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OFT Test Case on Bank Charges ......from House of Lords to Supreme Court

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  • OFT Test Case on Bank Charges ......from House of Lords to Supreme Court

    We will keep you updated as much as possible although we don't expect first news until just after 1pm today.

    the queue for security is massive and doors open 10.15 for a 10.30 kick off. Its in the entrance just off that lawn infront of big ben where all the interviews with ministers (mostly ex ministers now lol) take place.

    We have one member there today, probably two tmw and thursday and will get info on here as and when though we expect the preliminarys to be quite straightforward.

    Also Tom Brennan will be on five live radio at lunchtime talking about the waiver and destruction of data.

    Keep an eye on this thread for rambles and news




    St Stephen's Entrance


    A committee room at the HoL (just to set the mood) not today and probably not room 2a, and ur not allowed to take piccies
    Last edited by Amethyst; 23rd June 2009, 09:42:AM.
    #staysafestayhome

    Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

    Received a Court Claim? Read >>>>> First Steps

  • #2
    Re: TODAY at the House of Lords - OFT v Banks latest news

    If someone had a smartphone (iPhone or the like) FaceBook could be updated from within the courtroom...

    Tom
    I will not provide support by Private Message under any circumstances. This is for your protection and mine. Any advice I give is my own opinion and carries no legal weight. Check it before you use it!
    Over £1200 claimed in several actions against several organisations.

    Comment


    • #3
      Okay update give me ten to type it up xx

      Preliminarys - Jonathan Sumption QC. on behalf of the Banks is speaking for today and half of tomorrow,

      The courtroom is completely packed, theres about 50 members of public there.

      The main point the banks are making is that the charges cross subsidise other parts of banking and that doing that isnt against the law - and that mobile phone companies and travel companies do it all the time and no one has a problem with that.

      Sumption stated that theres a table in the cruikshank report which relates to frances standing order charges and how they cross subsidise other parts of frances banking system


      The Lady lord said about the cross subsidy bit - what if an OAP goes to the hairdressers on a half price tuesday - what about the others that pay full price is that fair etc

      Another lord said the OAP would be worthy to be subsidised

      Sumption said 'worthiness is not an issue'

      One of the lords said banks are like robin hood in reverse

      Sumption went through all the contract terms with the lords and basically their objection to the appeal is that there is confusion over the word PRICE in 6(b) of UTCCR regs

      He says PRICE should mean the overall charges the banks make is the price/renumeration - ie ALL revenue rather than as the judges seem to think a price like advatantage gold account fee.


      He pointed out that SMith in his original judgment said all charges were for a service except for the unpaid item fees and the appeal said all were charge for service INCLUDING unpaid item fees


      He also complained that the OFT were attacking the banks of two fronts - competeition with the PCA report and the UTCCR. He complained it was a form of price control and as such illegal.





      Also Charges are necessarily many times higher than the cost to the banks as they are a main income stream


      2 or 3 times the law lords have stated the in UTCCR if a term is considered unfair it would be unenforceable
      Sumption said the UTCCR applies to current and past contracts which raises the financial stakes, he said he doesnt think the lords grasp what the issue is unless they know the consequences and the OFT are saying the consequences are irrelevant. Sumption intends to make the law lords aware of the implications/consequences of the judgement.
      Last edited by Amethyst; 23rd June 2009, 13:01:PM.
      #staysafestayhome

      Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

      Received a Court Claim? Read >>>>> First Steps

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      • #4
        Re: TODAY at the House of Lords - OFT v Banks latest news

        well telling a Law lord that he/or she doesn't grasp what the issue is, is playing with fire in my book!
        Is no longer here

        Comment


        • #5
          Re: TODAY at the House of Lords - OFT v Banks latest news

          Well it looks like the banks are going back to the complete package of services angle and stating that they can basically charge whatever they like in terms of default fees because they are part of their main revenue stream.

          If that's all they have got then IMO it's game over for the banks, this has already been argued to death in the original hearings, which they lost.

          Am just off to get my hair done ( it's cut price Tuesday !!!!!!!!!!! ) although I am not an OAP I do consider that I am worthy !!

          Comment


          • #6
            Re: TODAY at the House of Lords - OFT v Banks latest news

            That price control bit really annoyed me as the OFT in 842 default fees and credit cards set a limit of £12 or they would take regulatory action. It further stated that it shouldn;t be the case that they drop their fees to £12, so what did they all do? Lowered it to £12. Ridiculous.

            Comment


            • #7
              Re: TODAY at the House of Lords - OFT v Banks latest news

              Nice one.

              I love these points.

              one of the lords said banks are like robin hood in reverse
              He complained it was a form of price control and as such illegal.
              He pointed out that SMith in his original judgment said all charges were for a service except for the unpaid item fees and the appeal said all were charge for service INCLUDING unpaid item fees
              Now should we send him a new pair of shoes as it appears to have his current ones stuck in his mouth

              Comment


              • #8
                Re: TODAY at the House of Lords - OFT v Banks latest news

                BBC report from this mornings events....

                ok worked out the robin hood bit - Ian is coming from the banks refute Law Lords claims that the are robin hood in reverse angle - whereas i think its ore fun to quote the law lord who suggested they were

                Ian is a much better writer than me lol but then he had more time...and shorthand lol
                Banks 'not Robin Hood in reverse'


                Billions of pounds of past and future bank income are at stake

                The House of Lords has been told that banks are not "Robin Hoods in reverse" when they levy overdraft fees.
                Seven banks and the Nationwide Building Society have started their Appeal to stop the Office of Fair Trading (OFT) regulating their overdraft fees.
                Jonathan Sumption QC claimed the banks were not taxing the overdrawn for the benefit of others.
                However, he told the Law Lords that overdraft fees involved a large element of cross-subsidy.
                The outcome of the hearing may decide if millions of bank customers are able to reclaim billions of pounds in past charges from their banks.
                'Fairness'
                Mr Sumption, for the banks, argued that existing consumer contract regulations did not give the OFT the power to regulate prices.
                THE STORY SO FAR...
                Nearly a million people have claimed for the return of their unauthorised overdraft charges but their cases are on hold
                If the banks win this week's appeal, these people are unlikely to get any money back
                If the banks lose, then the legal arguments should move on to a key stage - a case to determine whether these charges were fair or not
                Only then will people have a clearer picture as to whether billions of pounds will be handed back to customers



                Crunch time for bank charges case

                He said that bank overdraft fees were required to be clear but were not necessarily required to be fair.
                The High Court and the Court of Appeal have both previously upheld the right of the OFT to scrutinise the fairness of bank charges under the 1999 Consumer Contract Regulations.
                Mr Sumption said both of the lower courts had been wrong, and had both over-refined and overcomplicated the interpretation of the regulations.
                He pointed out that the regulations were not designed as a mechanism of price control and were not aimed at regulating what services were offered or the price charged.
                They did not, he argued, apply to the main subject matter of a contract or the price being charged for it - only to ancillary or contingent charges.
                "The overdraft charges are too fundamental to the bargain to be declared unfair," he said.
                Cross-subsidy
                He told the five Law Lords hearing the appeal that overdraft fees involved a large element of cross-subsidy.
                Jonathan Sumption QC is arguing the banks' case

                People who went overdrawn without permission were paying part of the cost of providing current accounts to people who always stayed in the black.
                So the charges exceeded the cost of dealing with an overdrawn customer because "the revenue stream is essential to the whole of the current account structure".
                Mr Sumption explained that cross-subsidies were common in the banking industries of other countries such as France, Canada, Australia and the US.
                He said they were common in the charging structures of many other complex sets of services such as airline ticket prices or mobile phone tariffs and were not objectionable.
                One of the Law Lords asked if it was the case that bank charges included a surcharge to subsidise those who did not go into the red.
                Another Lord suggested overdrawn customers were being taxed for the benefit of others.
                But Mr Sumption said it was "tendentious nonsense" to suggest that banks were operating as Robin Hoods in reverse.
                He went on to say that a victory for the OFT might render all past overdraft payments unenforceable and might lead to "restitution".
                "The OFT has significantly raised the stakes," he said. "The issues are of considerable importance to consumers and the future of retail banking."
                #staysafestayhome

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                Received a Court Claim? Read >>>>> First Steps

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                • #9
                  Re: TODAY at the House of Lords - OFT v Banks latest news

                  tick tock tick tock.....
                  #staysafestayhome

                  Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                  Received a Court Claim? Read >>>>> First Steps

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                  • #10
                    Re: TODAY at the House of Lords - OFT v Banks latest news

                    Has the OFT QC remained unchanged?
                    ------------------------------- merged -------------------------------
                    Brick Court Chambers | Jonathan Sumption QC

                    Info on Jonathan Sumpton QC
                    Last edited by natweststaffmember; 23rd June 2009, 15:08:PM. Reason: Automerged Doublepost

                    Comment


                    • #11
                      Re: TODAY at the House of Lords - OFT v Banks latest news

                      Sounds to me like a no brainer, the whole argument is a bout disproportionate charging, and this has always been the case how can they charge somebody £40.00 for an unpaid £10.00 direct debit. The banking institutions have had there day in this country ,and have more recently brought it to its knees. All they have done is delayed the inevatable. I really do hope the lords see sence in this case. Maybe for once a decent and fair banking system will be born from the current mess.

                      Comment


                      • #12
                        Re: TODAY at the House of Lords - OFT v Banks latest news

                        Rightio

                        Suption is on again in morning for about 20 minutes, then Abbey will take over for the rest of morning then thats it for the banks case and it goes over to the OFTs turn.

                        All a bit boring but basically arguing over definition of price - Sumption (banks) argued that forgone interest was already part of the price - in the original hearing Nationwide argued the same thing I believe (will look it up in a minute)


                        EXc will write more up when he gets back as i was mid picking child up from cooking club.
                        #staysafestayhome

                        Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                        Received a Court Claim? Read >>>>> First Steps

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                        • #13
                          Re: TODAY at the House of Lords - OFT v Banks latest news

                          Legal Beagles


                          EXC asked Nationwide about the interest forming part of the price for accounts back in April 08

                          Originally posted by EXC
                          From: EXC
                          To: graham.beale@nationwide.co.uk
                          Sent: Friday, April 18, 2008 11:04 AM
                          Subject: PCA price query



                          Dear Mr Beale

                          As a personal current account holder with a regularly high credit balance, I would be grateful if you could answer some questions relating to the pricing structure and cost of my account.

                          During his submission to Justice Smith in the OFT v Banks test case hearing, lead QC for Nationwide, Geoffrey Vos, stated on the subject of the cost of personal current accounts ''And what is the price? Well, my Lord, the price is broadly free for the credit customer, except of course we retain the difference between the interest rate that we give the credit customer and whatever commercial interest rate we are able to achieve on the money deposited, and that can be regarded as part of the price.''

                          1. Please confirm that this statement, made on oath, is correct.

                          2. If correct, could you kindly explain why this 'price' and therefore cost, is not referred to in any of your personal current account terms & conditions, both past and present.

                          I would be grateful for a concise reply.


                          Yours sincerely

                          EXC



                          Originally posted by nationwide
                          -----BEGIN PGP SIGNED MESSAGE-----
                          Hash: SHA256

                          Dear EXC,



                          Graham Beale has asked me to respond to your e-mail of 18 April.



                          I confirm that the extract quoted in your e-mail did form part of the
                          submissions made by Geoffrey Vos QC to the court during the bank charges
                          test case hearing.



                          In common with all other financial institutions which are in the
                          business of lending money, Nationwide aims to lend money, on average, at
                          a higher rate of interest than it pays to investors. This is known as
                          an "interest rate margin". Nationwide's interest rate margin is one of
                          the lowest in the industry. Profit made through the interest rate
                          margin is used, in part, to offset the cost of providing accounts such
                          as FlexAccount and this is the point being made by Mr Vos. The rates of
                          interest paid on credit balances in FlexAccounts and the rates charged
                          for FlexAccount overdrafts form part of the terms and conditions of the
                          account. The rates charged by Nationwide on other types of loan are not
                          part of the FlexAccount terms and conditions and are not, therefore,
                          specified in those terms and conditions.



                          Yours sincerely,



                          Charles Bacon

                          Solicitor

                          Legal Department

                          Nationwide Building Society



                          So thats a good basis for their case lol
                          #staysafestayhome

                          Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                          Received a Court Claim? Read >>>>> First Steps

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                          • #14
                            Re: TODAY at the House of Lords - OFT v Banks latest news

                            If the "interest rate margin" is the basis of their defence then their defence should fall flat on its face, because as well as charging this "interest rate margin" which I agree with, as it is a spread that keeps the financial institutes working, but they also charge a fee; ie, the £25, £30 0r £40 they feel greedy enough to charge, which we all know hs been proven to be unlawful. They really have no defence if that is all of the amunition in their armoury.
                            Borrow money from a pessimist -- they don't expect it back.

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                            • #15
                              Re: TODAY at the House of Lords - OFT v Banks latest news

                              Just to pick up on what Ame was saying, a Law Lord specifically asked Sumption ''Is foregon interest part of the price (of a current account)'' and Sumption answered ''no''.

                              When asked the same question by Justice Smith in the original hearing. Geoffrey Vos - QC for nationwide - said yes.

                              Comment

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