Appeals - Days 1, 2, 3 and 4... so far

[kev2b3]

Re: Appeals Day Two

Just wondering, if the judges were to agree with the banks would the OFT be able to afford an appeal. The OFT unlike the banks have'nt pots of money.

[EXC]

Re: Appeals Day Two

You're right to say the OFT don't have pots of money, they're just another poorly resourced government department. But even if they win, they'll have to defend an appeal to the House of Lords in any case and I'm sure they have factored that in to their budget.

There was quite a strong rumour a while ago that due to the financial burdon on the OFT's litigation budget, the FSA would take over.

[Tools]

Re: Appeals Day Two

The OFT`s budget for 2008/2009 is £65.6m , while the FSA`s budget for 2007/2008 is/was £301.7m.

The FSA`s budget is maintained by charging fees to the businesses they regulate ie Banks and other financial institutions.

[EXC]

Re: Appeals Day Two

Today's listing (Mon 3 Nov)

COURT OF APPEAL
CIVIL DIVISION

COURT 73
Before THE MASTER OF THE ROLLS
LORD JUSTICE WALLER Vice President of the Court of Appeal, Civil Division and
LORD JUSTICE LLOYD
Monday, 3rd November, 2008
At half-past 10
APPLICATION

A3/2008/1396 Office of Fair Trading -v- Abbey National Bank Plc. Application of Claimant for permission to appeal and expedition with appeal to follow if granted. Part Heard.

A3/2008/1406(Y) Office of Fair Trading -v- Abbey National Plc & ors. Application of 4th Defendant for renewal of lower court part refusal of permission to appeal. Part Heard.

A3/2008/1400 The Office of Fair Trading -v- Abbey National Plc & Otrs. Appeal of 8th Defendant from the order of Mr Justice Andrew Smith, dated 23rd May 2008, filed 13th June 2008. Part Heard.

A3/2008/1401 Office of Fair Trading -v- Abbey National Plc & Otrs. Appeal of 6th Defendant from the order of Mr Justice Andrew Smith, dated 23rd May 2008, filed 13th June 2008. PartHeard.

A3/2008/1402 Office of Fair Trading -v- Abbey National Plc & ors. Appeal of 3rd Defendant from the order of Mr Justice Andrew Smith, dated 23rd May 2008, filed 13th June 2008. Part Heard.

A3/2008/1403 Office of Fair Trading -v- Abbey National Plc & Otrs. Appeal of 2nd Defendant from the order of Mr Justice Andrew Smith, dated 23rd May 2008, filed 13th June 2008. Part Heart.

A3/2008/1407 Office of Fair Trading -v- Abbey National Plc & Otrs. Appeal of 7th Defendant from the order of Mr.Justice Andrew Smith, dated 23rd May 2008, filed 13th June 2008. Part Heard.

A3/2008/1404 Office of Fair Trading -v- Abbey National Plc & ors. Appeal of Defendant from the order of Mr Justice Andrew Smith, dated 23rd May 2008, filed 13th June 2008. Part heard.

A3/2008/1405 Office of Fair Trading -v- Abbey National Plc & Otrs. Appeal of 5th Defendant from the order of Mr. Justice Andrew Smith, dated 23rd May 2008, filed 13th June 2008. Part Heard.

A3/2008/1406 Office of Fair Trading -v- Abbey National Plc & ors. Application of 4th Defendant for permission to appeal and expedition with appeal to follow if granted. Part Heard.

[Amethyst]

Re: Appeals Day Three now

Update for all you Beagles.

In the hearing of the appeals today Milligan was continuing on from last Thursday. His main points seemed to be that he thought the OFT was questioning the level of the price, not the banks right to charge at all, and that the OFT therefore agree the banks have the right to charge and are simply questioning the level.

He used a Steering Wheel analogy (bizarre) and said if you are selling a steering wheel for £10k and add a leather cover do you not have the right to charge another £10k for the cover (Doesn't seem to fit at all in my opinion and they are picking some very weird analogies).

(thought we were all fully aware of this point to be honest so not really understanding where this line is going, but they have gone back in now so we shall see)

The OFT's Mr Crow spoke for a bit and agreed that the case is all about the level of the prices - and that people were complaining the prices were just too high. Clarke agreed with him that the case was primarily about the level of the charges.

According to Legal Beagle 's EXC who is reporting back to us from the Courtroom, Crow is doing a blinding job for the OFTs case and is holding his own.

More in an hour or so when they break for lunch.
legal beagles

[Amethyst]

Re: Appeals Day Three now

Couple additional bits from this morning - Malik for Abbey is saying Abbey will not making a submission at the moment.

Jonathon Crow for the OFT said no assessment on fairness of charges has been reached - and talked about the whole reason they are in court - in normal course of events the OFT duty bound to consult with industry and if cant reach decision they take enforcement actions - in this case half way through the investigation the banks said no investigation was needed and they wouldnt participate as they disputed the relevance of the UTCCR and that's why they have bought the test case.

OFT now accept that paid item fees are part of a service as per Smiths judgement. Legal Beagles

Judges had a chat in break and started the afternoon by asking the possible consequences of the OFT winning and ruling the charges as unfair.

Crow said as per regulation 8 UTCCR that the unfair terms would not then be binding on the consumer. Crow also said in respect of the backbook of consequences (historical charges) the OFT are only looking forward as it not in OFT remit to deal with recompense etc.

Then Crow highlighted the OFT skelton argument which basically covered the inflexibility of standards terms of contracts - generally a consumer doesnt read contract - if he does he doesnt understand it , if he does theres nothing he can do about it - and if theres nothing he goes to another bank and same applies - and this analysis is reflected in directive to utccr regulations he described the ' free if in credit model as a low cost harsh term contract'

Crow spoke regarding Rabinowitz's points made last Thursday about the EU driectives (internal markets and protection of consumers) Crow said he read it as not two purposes but as a single purpose and the consumer protection element of the regualtion is the tool that promotes effective internal markets. Legal Beagles

Legaslative basis for directive is a high level of consumer protection.

Jonathon Crow described the banks interpretation of how the banks interpeted the judgement as 'venomous'

Crow spent lot of time veering off topic into reasons we're in court because charges are too high and too much consumer detriment.
Legal Beagle
According to Legal Beagle's EXC who is at the hearing, all banks will give own individual judgement in terms of whether utccr apply, then Crow will reply, then next the banks will be going through individual terms. The judgement on Plain Intelligible Lanaguage appllication to appeal on last day.

Thanks, Amethyst

In my opinion it is a little worrying the focus at the moment seems to be on the reasons for the test case and the consquences for the banks.
Once the OFT have deemed the terms unfair (if it is carried over that the UTCCR applies) then the OFT will not do anything about past charges (ie its not in its power to order refunds) and this is where a second test case will come in, which will decide on the elements of refunds and if charges can be refunded as the terms are unbinding on the consumer. So long long way to go.

[Amethyst]

Re: Appeals Day Three now

Anyways, back to this appeal test case malarky.

This bit where Crow describes the PCA free if in credit model as a ''low cost harsh term contract''. is quite good i think. The terms of the contracts we have been arguing are non-individually-negotiable which is contrary to the UTCCR and thus makes them invalid. The banks have said the terms are individually negotiable, and in essence they may well be, however as Crow has explained consumers don't tend to read them, if they do they can't practically negotiate individual terms on them, and the only choice is to not open the account and to go to another bank, which has pretty much exactly the same terms. I think it will be interesting to hear the banks response to that, and the Judges views.

[EXC]

Re: Appeals Day Three now

Milligan for Barclays responded to Lord Justice Waller's ''Peter pays for Paul'' interpretation of the 'free if in credit' lbanking model last week by saying that the fact that the banks can contractually charge one account holder £100 and another £1000 for their banking is irrelevant as the contracts are identical. Rather missing Waller's point.

[natweststaffmember]

Re: Appeals Day Three now

Back ON TOPIC, how can they justify that the a paid referral item is a service. I think I will leave this in the air for now but............
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not necessary

[EXC]

Re: Appeals Day Three now

To elaborate on the argument that the Barclays QC, Milligan, spent a long time putting forward, was his contention that the OFT have never argued that UTCCR excludes the banks the right to charge for any aspect arising from a request for an unauthorised overdraft. And as such the OFT must have an issue with the amount charged, which the banks would argue is a matter of commercial choice. The OFT have recently confirmed that they believe it is not unreasonable for the banks to make some kind of charge.

Milligan referred to a question he put to the OFT's Brian Doctor in the initial case when he repeatedly asked that if the relevant charges were 1p, would the OFT be taking issue with them? And that Doctor never answered the question.

This issue pertains to the part of the regulations that exempts the assessment for fairness of the 'adequacy' of the price for the services supplied - basically the level of the charge.

Milligan used the example of buying a car for £10,000 and then purchasing an add on extra of a leather covered steering wheel for a further £10,000 (I know the figures are not realistic but that's what he used). But the problem I see with this analogy is that the steering wheel cover is ancillary part of the overall bargin and doesn't form the main part of the contract. The regulations exempt from the assessment of fairness any aspect that forms the main or essential part of the contract.

[natweststaffmember]

Re: Appeals Day Three now

To elaborate on the argument that the Barclays QC, Milligan, spent a long time putting forward, was his contention that the OFT have never argued that UTCCR excludes the banks the right to charge for any aspect arising from a request for an unauthorised overdraft. And as such the OFT must have an issue with the amount charged, which the banks would argue is a matter of commercial choice. The OFT have recently confirmed that they believe it is not unreasonable for the banks to make some kind of charge.

Milligan referred to a question he put to the OFT's Brian Doctor in the initial case when he repeatedly asked that if the relevant charges were 1p, would the OFT be taking issue with them? And that Doctor never answered the question.

This issue pertains to the part of the regulations that exempts the assessment for fairness of the 'adequacy' of the price for the services supplied - basically the level of the charge.

Milligan used the example of buying a car for £10,000 and then purchasing an add on extra of a leather covered steering wheel for a further £10,000 (I know the figures are not realistic but that's what he used). But the problem I see with this analogy is that the steering wheel cover is ancillary part of the overall bargin and doesn't form the main part of the contract. The regulations exempt from the assessment of fairness any aspect that forms the main or essential part of the contract.

Dare I say this but many garages will throw them in at no extra cost(would bank charges be the no extra cost yet they do cost??) if they know the customer and that customer uses their garage regularly. Or in the analogy, they use the bank and therefore by definition are known to the bank, ie not a dormant customer account.

[righty]

Re: Appeals Day Three now

To elaborate on the argument that the Barclays QC, Milligan, spent a long time putting forward, was his contention that the OFT have never argued that UTCCR excludes the banks the right to charge for any aspect arising from a request for an unauthorised overdraft. And as such the OFT must have an issue with the amount charged, which the banks would argue is a matter of commercial choice. The OFT have recently confirmed that they believe it is not unreasonable for the banks to make some kind of charge.

Milligan referred to a question he put to the OFT's Brian Doctor in the initial case when he repeatedly asked that if the relevant charges were 1p, would the OFT be taking issue with them? And that Doctor never answered the question.

This issue pertains to the part of the regulations that exempts the assessment for fairness of the 'adequacy' of the price for the services supplied - basically the level of the charge.

Milligan used the example of buying a car for £10,000 and then purchasing an add on extra of a leather covered steering wheel for a further £10,000 (I know the figures are not realistic but that's what he used). But the problem I see with this analogy is that the steering wheel cover is ancillary part of the overall bargin and doesn't form the main part of the contract. The regulations exempt from the assessment of fairness any aspect that forms the main or essential part of the contract.

Precisely NOT buying the wheel cover doesn't mean you have to reject the whole of the car/contract. Whereas with penalty charges you have little choice but to accept them

[Amethyst]

Re: Appeals Day Three now

Thanks for that Righty, my head was going in circles a bit, but i get it now

[EXC]

Re: Appeals - Days one, two and three so far

Following on from Milligan's point that the court should not be concerned with the level of the price, the OFT's Jonathon Crowe freely admitted that the high level of the charges cannot be ignored and if, as Justice Smith ruled in his judgment, ''they are ancillary charges and the high level must be relevant'' although ''It's not just about price''

Lord Justice Clarke - the most senior of the three - agreed: ''People [consumers] are complaining about the price''.

Sensing the oportunity , Crowe went on to expand on the issue of the unfairness of the level of pricing - a topic that is not really for the court to consider in this hearing and one which I doubt Justice Smith would not have allowed in the initial hearing. He quoted extracts and key findings from the OFT's PCA report about the cross subsidisation of of the free if in credit model, the fact that the main revenue from current accounts comes from the poorest 20% of customers and the difficulty for consumers to avoid charges when the order of payments is almost entirely at the descretion of the banks.

If was refreshing to see the court allow him to address the real concerns of consumers that were not strictly part of the legal issues the court were there to deal with.

After the highly polished performance of Lawrence Rabanowitz, Jonathon Crowe is certainly a match for him. He is a confident speaker, well prepared and can go off script when needs be without any hestitation.

[righty]

Re: Appeals - Days one, two and three so far

Why are they not arguing that the banks have an incentive to try & ensure a large number of their customers default & incur these charges as without the income they generate (& to use their own arguments) they would not be able to offer 'free' banking

Also if one looks at their business model (particularly their newly revised T's & C's) the have made it very more likely that those on either a low or limited income WILL fall victim to their charges
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An analogy that would be suitable is to say that just because I live on a bus route doesn't mean I have to pay the fare.