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

[MIKE770]

Re: Consumer Rights Directive consultation - unfair charges

Believe cheques are on way out anyway?

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

Its not about getting the charges laid down in law else it would restrict the market enormously. The SAR fee is set down in legislation to keep information accessible.

This is about giving the courts and the gov't the power to assess those other charges for fairness to keep them fair for consumers. Much as they did for the credit card charges.

[EXC]

Re: Consumer Rights Directive consultation - unfair charges

That's basically the way I see it except for

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

I think it's important to draw the distinction between ancillary and contingent. I remember that there was a lot of debate in the HoLs hearing about this. The court focussed on the example of ordering a new car with an optional leather steering wheel to define 'ancillary'.

In the first instance judgment J Smith found that bank charges were levied ''on an event'' - ie going overdrawn - and were therefore contingent to that event, but not core or the main subject matter, whereas the Supreme Court found the charges to be both contingent and core, but not ancillary.

Another example of a service that is both contingent and core that was tossed around at the Court of Appeal hearing is that of an estate who bills you in the event that he sells your property.

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

Financial Services Bill - progresses through Lords..... - Page 2 - Legal Beagles Consumer Forum

This clause in the FSB was proposed (then withdrawn) (before the whole thing died in the washup)

LORD NEWBY

LORD OAKESHOTT OF SEAGROVE BAY

BARONESS NOAKES

307*Insert the following new Clause— "Action against unfair unauthorised bank charges

(1) The Unfair Terms in Consumer Contract Regulations 1999 (SI 1999/2083) is amended as follows.

(2) After regulation 6(1), insert— "(1A) Paragraph (2) shall not apply to a Relevant Contract. (1B) For the purposes of this section, a Relevant Contract means a contract for the supply of personal current account banking services, and includes all past contracts currently in effect." (3) After regulation 6(2) insert— "(3) In so far as it is in plain and intelligible language, the assessment of fairness of a term in a Relevant Contract shall not relate— (a) to the definition of the main subject matter of the contract, or (b) to the adequacy of the main price or remuneration, as against the goods or services supplied in exchange. (4) When assessing whether a charge falls within the main price or remuneration within the meaning of paragraph (3), account shall be taken of all the relevant circumstances at the time the contract was concluded, including whether the imposition of the charge is contingent on other uncertain events and whether the charge is likely to have been considered by the consumer prior to concluding the contract. (5) Where a term of a contract provides for the charging of a consumer and the circumstances in which that charge can be imposed are not certain to arise during the term of the contract, then such price or remuneration shall not fall within the main price or remuneration for the purposes of paragraph (3). (6) If, for the purposes of paragraph (3), there is doubt about what represents the main price or remuneration, the interpretation which is most favourable to the consumer shall prevail.""

The discussion on it is Legal Beagles Consumer Forum - View Single Post - Financial Services Bill - progresses through Lords.....

However, I understand that that is unlikely at present, as the European Union is considering a new consumer rights directive that may, in due course, amend those regulations. Nevertheless, we are concerned that no action will be taken in the UK until that happens, and there is no certainty that a new consumer rights directive will come into force, even within the next five years. Even if it does come into force, it may require amending.

Which? would like to see the UTCCRs amended to ensure that overdraft charges can be assessed for
fairness going forward. This will help ensure a future where charges are clear, transparent and
proportionate.
The normal route to achieve this would be via BIS reissuing the UTCCRs. However we understand
this is unlikely at present as the European Union is looking at a new Consumer Rights Directive that
may, in due course, amend the UTCCRs. Which? is therefore concerned that no action will be taken
in the UK, but that there is no certainty that the Consumer Rights Directive will come into force
within the next five years and, even if it does, whether it would require an amendment to the
UTCCRs.

As a result we believe an amendment to the Financial Services Bill could, as an interim measure,
achieve the desire change. The proposed amendment would:
> 35.1) Changed Reg 6(2)(b) of the UTCCRs so that only terms relating to the main price are
excluded from an assessment for fairness.
> 36.2) Clarified that in the event of any doubt, the determination of what is classed as the
main price should be done from the point of view of the typical consumer, not the trader.

So I see this current consultation as the next step expansion on those ideas.

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

T I remember that there was a lot of debate in the HoLs hearing about this. The court focussed on the example of ordering a new car with an optional leather steering wheel to define 'ancillary'.

In the first instance judgment J Smith found that bank charges were levied ''on an event'' - ie going overdrawn - and were therefore contingent to that event, but not core or the main subject matter, whereas the Supreme Court found the charges to be both contingent and core, but not ancillary.

Another example of a service that is both contingent and core that was tossed around at the Court of Appeal hearing is that of an estate who bills you in the event that he sells your property.

Anyone wondering how it was discussed at the hearings for the test case can find all the transcripts for those hearings in this forum >> OFT v Banks Test Case Official Docs - Transcripts, Defences, POCs - Legal Beagles Consumer Forum- it does make very interesting reading and is quite amusing in places - much of it is in PIL - especially the comments from the Lords

[EXC]

Re: Consumer Rights Directive consultation - unfair charges

BTW I spoke to Tom about the schedule for the implementation of the directive and although ''when agreed it is likely to be adopted in 2011'' a further date for it's implementation still needs to be set and yet a further date for it to be UK law - but any potential claim would go back to the date of the implementation (but not the adoption) and he reckons that could be 2012.

[Amethyst]

Re: Consumer Rights Directive consultation - unfair charges

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 ?

[Amethyst]

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

Are there also any moves/changes in the definition of Consumer under the UTCCR ?

I'd like to see SME's included really, but otherwise a definition in line with some other countries which would bring small business owners into the protection of the UTCCR.

We have

"consumer" means any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession;

EU wide it differs;

b. Definition of consumer
Art. 2 lit. (b) of Directive 93/13 defines consumer as any natural person who is acting for
purposes which are outside his trade, business or profession. The member states have only
partly followed this definition. In a number of member states one finds deviating definitions
of consumer. In SPAIN, GREECE and HUNGARY all “final addressees” are protected as
consumers. In most cases, this concept offers wider protection than Directive 93/13, since it
also encompasses atypical transactions, which are not related to a further transfer. In FRANCE,POLAND and LATVIA businesses concluding contracts which are not directly related with hisor her profession are also protected as “consumers” or “non-professionnels”.65 In AUSTRIA,BELGIUM, CZECH REPUBLIC, DENMARK, FRANCE, GREECE, HUNGARY, SLOVAKIA and SPAIN (controversial), legal persons are treated as a consumer, provided that the purchase is for private use or (in GREECE, HUNGARY and SPAIN) the legal person is the final addressee.
HUNGARY is presently planning to limit the notion of consumer to natural persons. In
PORTUGAL, it is unclear whether legal persons can be protected as “consumers”, however, a
draft of a new Consumer Code acknowledges that legal persons may, in certain
circumstances, benefit from the protection conferred to consumers. ROMANIAN law protects
groups of natural persons, organised in associations.66
In MALTA, any other class or category of persons whether natural or legal may, from time to
time, be designated as "consumers" for all or any of the purposes of the Consumer Affairs Act
by the Minister responsible for consumer affairs after consulting the Consumer Affairs
Council. Furthermore, in Malta the notion of “consumer” includes any other individual not
being the immediate purchaser or beneficiary, whether or not a member of the consumer’s
household, who, having been expressly or tacitly authorised or permitted by the consumer,
may have consumed, used or benefited from any goods or services provided to the consumer
by the trader.

b. Definition of consumer64
Art. 2 lit. (b) of Directive 93/13 defines consumer as any natural person who is acting for
purposes which are outside his trade, business or profession. The member states have only
partly followed this definition. In a number of member states one finds deviating definitions
of consumer. In SPAIN, GREECE and HUNGARY all “final addressees” are protected as
consumers. In most cases, this concept offers wider protection than Directive 93/13, since it
also encompasses atypical transactions, which are not related to a further transfer. In FRANCE,
POLAND and LATVIA businesses concluding contracts which are not directly related with his
62 SPANISH courts quite often use “indirect control” by applying the general theory on vices of consent (mistake,
fraud, etc.). Moreover, the Civil law of Navarre and Catalonia admits a laessio enormis (but not the Spanish
Civil Code).
63 Cass. civ. 22 October 1996 D. 1997, 121 Société Banchereau v. Société Chronopost. In later decisions
however the Cass. civ. did place limitations on the extent of the principles developed in Chronopost, see
Chambre mixte 22 April 2005, pourvoi n° 02-18326 and 03-14112; Chambre commerciale 21 February 2006,
pourvoi n° 04-20139.
64 See thereto in detail Part 3 A. of the study.
Consumer Law Compendium Comparative Analysis
C. Unfair Contract Terms Directive (93/13)
379
or her profession are also protected as “consumers” or “non-professionnels”.65 In AUSTRIA,
BELGIUM, CZECH REPUBLIC, DENMARK, FRANCE, GREECE, HUNGARY, SLOVAKIA and SPAIN
(controversial), legal persons are treated as a consumer, provided that the purchase is for
private use or (in GREECE, HUNGARY and SPAIN) the legal person is the final addressee.
HUNGARY is presently planning to limit the notion of consumer to natural persons. In
PORTUGAL, it is unclear whether legal persons can be protected as “consumers”, however, a
draft of a new Consumer Code acknowledges that legal persons may, in certain
circumstances, benefit from the protection conferred to consumers. ROMANIAN law protects
groups of natural persons, organised in associations.66
In MALTA, any other class or category of persons whether natural or legal may, from time to
time, be designated as "consumers" for all or any of the purposes of the Consumer Affairs Act
by the Minister responsible for consumer affairs after consulting the Consumer Affairs
Council. Furthermore, in Malta the notion of “consumer” includes any other individual not
being the immediate purchaser or beneficiary, whether or not a member of the consumer’s
household, who, having been expressly or tacitly authorised or permitted by the consumer,
may have consumed, used or benefited from any goods or services provided to the consumer
by the trader.

[EXC]

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

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.

[dogtired]

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!

Done the same, agree with you all!
So what happens now?

[Amethyst]

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

lol, well thats good, unless people comment we don't know that that's the case or if we're just talking on our own behalf rather than the consumers We're working on a draft, we do need your input, in the main with regards the other types of charges consumers face - of course feeling very strongly as we do about the banks we shall focus primarily on those, but this should be a good opportunity to bring up any other niggles people have with hidden charges and how they affect you. We're aiming to have the bulk ready by middle of next week anf finalised in plenty of time for submission before the deadline.

[EXC]

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

Question to Vince Cable on 8 July. Unfortunately I can't find the earlier question that Andrew George was referring to. Anyone?

House of Commons Hansard Debates for 08 July 2010 (pt 0001)

T5. [6708] Andrew George (St Ives) (LD): I was listening carefully to the Minister's earlier response to the question on penalty charges applied to personal bank account holders who occasionally stray into unauthorised overdraft. Bearing in mind the Supreme Court's decision last year, which has resulted in a very unsatisfactory situation, does the Department intend to review the situation and, indeed, intervene to protect those personal account holders who find themselves in difficulty?

Vince Cable: There certainly was a problem of serious overcharging, and it was pursued through the courts by the Office of Fair Trading. I am going to meet the director general of fair trading very soon, and I shall try to establish whether any action needs to be taken by the Department, as opposed to through the legal channels that have been pursued so far.

[Amethyst]

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

Can't find a sausage on the 8th or immediately preceeding days, lots around the 19th July tho - maybe Andrew George can see into the future

He;s good tho, AG, has stuck up for charges victims the whole way through this.

[Budgie]

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

Am gonna throw an idea into the pot, which I mentioned in an earlier post and which I believe could be expanded upon.

PCA's ( Personal Current Accounts ) are, by their nature, unlike any other type of Consumer Contract. They are intended to be perpetual ( IE continuous and without end ) which is unlike most other types of Consumer contracts that usually have a defined end point. Surely this, combined with the fact that PCA's are used by virtually every person within the European Union, all have very similar contracts and are all, as we are well aware, subject to abuse by the organisations that create the terms and conditions contained within them.

Surely it is not outside of the realms of possibility that either a totally separate European Directive or a separate section within an all encompassing European Directive could be created to specifically cover Personal Current Accounts.

It would then be extremely simple within a Directive to clearly identify, from the PCA point of view, which are core terms, which are contingent or ancillary terms, which are subject to a test of fairness and which are not.

This would create a clear situation for the banks and for the Consumer, be easy to regulate and would no doubt create an extremely competitive environment between the banks.

The more I have thought about the present evidence gathering exercise the more I feel convinced that we are trying to do the impossible and create an all encompassing Directive that is discretely re-opening the possibilities for legal action on the fairness of bank charges.

Only the Banks and the Supreme Court actually appear to believe that the present charging system is incapable of challenge from the price / fairness point of view. Everyone else, the Consumer, the Government, the High Court, the Appeal Court believe that they should be challengable.

Why don't we propose that the UK Govt takes a position that clearly details the future nature of PCA's

[EXC]

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

The more I have thought about the present evidence gathering exercise the more I feel convinced that we are trying to do the impossible and create an all encompassing Directive that is discretely re-opening the possibilities for legal action on the fairness of bank charges.............................Why don't we propose that the UK Govt takes a position that clearly details the future nature of PCA's

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.”

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''