Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

[righty]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

The Guildhall ..............Good luck with the parking then It's worse than the Strand

[EXC]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

Summer recess is only 3 days?

Sorry yes actually he did say August but I'm sure he meant October.

[EXC]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

The lead Court of Appeal judge - the Master of the Rolls Sir Anthony Clarke - who's judgment is the subject of the House of Lords appeal, has been appointed to the Supreme Court from 1 October.

http://www.number10.gov.uk/Page19036

[Tools]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

Nicks link reads

Monday 20 April 2009 Justice of the UK Supreme Court

The Queen has been pleased to approve the appointment of The Right Honourable Sir Anthony Peter Clarke, the Master of the Rolls, as a Justice of the Supreme Court with effect from 1 October 2009 upon the retirement of the Right Honourable The Lord Scott of Foscote who retires on 30 September 2009. He will be the first Justice to be appointed direct to the Supreme Court.
Biographical Note

Sir Anthony Peter Clarke (65) was called to the Bar in 1965, took Silk in 1979, was appointed a Recorder in 1985 and was made a Bencher in 1987. He was appointed to the High Court in 1993 and then to the Court of Appeal in 1998. In 2005 he was appointed as Master of the Rolls. He has been Head of Civil Justice since 2005.
Sir Anthony was knighted in 1993.
Note for Editors

The UK Supreme Court is launched on 1 October 2009. On that date The Right Honourable Lord Phillips of Worth Matravers will become the President of the Supreme Court and the Law Lords will become Justices of the Supreme Court.
Tags: Justice of the Supreme Court, Lord Scott of Foscote, Sir Anthony Clarke, Supreme Court

[Amethyst]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

18 Office of Fair Trading (Respondents) v Abbey National plc and others (Appellants) (England) It was ordered that the appellants be allowed to prosecute the appeal without giving the usual security for costs as required by Standing Order.



3 Office of Fair Trading (Respondents) v Abbey National plc and others (Appellants) (England) The appeal Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc, HSBC Bank plc, Lloyds TSB Bank plc, Nationwide Building Society and the Royal Bank of Scotland Group plc was presented and it was ordered that in accordance with Standing Order VI the statement and appendix thereto be lodged on or before 2 June (lodged 6 April).

[BJ's Dad]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

are we going to get our money back tho...and if so will it be before 2010?

[Amethyst]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

With all the discussion about 'a deal' being done and what will happen once the OFT have found the fees to be unfair, this is the South African competition commissions recommendations into reforming 'penalty fees' (bounced DD charges etc)

8.2.3 Recommendations on penalty fees


Both the level and the volume of the fees charged for rejected debit orders by the major banks provide grounds for grave disquiet. Payment by debit order is routinely required nowadays for all manner of regular services which have become an essential part of everyday life. Reliance on debit orders is widespread throughout the mass market served by banks, and it is notable that debit order facilities have recently been added to the basic Mzansi account offerings.

Analysis of the banks’ data revealed that the average rate at which debit orders are rejected, and thus attract a penalty fee, is roughly twice as high for basic savings or transmission accounts as for all PTAs taken together. In other words, in accounts typically held by lower income customers, a relatively high proportion of debit orders presented for payment are dishonoured for insufficient funds. This means that the burden of penalty fees is falling disproportionately on those least able to afford them. Where detailed data has been provided, indications are that as much or even more revenue is earned by banks from rejected debit orders on these accounts than from the processing of successful debit orders. Many ordinary bank customers are not in a position to pad their bank accounts with funds that are surplus to their immediate needs. They face the situation where, when credits such as salary payments are delayed, this causes the debit orders which they have signed in good faith to “bounce” for insufficient funds. It is not a matter of neglect, or irresponsibility, but of circumstances beyond their control. Yet the penalty fee is applied per debit order item, so that a customer may face multiple penalties to add to the primary misfortune of getting paid late.

Customers on low incomes, with tight credit margins, can readily find themselves lacking
sufficient funds without having had any intention of defaulting on their payments or of breaching their undertakings to the bank.

It seems to us quite unacceptable that a bank should recover more than the cost incurred in processing the rejections in such cases. It is no answer for banks to say that, on application, they might reverse the penalty fee in a deserving case. Very many consumers – even if they were assured of the possible indulgence – would suffer in silence rather than muster the confidence, or find the time, to challenge the debit when it appears on their account.

We recommend that a cap be imposed on the price of processing rejected debit orders at approximately R5 per dishonoured item.

We have no reason to believe that, currently, banks would be unable fully to recover their costs ordinarily incurred in respect of rejected debit orders within such a cap. Such a cap should be imposed by regulation. It should apply both to savings and current
accounts, and to ordinary as well as early debit orders. Banks, which incur additional expenses or losses in particular cases through their customers’ default in respect of debit orders, can terminate those customers’ accounts and/or sue for damages.

The regulatory remedy should also include a provision to ensure that the re-presentation of
dishonoured items cannot itself amount to an abuse.

Whether such price regulation should be imposed using existing regulatory powers of the
SARB, or by way of section 9(1) of the Sale and Service Matters Act 25 of 1964 (as amended), or by other existing or special legislation is a matter on which we are not best placed to express an opinion.

In our view, if the necessary regulatory intervention is not forthcoming within a reasonable time, the Competition Commissioner should recommend to the Minister of Trade and Industry that he consider directing the Consumer Affairs Committee established under the Consumer Affairs (Unfair Business Practices) Act 71 of 1988 (as amended) to conduct a full-scale investigation into dishonour fees in respect of debit orders charged by the four major banks.

Should the latter Act be replaced by the enactment of the Consumer Protection Bill, 2007, now before Parliament, then the necessary investigation could be initiated or continued as may be appropriate under the new Act.

We also recommend that systems should be put in place by the banks, which will enable
customers to cancel any direct debit instruction at any time by phone, internet, or over
the counter at a branch (subject to written confirmation by the customer where
necessary). This would not alter the customer‘s contractual obligation to the creditor in respect of payment arrangements.

Prior to that the banks charged R.45.

Nevertheless, on savings accounts, FNB
reported a transaction cost of R1.80 per successful debit order, while Nedbank reported a
cost of R1.42 per successful debit order, compared with the cost of a rejected debit order of Confidential:
R4.18 and R4.88 respectively. These values bear no evident relationship to the fees charged
per debit order and rejected debit order on, for example, the FNB Smart and Nedbank
Transactor accounts.

Anyway the SACC had a couple meetings with the OFT whilst working on this report, and similar methods were used for the OFTs default fees credit card costings. So its likely costs wise to be similar considerations when determining fairness re proportion to cost.


P.s have FOi'd OFT for minutes of 26th -28th March meetings between OFT & SACC

[ROBSTER]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

So SA banks (Hello Barclays) can make money at 40 pence on a bounced direct debit !

Hey maybe Cap one & Egg could use the SA soft ware.... they told that Judge it cost them over £12 a time..Criky how silly must they feel now the've found out how much cheaper they could process the same transaction for if they had an operation in South Africa ..must be even Cheaper than India!!!

[EXC]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

It seems to me that the South African example is more akin to the £12 credit card threshold in that ''....the Competition Commissioner should recommend to the Minister of Trade and Industry that he consider directing the Consumer Affairs Committee established under the Consumer Affairs (Unfair Business Practices) Act 71 of 1988 (as amended) to conduct a full-scale investigation into dishonour fees in respect of debit orders charged by the four major banks.''

Unlike South Africa or the credit card scenario in the UK, in the case of bank charges the threat of a full-scale investigation is already being executed and will be settled by the application of the law, as opposed to any kind of reccomendation. Something that those who still believe a credit card type deal will be struck seem to forget.

The appeal hearing in the House of Lords has been moved back a day and will begin on Tuesday 23 June. Although the judges are yet to be appointed there'll be a total of 5 Law Lords hearing the case.

[Glenn UK]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

Unlike South Africa or the credit card scenario in the UK, in the case of bank charges the threat of a full-scale investigation is already being executed and will be settled by the application of the law, as opposed to any kind of recommendation. Something that those who still believe a credit card type deal will be struck seem to forget.

LOL @ EXC


I'm not sure i am forgetting anything TBH. My perspective is based primarily on pragmatism and economics.

You could be entirely right about the test case and the follow through all the way.

i just think that from the banks perspectives it is likely to cost them more in the long run than trying to strike a deal.

The OFT don't have the resources the banks do and are likely to consider striking a deal to save costs too if they can get to a position where they feel comfortable.

I haven't looked in detail at the budget to see what it says about public spending, but from what i heard its likely that public spending will be squeezed significantly over the coming months and possibly years.

I am not sure what the HoL would do if the banks and OFT rang them tomorrow and said we have brokered a deal, the appeal is withdrawn.

I doubt it would happen yet because the banks haven't reached the stage where they need to, the jury is still out so to speak on the application of the UTCCR.

But it may happen when the banks feel they are getting close to the stage where they are actually fighting a losing battle in terms of the application of the UTCCR.

JMHO

Glenn

[EXC]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

LOL @ EXC



The OFT don't have the resources the banks do and are likely to consider striking a deal to save costs too if they can get to a position where they feel comfortable.

It would be an unbelievable waste of money if that was the case.

Actually I wasn't referring to you Glenn. I had in mind a certain green and blinking invertebrate who steadfastly believes that as a result of a formal 3 year investigation the OFT would impose a threshold that, if breached, would trigger a, err, formal investigation.

[Glenn UK]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

EXC

With regards to the waste of money i think its is very much a matter of perspective.

From the banks viewpoints the sums of money they stand to lose are enormous especially bearing in mind that the 'bill' for them will potentially be essentially in cash as opposed to a theoretical debt. Some of course will never be reclaimed (unless of course they are forced to return monies taken unlawfully without applications from customers), even though as you say in the context of bank turnovers the sums are not that big.

So i think from their perspective its money well invested if they are able to reduce the size of the final bill to them significantly.

From the OFTs perspective i think if the banks were to comply they would hail it as a victory for the consumer.

i think that they might not say it but privately they would be relieved that this very expensive test case was halted given that they very finite resources.

I have no idea to whom you could be referring, don't suppose that they speak French at all?

Glenn

[natweststaffmember]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

"We should make it quite clear that we are not inviting the banks to align their charges at such a threshold figure. We are not proposing that default fees should be equivalent to the threshold, and a court will certainly not consider that a default fee is fair just because it is below the threshold" Point 5.5 OFT842 Credit card default fees.

What the OFT had hoped would not happen, did happen. Unfortunately, we would go back to 2007 where people would simply go to court again. We effectively go back to stage 1. It has to be decided in a court of law.

[Glenn UK]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

NWSM

weve kind of been here before, ie me saying that a deal might be struck and others saying its impossible it has to be settled by law.

The whole point is that there are a number of facets of this issue, only one of which is what might or might not be fair under the law.

The overwhelming element for the banks is about profits and economics. I do not belive the banks are not interested in the law per se, only the impact it has on thier bottom line.

i cannot belive that sitting aorund the board tables at the banks there are bankers looking forward to establishing case law. i can only imagine them trying to minimiose the impact on their P&L and balance sheets.

If this was a merder case rather than a case essentially about contracts i think the issues would be a lot different in terms of how the case would be proseucted ie if it were a murder case then of course a deal couldnt be strcuk over guilt, but it isnt.

I have always accepted that my 'arguments' are speculation and it would be good if i was wrong.

i am not too sure that i am far from the truth though.

JMHO

Glenn

[EXC]

Re: Appeal Judgment - 26th February 2009 - OFT v Abbey National Plc & Otrs

EXC

With regards to the waste of money i think its is very much a matter of perspective.

From the banks viewpoints the sums of money they stand to lose are enormous especially bearing in mind that the 'bill' for them will potentially be essentially in cash as opposed to a theoretical debt. Some of course will never be reclaimed (unless of course they are forced to return monies taken unlawfully without applications from customers), even though as you say in the context of bank turnovers the sums are not that big.

So i think from their perspective its money well invested if they are able to reduce the size of the final bill to them significantly.

From the OFTs perspective i think if the banks were to comply they would hail it as a victory for the consumer.

i think that they might not say it but privately they would be relieved that this very expensive test case was halted given that they very finite resources.

I have no idea to whom you could be referring, don't suppose that they speak French at all?

Glenn

But we don't know that do we? It hasn't suddenly got expensive for them. As per the litigation agreement the OFT were fully aware of what this would involve.

The OFT are commited to the litigation agreement. It was the litigation agreement to achieve legal certainty which was signed up to by the banks and the OFT that was the entire basis for the FSA waiver and stays in the County Courts and for that reason alone the OFT are obliged to see it through.