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

[Curlyben]

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

Here's the BBA's announcement: BBA Association - Statement on Bank Charges Test Case

Point 4 concerns the HoL appeal.

[TANZARELLI]

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

Thats the 3rd time today that their statement has been updated. Better keep a check on this until a few days time for other additions.

[Paule]

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

21/09 26 February 2009 The Office of Fair Trading: OFT welcomes Court of Appeal judgment

The OFT welcomes the Court of Appeal's very clear confirmation today that the unarranged overdraft charging terms for personal current accounts can be assessed for fairness.

The Court found that these terms are not part of the core or essential bargain between a consumer and their bank, and therefore consumers do have protection under the Unfair Terms in Consumer Contract Regulations (UTCCRs) for these terms.

This judgment confirms the OFT's long-held interpretation of this important aspect of consumer law, and is one that consumers themselves would identify with. It is also relevant to businesses across the whole economy.

We are now analysing the implications of the judgment for our ongoing investigation. The OFT has already written to the banks with its provisional view on the fairness of the terms, setting out its concerns that they may be unfair. We expect to reach a final decision on fairness later this year.

NOTES

1. The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) protect consumers against unfair standard terms in contracts they make with traders. The Office of Fair Trading, together with certain other bodies, can take legal action to prevent the use of such terms.

2. In April 2007, the OFT announced its investigation into the fairness of terms providing for unarranged overdraft and returned item fees (referred to as 'unarranged overdraft charges'). This followed on from the OFT's initial review of unarranged overdraft charges, where the OFT concluded that it shared public concern about the level and incidence of such charges.

3. In July 2007, the OFT entered into an agreement with the largest retail current account providers in relation to bringing a test case in order to ensure an orderly and timely resolution of the legal issues associated with its investigation.

4. In April 2008 the High Court gave a ruling, the key aspect of which confirmed the OFT's view that the terms can be assessed for fairness. The banks appealed this finding by the High Court to the Court of Appeal.

5. In August 2008, we wrote to the eight banks setting out our approach to the assessment of fairness and, for seven of them, our concerns about their particular terms. This included a provisional view on the unfairness of particular terms and conditions that impose charges. At this stage, no bank's terms have been given a clean bill of health and all banks remain under investigation.

6. The other parties to the test case are Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HSBC Bank plc, Lloyds Banking Group plc, Royal Bank of Scotland Group plc, and Nationwide Building Society. Together these current account providers account for about 90 per cent of personal current accounts in the UK.

7. In the course of its work on the issue the OFT has liaised closely with the Financial Services Authority.

8. In July 2008, the OFT published a market study which concluded that the personal current account market is not working well for consumers including specific concerns about the charge structure.

[righty]

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

I agree with Pkea It's my understanding that the banks ARE gearing up to pay without the need for court action.

Where this will leave the court fees & other costs of all those pending cases remains to be seen..............unless it's demanded of the courts that they give a refund, which is unlikely, then I doubt the banks will pay unless forced too

[Budgie]

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

BBA statement as at 13.48 26/2/09

Let's see how it changes over next couple of days once further pressure is brought to bear.

Statement on Bank Charges Test Case


26/02/2009

The BBA said:

"The court has not said fees are unfair just that they can be looked at to see if they are fair or not. The banks continue to believe that the Regulations do not apply to these type of charges. The banks' aim throughout this process has been and remains to achieve clarity and certainty for customers. The banks will apply to the House of Lords for permission to appeal the Court of Appeals decision. The banks will work with the OFT to ensure the next stages in the test case process are progressed as quickly as possible."


Background Note

1. The Court of Appeal has today issued its judgment on the test case relating to unarranged overdraft charges. The test case process was initiated by the Banks and the OFT, to bring clarity to an issue which is of concern to a large number of bank customers.



2. The Banks had appealed Mr Justice Andrew Smith’s decision that their current terms and conditions were assessable for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCRs”). His decision that the banks terms and conditions relating to unarranged overdraft charges were not capable of being penalties (except for one term relating to one bank) was not appealed.


3. The Court of Appeal has today ruled that the banks’ terms are assessable for fairness. The Court held that although the banks provide a service to customers when considering an unarranged overdraft and either providing an overdraft or returning the payment, the charges for these services are not an essential part of the bargain with customers when they open their account.


4. The judgment highlights the complex issues involved and the Court of Appeal said it reached its decision "not without hesitation". The banks will apply to the House of Lords for permission to appeal the Court of Appeal’s decision because:

• There is limited guidance from case law on whether and how the UTCCRs apply in these circumstances.
• The Banks continue to believe that the UTCCRs do not apply to these types of charges, where the customer is using and paying for a service that is being offered.
• The test case is of considerable public importance, as acknowledged by the Court of Appeal, so it is important for the issues to be fully tested.

5. The Banks remain committed to resolving, through the Courts, the legal issues concerning unarranged overdraft charges. The Banks and the OFT agreed that the case should move forward as quickly as possible and this has been achieved, with assistance from the Court. The Banks expect that the case will continue to progress as quickly as possible and will work with the OFT to achieve that.


6. Although the Court of Appeal found that the charges can be assessed for fairness under the UTCCRs, the Court did not consider whether the charges were actually unfair. That is a question that can only ultimately be decided by the Courts.


7. A further hearing or hearings will be required in order for the Court to determine the issue of fairness. The Banks believe their charges are fair and that the charges will therefore be upheld by the Court at the next phase.


8. As previously agreed with the Financial Ombudsman Service and FSA, customer complaints relating to unarranged overdraft charges will remain on hold. The Court of Appeal has recommended that County and Sheriff Court cases relating to unarranged overdraft charges should remain on hold.


9. Please refer to the BBA and individual Banks' websites for further information.

[righty]

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

Here's the BBA's announcement: BBA Association - Statement on Bank Charges Test Case

Point 4 concerns the HoL appeal.

Point 7 indicates that no matter what the OFT decides is fair the banks will seek to have the fairness of their charges tested by the court & not the OFT. They think the OFT has no authority to decide on the issue.

If this be the case then when the stay is lifted individual consumers may STILL find themselves having to challenge the banks in court to obtain a refund

[Glenn UK]

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

Interesting comment Righty, the objecitve of the anks historically has appeared to keep their charges out of courts lest they have to reveal their actual costs.

given that the way that the charges levle worked with the CC claims i do wonder if the banks wont still feel the same?

I.E do they really want the public to find out that it costs the banks as close to nothing to administer their account and then charegs then several quid for the privelige?

I cant see that the banks will want this to happen unless they are prepared to accept a level of charges very low e.g. of the order of a few tens opf pence.

If on the other hand they accept an accepotable level below which the oft wont investigate then chances are they will get a better deal imho.

Ultimatley as we know this is about money, the banks are now in a position where they need to work to get the best deal they can for themselves.

it may be that they will get a better deal structured like the CC deal was rather than go to court and face the potential issue of having to take several hundred thousand claims to court to sargue over the actual lelve of charges they can charge.

its early days yet and the BBA are getting thier wind back having taken a metaphorical kicking. I wouldnt be surpirsed if they simply offer everyone money back based on the £12.00 CC idea.

We shall see

Glenn

[borgbaiter]

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

test case two (the revenge) coming to our courts soon.

or it could be the never ending story


another 2 years to go. time to look at the statute of limitations issue again.



Borgbaiter

[TUTTSI]

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

This has been posted on Abbey's website.

http://www.abbey.com/csgs/Satellite?...COM_TemplateA1

[Curlyben]

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

test case two (the revenge) coming to our courts soon.

or it could be the never ending story


another 2 years to go. time to look at the statute of limitations issue again.



Borgbaiter

Interesting point, BUT is fairness covered by Limitations ?!?!

That's the real question.

[Glenn UK]

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

Interesting point, BUT is fairness covered by Limitations ?!?!

That's the real question.

Do you mean it is limited or it is not limited?

I have been thinking about this and it occurs to me that if it is limited potentially then the arguments that were relevant when the charges were perceived as penal would still be relevant and therefore section 32 would take affect.

on the other hand if the charges are not subject to limitations then it doesn't matter.

[ROBSTER]

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

time to look at the statute of limitations issue again.



Borgbaiter

About time!


Here's my 10 penneth:

Banks are winning by dragging this out.

Imagine I am a claimant who is waiting for the outcome of the test case before I apply for my charges back (yes I should know better but statistics show only 20% of potential cases have been settled so far).

If I send a DSAR to my bank today they will only send details of charges back to 26 February 2003, this day six years ago! So any delay caused by this test case is benefiting the banks despite the objectives of the FSA/OFT guidance that time should effectively stand still!

This is the hidden agenda of the banks (in my opinion) and it's working.

[EXC]

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

The banks have 1 month in which to seek leave to appeal to the House of Lords and the HoLs have 8 weeks to decide whether to grant it.

If permission is granted it could be one of the first cases to be dealt with in the 'Supreme Court' which takes over from the House of Lords in a few months.

[TANZARELLI]

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

About time!


Here's my 10 penneth:

Banks are winning by dragging this out.

Imagine I am a claimant who is waiting for the outcome of the test case before I apply for my charges back (yes I should know better but statistics show only 20% of potential cases have been settled so far).

If I send a DSAR to my bank today they will only send details of charges back to 26 February 2003, this day six years ago! So any delay caused by this test case is benefiting the banks despite the objectives of the FSA/OFT guidance that time should effectively stand still!

This is the hidden agenda of the banks (in my opinion) and it's working.

I agree. Its easy to say to people that they need to get their claims in, but if the amount they are claiming is a lot shtne the court fees could be better used in their pockets than tied up in the court system.

However your arguement is that it has taken a high court test case to iron out the complexities of points of law, therefore how would it have been possible for you to have brought a case to court prior to this. Also throughout the test case the banks still attempted to conceal the true nature of the charges by dragging it out, cloaking the charges/dressing them up as fees for service/changing Terms & Conditions just before court.

I think s32 would be a go'er IMO.

[TUTTSI]

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

The banks have 1 month in which to seek leave to appeal to the House of Lords and the HoLs have 8 weeks to decide whether to grant it.

If permission is granted it could be one of the first cases to be dealt with in the 'Supreme Court' which takes over from the House of Lords in a few months.

Forgive me asking this question is the HOL/Supreme Court are they higher experienced Judges in this field than the appeals court!