – Call for Evidence - Consumer Rights Directive: Allowing Contingent or Ancillary Charges to be Assessed for Unfairness :: BSA - Building Societies Association

[EXC]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

In effect the Building Societies Association are saying that the charges are transparent for reasons other than the providers making them transparent themselves.



Second, regarding clarity and transparency –

• there is already a requirement for relevant terms to be “in plain intelligible language” (Regulation 7 Unfair Terms in Consumer Contracts Regulations 1999 - UTCCRs).
• providers have done, and continue to do, a great deal of work with the OFT to
  ensure transparency of such charges; see –
  www.oft.gov.uk/OFTwork/markets-work/completed/personal/.

Third, in the light of the enormous publicity concerning bank charges in the last few years, it is almost inconceivable that there are many members of the general public who are not aware of them.
For all these reasons, we do not agree - in relation to unauthorised overdraft charges - with the basis for the stated premise. Therefore, it follows that we cannot agree with the premise itself.

[Amethyst]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

That's a terrible way to gain transparency of price isnt it, through campaign publiclity and a massive court case. Surely they could think of better ways

[Amethyst]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

Something which is interesting that we looked at after the test case judgment - which now relates to this - Legal Beagles Consumer Forum - View Single Post - OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

[EXC]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

Citizens Advice response to the BIS consultation Consumer Rights Directive: Allowing contingent or ancillary charges to be assessed for unfairness

[Amethyst]

Re: Negotiating Line for the Consumer Rights Directive on the Concept of Assessabilit

Legal Beagles response has been submitted today and is attached.

Huge thanks to everyone who has helped with this, especially EXC, Tools, Budgie and Tom Brennan.

Any comments welcome.