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

[borgbaiter]

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

hi

could never understand why the OFT didnt appeal the penalties aspect in the first place. would make me happy if they were once more panalties :-)


Borgbaiter

[WendyB]

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

Well, I can't get my head round all of this, but that part seems to be clear to me. I think! And couldn't the Lords just do their own thing anyway, within the legal guidelines? i.e overrule the original findings and rule them as penalties anyway? It does seem as if their Lordyships are on the side of the Consumer. If the banks don't want it ruling on why do they keep bringing it up? Best to keep their collective gobs shut, IMO.

Or am I missing the point completely.........

[fuzzybrain]

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

I was thinking the same thing. It seems as if the judges want them classed as penalities... If this were the case then that would be game over for the banks??

It seems that whenever the banks open thier mouths them seem to drop themselves in it further.

I can't belive that they are arguing that things should go their way because of the effect it will have on them if they lose. they never took in account what damage their charges did to us!! What goes around, comes around!!!

[dunkmat]

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

FYI

http://news.bbc.co.uk/1/hi/business/8116384.stm

[crashbandicoot]

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

Hmmm 'Jonathan Sumption QC, for the banks, said if the previous ruling in favour of the OFT was upheld, the banks would face a deluge of litigation with claims going back many years.
"That prospect is appalling," he said. '

As others have pointed out, it just seems outrageous that they're using the 'credit crunch' card in effect to say the effect of losing would be devastating to them. They've been charging people willy-nilly, and so many have suffered financial hardship because of these very charges. Did they have a heart then? No...so why should anyone have a heart for the banks now?!!

Crash

[WendyB]

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

Banks face an "appalling prospect" if the Office of Trading is allowed to rule that overdraft charges are unfair, the House of Lords has been told.
The banks would receive a deluge of litigation if the decision was made against them, the court has heard.
Five Law Lords are hearing an appeal by seven banks and one building society against judgements by two lower courts.
The lenders are challenging the right of the Office of Fair Trading to decide if overdraft charges are fair or not.
Prices
Jonathan Sumption QC, for the banks, said if the previous ruling in favour of the OFT was upheld, the banks would face a deluge of litigation with claims going back many years.


Well they shouldn't have been ripping us off all this time if they didn't want to face the consequences, should they?

Oh dear, poor ickle banks, getting slapped on the wrist cos they couldn't get away with it any longer. What do they think this is, one law for them and another law for the rest of us? Why not just dispense with the entire British justice system and let the banks make their own laws??? Isn't that what they are doing already? I cannot believe they are so up themselves.

Well actually I can......

[archer_66]

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

crash youre quite right and in my opinion it was the banks that started the credit crunch.back in the olden days banks didnt have direct debits and cheques and so had to make money through other ways, not fleecing their customers and taking the profits to line their pockets instead of re investing it

[Amethyst]

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

Baroness Hale expressed amazement that with all the press and publicity about the case and the issues that one of the banks havent picked this up and decided they could get more customers etc by dropping the charges etc.

Crow talked mainly about the link/differences between the Utccr and competition issues.

Bud will write up his notes when he gets home xx save me rambling lol.



This mornings BBC report in full

Banks 'face deluge of litigation'


The Law Lords are led by Lord Phillips, the senior Lord of Appeal

Banks face an "appalling prospect" if the Office of Trading is allowed to rule that overdraft charges are unfair, the House of Lords has been told.
The banks would receive a deluge of litigation if the decision was made against them, the court has heard.
Five Law Lords are hearing an appeal by seven banks and one building society against judgements by two lower courts.
The lenders are challenging the right of the Office of Fair Trading to decide if overdraft charges are fair or not.
Prices
Jonathan Sumption QC, for the banks, said if the previous ruling in favour of the OFT was upheld, the banks would face a deluge of litigation with claims going back many years.
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

"That prospect is appalling," he said.
He said if the courts upheld the right of the OFT to scrutinise bank charges, then the charges might be deemed unenforceable for a time period dating all the way back to the 1990s.
That was because European Union regulations on unfair terms in consumer contracts had been introduced into UK law during that decade.
Alternatively, Mr Sumption argued, all personal current account contracts might become unenforceable in total.
At the core of the arguments is whether bank charges are exempt from the Unfair Terms in Consumer Contract Regulations (UTCCR) and whether the OFT can scrutinise or regulate the charges.
Mr Sumption argued that the price being paid by bank customers for the use of their overdrawn accounts was not something that fell under the above regulations.
"Does our case allow extortionate prices? Yes," he said.
"The remedy for extortionate prices lies in the domain of competition regulations, not in the domain of contract regulations."
'Consumer categories'
Mr Geoffrey Vos QC, for the Nationwide Building Society, supported the arguments of the banks.
In particular, he said, the Court of Appeal had been wrong in law to analyse the impact of overdraft charges from the point of view of consumers who stayed in the black.
The banks have been outlining their case

He pointed out that of 54 million current account holders, 12.6 million paid overdraft fees in any one year.
That meant there were at least two categories of consumer - those who paid and those who did not pay overdraft fees.
"The typical consumer is one who pays, intends to pay, or expects to pay debit charges," said Mr Vos.
"The charges are clearly recognisable as the price for this service for the debit customers."
So, Mr Vos argued, the bank charges were necessarily exempt from the Unfair Terms in Consumer Contract Regulations (UTCCR) and the OFT could not scrutinise or regulate them.
'Consumer protection'
Mr Jonathan Crow QC, representing the OFT, spent the afternoon rejecting some of the assertions of Mr Sumption and outlining the case for the OFT.
The OFT investigation will proceed irrespective of the outcome of this appeal because the relevant overdraft terms are still assessable to fairness


Jonathan Crow QC

He denied that the OFT was trying to conduct price control and said it was interested in consumer protection, which was the other side of the coin from the operation of competitive markets.
"We are looking at market failure because the consumers are not thinking about banking charges and banks can raise their charges without losing customers," he said.
He said there was no justification for the banks' suggestion that the OFT should use competition law rather than consumer contract regulations if it was worried about overdraft charges.
He pointed out that going to the Competition Commission was not a route available to ordinary consumer.
However but the consumer contract regulations did give consumers rights they could pursue in national courts.
Investigation goes on
Mr Crow went on to justify the OFT's intended use of the consumer contract regulations to scrutinise the fairness of bank overdraft charges.
"Price terms have not been given some kind of ring-fenced status," he said.
"Price clauses have not been cast out from the application of the regulations."
He went on to assert that overdraft terms could still be assessed for their fairness for reasons other than price, for instance if customers were taken by surprise.
He told the Law Lords that the OFT's current investigation into overdraft charges would continue even if it lost the current appeal.
"The OFT investigation will proceed irrespective of the outcome of this appeal because the relevant overdraft terms are still assessable to fairness," he said.
Mr Crow denied that a victory for the OFT in this appeal would lead to a disastrous upheaval for the UK's banking system.
He said the OFT was looking not only at the size of overdraft charges but how they were applied and how they affected customers. The OFT might, for instance, seek variation of bank interest rates associated with overdrafts.
The hearing is expected to end on Thursday

[Amethyst]

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

So basically Crow seems to be saying if they lose on the utccr in court they will look at the terms in similar vein to credit cards and competition ? which would only affect future charging not historical ?

[brown1950]

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

Baroness Hale expressed amazement that with all the press and publicity about the case and the issues that one of the banks havent picked this up and decided they could get more customers etc by dropping the charges etc.

Cartel springs to mind !

[Paule]

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

Cartel springs to mind !

How? Are they a Bank?

[natweststaffmember]

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

Hmmm 'Jonathan Sumption QC, for the banks, said if the previous ruling in favour of the OFT was upheld, the banks would face a deluge of litigation with claims going back many years.
"That prospect is appalling," he said. '

As others have pointed out, it just seems outrageous that they're using the 'credit crunch' card in effect to say the effect of losing would be devastating to them. They've been charging people willy-nilly, and so many have suffered financial hardship because of these very charges. Did they have a heart then? No...so why should anyone have a heart for the banks now?!!

Crash

Isn't the phrase "you reap what you sow". Unfortunately the banks and financial institutions have had unenforceable loan agreements, missold PPI, missold endowment and unfair charges.

Furthermore, I am a typical customer, I don't expect charges and I don't think any customer joins a bank expecting charges. It's just that sometimes things happen in life to cause a deficiency in funds to pay for outgoings be it poor financial education, family emergency, lifestyle changes. No typical customer goes into a contract with a bank immediately expecting charges. Such rubbish by Vos.
------------------------------- merged -------------------------------

Baroness Hale expressed amazement that with all the press and publicity about the case and the issues that one of the banks havent picked this up and decided they could get more customers etc by dropping the charges etc.

Cartel springs to mind !

I do agree with you at the start of the OFT test case. However, many of the banks have made "quick fixes" so that while the basic elements of charges are the same, the fees themselves are not the same price anymore. For example, Barclays Bank during the OFT test case and their personal reserve, Lloyds just as the case was announced with a cost per day, HSBC with its fair fees policy, while others remain the same but the price is different.
Prior to the first OFT test case arguments I think there was a case for the idea of a cartel. Unfortunately, I don't think there is currently based on price.

[EXC]

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

Just a few points from this afternoon in no particular order.

Asked by a Law Lord if the banks could combine other accounts ie savings accounts with current accounts to avoid going overdrawn, Crow said: ''The bank has a right to combine accounts but not an obligation.

Sumption said the banks believed that a reference to the ECJ by the HoLs would be a problem because of the delay and that the ECJ may favour a national regulator enforcing an EU directive.

In the OFT's reply to the banks view that any issues with the charges should be a matter for competition legislation rather than consumer regulations, Crow quoted plenty of evidence that one of the main purposes of the directive that gave rise to UTCCR was to promote competition.

A lot was spoken about the the effect of an unfair contract term in UTCCR which says that an unfair term is one that causes ''a significant inbalance of the rights and obligations of either party''. Sumption essentially argued that if the terms were deemed unfair and not binding the banks would be ''forced to provide costly services for no charge'' resulting in an inbalance.

Nationwide's Vos was asked if he thought the charges were ''extortionate''. He said ''Well I won't say they are not significant for the average consumer''. Vos also mentioned the significance of the Foxtons case.

Crow should be finished by lunchtime tomorrow though I don't know if the banks get to reply.

[scoobydoo]

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

"A lot was spoken about the the effect of an unfair contract term in UTCCR which says that an unfair term is one that causes ''a significant inbalance of the rights and obligations of either party''. Sumption essentially argued that if the terms were deemed unfair and not binding the banks would be ''forced to provide costly services for no charge'' resulting in an inbalance."



Is it just me or do the banks seem to be running round in circles?

One minute they write to customers stating the charges are not unfair.
Now they are saying ,so what if they are unfair? we are entitled to charge on those who go overdrawn to subsidise those who dont .

Then they say they are justified because they are the cost for a service and if they charge less they will lose out? Or was it the argument that they are not charges for the actual work involved they are a main income stream not in proportion to the work involved?

In theory if they are saying it is a main income stream and the recession ended and none of us went OD ,then they would pratically go bust anyway as this main income stream would be cut off? So part of their business model is based on us all not being able to handle our money in a responsible manner ? Thats not exactly a good plan is it?


Thanks for the excellent reporting - I think the only reason I am confused is that the banks seem to keep changing exactly what they are using as their core argument.



As for the case of trying to put the frighteners on about what the consequences would be if the case goes against them - I find that very strange. This is surely a legal argument and the consequences of what the ruling is should not be relevant.In fact I would say that a ruling in the banks favour would only re-inforce the fact that they could not be regulated and that in the long term implications would be dangerous for the economy as well as the consumer.


Thanks again.

Confused from Oxfordshire

[Amethyst]

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

Buds having to sort out a few work problems but will post comprehensively later thie evening.


for interest (maybe) LBC are doing a radio piece at 7.30 this evening.