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

[leclerc]

Negotiating Line for the Consumer Rights Directive on the Concept of Assessability for Unfairness in Consumer Contracts | Consultations | BIS

Negotiating Line for the Consumer Rights Directive on the Concept of Assessability for Unfairness in Consumer Contracts

Open date: 08 Jul 2010
Closing date: 24 Aug 2010
BIS is seeking views to inform its negotiating position on the Consumer Rights Directive as to whether contingent or ancillary charges should be assessed for unfairness under the unfair contract terms provisions.


Background to Call for Evidence

The Supreme Court judgement in the OFT v Abbey National plc case has led to 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 EU Consumer Rights Directive is currently being negotiated, and will replace four existing Directives including the Unfair Contract Terms Directive, which forms the basis of the UK law on unfair contract terms. The Commission or Members of the European Parliament may seek to address the issue when the proposal comes up for debate in the Autumn. The UK Government therefore needs a negotiating line to take for subsequent discussions in the Council of Ministers as to whether contingent or ancillary charges should be assessed for unfairness.
Purpose of Call for Evidence

This Call for Evidence invites views on a number of specific issues to help inform the development of the UK Government’s negotiating position in advance of discussions in the EU’s Council of Ministers later this year.

Download the consultation

• Call for evidence. Consumer Rights Directive: allowing contingent or ancillary charges to be assessed for unfairness (PDF, 114 Kb)

Respond to this consultation

Email us:
david.a.evans@bis.gsi.gov.uk
Write to us:
David EvansConsumer and Competition Directorate
Department for Business, Innovation and Skills
1 Victoria Street
3rd Floor
SW1H 0ET





Tel: 020 7215 0335
Fax: 020 7215 0357

[Amethyst]

Re: Consumer Rights Directive consultation

lol Thanks Nattiedoodle x What do you reckon then ?

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

Well I think we have two weeks (why the heck didnt we see this before! thank goodness for Wendy!) to get our name added to the list of respondees (ie to respond).

These are the Questions

Questions

1 Do you agree with the Government premise that because charges are contingent, ancillary or not transparent, or otherwise not part of what a typical consumer would understand as “the essential bargain”, competition may not drive down the level of such charges as it ordinarily would?

2 Should any exclusion from the price exemption provision in the UTCCRs (Paragraph 6(2)) focus on:
􀂾
contingent charges - made only on the occurrence or non-occurrence of a particular event – and/or;
􀂾
ancillary charges which require the consumer to pay additional sums for matters outside the ordinary and expected performance of the contract – and/or;􀂾
charges that are not transparent to the consumer for reasons going beyond the clarity of the language used, for instance in terms of presentation; or all three of the above?


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?

4 Should all contingent price terms be assessable even where they are likely to be in the forefront of consumer’s minds when contracting, e.g. estate agency sale fees? If not, what other criteria should be involved?

5 Would you support a provision which would simply allow charges to be assessed for unfairness if they were not, from the consumer’s perspective, part of the “essential bargain” between the consumer and the trader? Would further conditions need to be applied?

6 Do you have any evidence of contingent, ancillary or non-transparent charges arising in other sectors beyond personal current accounts which, in your view, would be assessable for unfairness in relation to the level of the charge if the law was changed?

7 If so, do you think any of these charges are unfair and if so, why?

8 What would be the impact on your sector or your business in terms of its pricing policy if the law was changed to allow the level of all contingent, ancillary or non-transparent charges to be assessed by the Courts for fairness?

9 Are there other potential consequences or wider impacts of allowing the assessment of contingent, ancillary or non-transparent charges for fairness?

[leclerc]

Re: Consumer Rights Directive consultation - unfair charges

I wished I had seen it earlier, I wish I had more time, and thank god for Wendy, lol!

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

Okay well we best get to work - sodding shows we've had our heads elsewhere since we made the decision on bank charges doesn't it.

This will affect all areas - banks, lenders, rentals, telecoms, tv packages etc

The Financial Service Bill discussions in HOL will help too.

[Sapphire]

Re: Consumer Rights Directive consultation - unfair charges

Well I think we have two weeks (why the heck didnt we see this before! thank goodness for Wendy!) to get our name added to the list of respondees (ie to respond).

These are the Questions

Questions

Ok I will try to do this but I do wish that people would do these things in flaming PIL.

1 Do you agree with the Government premise that because charges are contingent, ancillary or not transparent, or otherwise not part of what a typical consumer would understand as “the essential bargain”, competition may not drive down the level of such charges as it ordinarily would? Yes

2 Should any exclusion from the price exemption provision in the UTCCRs (Paragraph 6(2)) focus on:
􀂾
contingent charges - made only on the occurrence or non-occurrence of a particular event – and/or;
􀂾
ancillary charges which require the consumer to pay additional sums for matters outside the ordinary and expected performance of the contract – and/or;􀂾
charges that are not transparent to the consumer for reasons going beyond the clarity of the language used, for instance in terms of presentation; or all three of the above? Sorry can't work this one out.


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? Nope clear as mud again.

4 Should all contingent price terms be assessable even where they are likely to be in the forefront of consumer’s minds when contracting, e.g. estate agency sale fees? If not, what other criteria should be involved? I believe that everything should be crystal clear and easy to understand so that people can make informed decisions.

5 Would you support a provision which would simply allow charges to be assessed for unfairness if they were not, from the consumer’s perspective, part of the “essential bargain” between the consumer and the trader? Would further conditions need to be applied? No, as I said before it should be clear and transparent and easy for people to make decisions.

6 Do you have any evidence of contingent, ancillary or non-transparent charges arising in other sectors beyond personal current accounts which, in your view, would be assessable for unfairness in relation to the level of the charge if the law was changed? No

7 If so, do you think any of these charges are unfair and if so, why? All charges over and above the true cost are unfair.

8 What would be the impact on your sector or your business in terms of its pricing policy if the law was changed to allow the level of all contingent, ancillary or non-transparent charges to be assessed by the Courts for fairness? If a business is forever running into an overdraft (luckily I don't have that problem at the moment) then these charges could in effect ruin the business.

9 Are there other potential consequences or wider impacts of allowing the assessment of contingent, ancillary or non-transparent charges for fairness?

If the banks are allowed to do this, then businesses would fail, therefore putting more and more people out of work.

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

Okay some very brief off the cuff comments first reaction to the questions without too much thinking and without having read the entire consultation document ( http://www.bis.gov.uk/assets/biscore...r-evidence.pdf ) ....just to kick start discussion whilst I go read it in full, and put my more sensible legally type head on.

1 If we are talking about bank charges then I would disagree with the premise, although I personally feel there has been in the past some collusion to raise the charges as they found they could get away with it. I also feel that the current spate of reductions in overdraft charges and the massive range of different structures available now has been colluded on between the banks as it makes it incredibly difficult to fit them in with legislation now and eahc bank has to be looked at individually - we cant just say overdraft charges are unfair, there has to be specifics, and they have hugely widened the amount of specifics. (makes sense to me) Also with other well publicised charges such as the other method than DD charges, but other charges - such as late payment on a mortgage, copy statement charges, inactivity fees (on bank accounts and other financial products) These are pretty well hidden and as such competition doesn't really touch them as they are only found out about when that particular part of the service is used.


2 Definately all three should be subject to fairness and should be excluded from the exemption provisions. Particularly the non transparent to consumer charges.


3 Just because a charge isnt incured EVERY time you do the thing which you get charged for doesn't make it any less applicable.


4 Yes of course, it is still beyond me how just because something is the main price of the contract it should be allowed to be excessive or unfair in any way. Yes we need freedom of pricing or no one would make any profits. I think possibly they need to look more at what is a contingent/ancillary fee and how to distinguish main contract prices from them.

5 Yes, again. But for that to work you would need an 'average' consumers perspective - and that is not something which is easy to work out. They need to say that ancillary/contingent fees are NOT part of the main bargain, regardless of the circumstances, and as such are assessable.

6 & 7 God, give me a few hours on that one !

8 Make life much easier for so many people as lenders couldn't get away with ripping people off in the small print any more so there'd be less complaints lol.


9 Competition issues, reduction in profits. But they'd have to compete on service rather than price which can only be a good thng imo.

[Budgie]

Re: Tom & BIS Consultation

The biggest problem with all of this is that currently bank charges are not regarded ( as a result of the Supreme Court decision ) as contingent, ancillary or non transparent. They are part of the price in exchange for a package of services. So, as far as bank charges are concerned, if this exercise is to be of any benefit to us we need to make the point, beyond any possblel doubt that we consider the Supreme Court judgement is wrong.

Everyone ( except the Banks and the Supreme Court Judges ) believe that bank charges are ancillary or contingent. Evidence of this is actually contained within the PDF file . See paras 45, 46 and the illustrative list that follwos those two paragraphs.

This opportunity is bloody fantastic and even if we do not impact the Govt's standpoint which it will eventually take on this matter we have as a fallback the fact that the matter will be raised in the upcoming European debates and other member states Govt's will probably insist on a much harder line being taken.

The Australian Consumer Law changes mentioned in the PDF file look to be well worth investigating as well and are maybe along the lines that we should be adopting in Europe.

[Budgie]

Re: Consumer Rights Directive consultation - unfair charges

I strongly recommend reading the entire consultation document before responding to the questions ( see Ame's last post for the link ). It is very well written and quite easy to follow.
It provides a lot of background to the questions and quite clearly outlines the Govt's concerns regarding the new European Directive currently being discussed.

LB will be responding to this consultation exercise and as we are responding from the Consumer point of view I feel it is more important for us to respond to the questions which are particularly aimed at Consumers.

As far as Bank Charges are concerned it is important to bear in mind that the present position is that they are not considered to be ancillary or contingent terms, they are regarded, by the Supreme Court as part of the complete package of services provided to Personal Current Account Customers by the Banks. Virtually no one else, other than the Banks, believe this to be the case, even the Govt appear to believe that bank charges are ancillary or contingent. I therefore feel that one of the tasks in the LB response will be to argue why we disagree with the Supreme Court decision.

Below, ( extracted from the Consultation document ) is an illustrative list of potential contingent/ancillary/non transparent charges :- What other ones can you add to the list ??

Financial Sectors
Insurance Sector – Exit Charges; Compulsory secondary expenses; Unexpected revision charges (mid-term).
Investment Sector – Inactivity Fees (fees payable by customer if they do not carry out any transactions on an account during a 12 month period); Cash account charge.
Banking Sector – Unauthorised overdraft charges; Transaction charges (e.g. bounced cheque); Copy of Statement fee.
Mortgage Sector – Post completion administration fees (e.g. deeds production fee), mortgage exit administration fee, breakdown of account fee.

Non Financial Sectors
Gym Contracts (termination charges) – overly long termination notice periods and large termination charges.
Book Clubs/Film Clubs – Buying less than minimum purchase commitments, returning items late.
Car Clubs – Charges for dropping cars off in locations other than agreed.
Car Hire - Penalty charges incurred for punctures, hire, theft of car, but not clearly defined in rental agreement where consumer’s liability starts.
Service Contracts – Charges for fixing unexpected problems in home improvements, or charging extra for cases that are hard to fix, e.g. cars.
Retirement Homes – Transfer fees or “exit fees” paid by consumers when they sell or rent their purpose built retirement apartment.

[Amethyst]

Re: Tom & BIS Consultation

An Australian Consumer Law - Home there you are Received assent in July this year.

5 Terms that define main subject matter of consumer contracts etc. are unaffected
(1) Section 2 does not apply to a term of a consumer contract to the extent that, but only to the extent that, the term:
(a) defines the main subject matter of the contract; or
(b) sets the upfront price payable under the contract; or
(c) is a term required, or expressly permitted, by a law of the Commonwealth or a State or Territory.
(2) The upfront price payable under a consumer contract is the consideration that:
(a) is provided, or is to be provided, for the supply, sale or grant under the contract; and
(b) is disclosed at or before the time the contract is entered into;
but does not include any other consideration that is contingent on the occurrence or non‑occurrence of a particular event.

[Budgie]

Re: Tom & BIS Consultation

An Australian Consumer Law - Home there you are Received assent in July this year.

5 Terms that define main subject matter of consumer contracts etc. are unaffected
(1) Section 2 does not apply to a term of a consumer contract to the extent that, but only to the extent that, the term:
(a) defines the main subject matter of the contract; or
(b) sets the upfront price payable under the contract; or
(c) is a term required, or expressly permitted, by a law of the Commonwealth or a State or Territory.
(2) The upfront price payable under a consumer contract is the consideration that:
(a) is provided, or is to be provided, for the supply, sale or grant under the contract; and
(b) is disclosed at or before the time the contract is entered into;
but does not include any other consideration that is contingent on the occurrence or non‑occurrence of a particular event.

I like this a lot, it would seem to be a much better way of describing matters, although as far as PCA's are concerned I still suspect we need something even more concrete !!!!

[Amethyst]

Re: Tom & BIS Consultation

''does not include any other consideration that is contingent on the occurrence or non‑occurrence of a particular event.''

covers them doesnt it, the only worry is the comments about Barclays charges and how they werent directly related to the events that caused them (yep still on about that!)

[EXC]

Re: Consumer Rights Directive consultation - unfair charges

As far as Bank Charges are concerned it is important to bear in mind that the present position is that they are not considered to be ancillary or contingent terms, they are regarded, by the Supreme Court as part of the complete package of services provided to Personal Current Account Customers by the Banks. Virtually no one else, other than the Banks, believe this to be the case, even the Govt appear to believe that bank charges are ancillary or contingent. I therefore feel that one of the tasks in the LB response will be to argue why we disagree with the Supreme Court decision.

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.

[Budgie]

Re: Tom & BIS Consultation

''does not include any other consideration that is contingent on the occurrence or non‑occurrence of a particular event.''

covers them doesnt it, the only worry is the comments about Barclays charges and how they werent directly related to the events that caused them (yep still on about that!)

I agree it's possibly good enough as it is. But as PCA's are such a separate and independent type of contract, applicable globally, surely a couple of extra sentences could be added in to specifically cover them.

[Angry Cat]

Re: Consumer Rights Directive consultation - unfair charges

The following may prove to be of interest:
http://www.eu-ems.com/event_images/D...rum%202010.pdf