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

[archer_66]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

pmsl I love the earlier bit about the 'swa nky' HQ. Pell sticks to the 'cross subsidy makes it okay' line much as they did in the HoL hearings.

Further on quite an amusing exhange about overseas workers being employed by lloyds 'harrassment' division also this, which really shows how far removed the top bods are from what actually happens on the ground;

''Q370 Mr McGovern: On that subject of charges, I have had quite a few constituents come to my local surgeries, very often single mothers who have found themselves in the situation where, for one reason or another, they have missed their direct debit payment and it causes a charge and the knock-on effect is that they then miss another direct debit payment which causes another charge. One particular single mother found herself in the situation where she owed the bank something like £280 and she had never spent a penny of it-it was just charges. Is that justifiable?


Mr Kane: These circumstances do happen, I absolutely understand. They are relatively limited and I believe that they are to be avoided at all cost. Remember, we are dealing with large numbers of customers so there are processes in place that sometimes work in that fashion; but generally speaking we would not seek to operate in that fashion, we would try to communicate with the individual and try to come to an arrangement.''



cheers exc good read that, hadn't seen it before

i would just like to point out to that "man" that this has happened to me for many years, and its not much fun getting through the week on a tenner !!

[Tools]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

Q366 Chairman: Do you not think there should be some balance there on how much they should be charged rather than just leave it to the bank?


Mr Kane: The banking industry has generally come to an agreement that they will charge certain amounts for overdraft letters

Isn't that in breach of competition regulations? I realise that he mentions the charges range between £20 and £39, but surely this would still be classed as price fixing?

On a separate note, Amethyst mentioned the cost of the banks new HQ being "sw anky" being slated by the ministers.

Q143 Mr Carmichael: I do not want to be obsessive about Sir Fred Goodwin, but all you are really telling us is that in a mad world he was the maddest and you think for that reason history will be kind to him.
Mr Pell: No. As the only Englishman on the board of the Royal Bank for about four or five years, one cannot look at Scotland and the contribution that the Royal Bank has made to Scotland in many ways over the past ten years and just write them off at the moment. At the moment we are at a low ebb. We have a huge responsibility to get ourselves back up and running. We have powerful businesses in there. I will give you a simple example: I used to drive in three or four times a week past the Gogarburn site. It was as derelict building, as you probably remember; no testimony to anyone. If you drive in there now it is one of the finest world-class centres/head offices in any country in the world. A world-class business school. You cannot just forget that and move on. That will still be there in five years time when we have dealt with this issue and the bank has repositioned.
Q144 Mr Walker: How much did that building cost?
Mr Pell: I have no idea. I could find out.[3]
Q145 Mr Walker: This is your headquarters?
Mr Pell: The Gogarburn site.
Q146 Mr Walker: It is RBS's headquarters?
Mr Pell: Yes.
Q147 Mr Walker: So let us forget about the tens of billions you have lost because that is all made up by the fact that you have a s****y HQ. That really is pretty thin gruel for this Committee.
Mr Pell: It is not a s****y HQ.
Q148 Mr Walker: You just said it is a s****y HQ.
Mr Pell: I did not use the word "s****y". Those are your words. I said it was world-class and I would hope that that is the standard at which Scotland would wish to ask.
Q149 Mr Walker: I do not think you have grasped what you have done. You are somehow saying that a building compares to the tens of billions of pounds of taxpayers' money that you have wasted. You clearly have not grasped the gravity of the situation and the anger, both in this Committee and in Scotland, as to what you have done. Have you?
Mr Pell: Yes, I have. What I am saying is that we are at the moment at a low ebb-there is no question about that. I am deeply ashamed about the situation we are in. I think I have made that perfectly clear. However, in the last ten years we have built a powerful business. It has brought a huge contribution to Scotland. We are determined to get that business back up again as a major flag carrier.

Coincidentally I was collecting from a company today that supplied the roof for the scottish parliament building, it is a very elaborate design which consists of over 100 specialised frame joints, each costing....................£11000

For reference here are some pictures detailing the roof,


ScottishParliament




l

Beautiful I agree, but essential?

The phrases "Kettle calling the pot black" and "glass houses/ stones" springs to mind.

[scoobydoo]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

If customers were fully aware of the cost of the RBS building in India I dont think they would be happy either.

That scottish parliament building is very impressive. Would be lovely to work in a building like that - rather than the converted chicken shed I work in.

[EXC]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

So the Treasury were invoved in dicussions prior to the test case announcement. Be intersting to know why so I'll whack off an FoIA request.


Q233 Mr Davidson: Coming back to the question of your treatment of your customers, the overdraft charges and the Office of Fair Trading inquiry, you are taking legal action at every stage that you possibly can along with some other banks to try to stop the OFT making a judgment on the fairness or otherwise of your overdraft charges. Given that you are now majority owned by the Government, are you reconsidering your position? Or have you come under any pressure to do so?

Mr Pell: No. Could I for the record correct the opening point of your statement? The OFT opened the box by way of a press release two and a half years ago when they announced that in their view they considered overdraft charges to be illegal and unfair. When challenged by the banking industry, not by us as a bank, on what basis they justified it, they admitted actually that this was not within their "gift" to make this judgment. It was certainly a view they held, but the only way it could be tested would be in court. This left the banking industry in an almost impossible position because the box had been opened and yet the main regulator was then not really in a position to close it. In discussion with the OFT and all the regulators and the Treasury, it was agreed that the only way we could really resolve this issue was to get it taken to court and get legal certainty. The OFT was invited by the banks to bring a legal action against the banks in order that we could get clarity on this. That is the legal action which is going on at the moment. The OFT in the meantime has perfect right to come up with a ruling on fairness. It has been two and a half years, no ruling has emerged. That sits entirely within their gift.

[Budgie]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

Some light reading !!!!!!!!!!!





Civil Law Reform Bill




Purpose of the Bill:
The Civil Law Reform Bill will bring forward a number of civil law reform measures, including several recommendations of the Law Commission making the law simpler and more up to date.
The main benefits of the bill are:
The Civil Law Reform Bill will provide an opportunity to modernise and simplify the law on a variety of subjects where obtaining Parliamentary time for individual subject Bills may be difficult.
The civil law affects everyone. Keeping it up to date is essential if the law is to remain fair and people are to understand their rights and responsibilities.
The Bill’s enactment will demonstrate the Government’s support of the Law Commission and the Government’s commitment to law reform.
The main elements of the bill are:
The exact content of the Bill is still to be settled but the Bill is likely to include proposals in the following areas:

• Reform of the law relating to damages – in particular in relation to dependency claims and bereavement damages under the fatal Accidents Act 1976, creating a fairer and more modern system.
• Reform of the Limitation Act 1980 – how long a claimant has to take civil legal proceedings, making the law simpler and more consistent.
• Reform of the law relating to the rule of forfeiture and the law of succession – amends the law so that the heirs of a murderer, who are now disinherited under the forfeiture rule would be able to inherit.
• Reform of the law in relation to Pre-judgment interest – giving the Lord Chancellor to specify rates of interest by order, including power to award compound interest if appropriate.

Limitation periods – proposals for reform

May 12, 2009 by 1banklawblogger

A bill is to be published later this year that will propose a “primary” 3-year period for contract (and other) claims starting from, broadly, the date on which the claimant knows of the facts which give rise to the action and a “longstop” 10-year period starting from, broadly, the date of accrual of the cause of action.
The ‘Limitation Bill’ will be published in draft as part of the provisions of the Civil Law Reform Bill later this year (2009) for pre-legislative scrutiny. The draft Limitation Bill is expected to follow the terms of the draft Bill that was published by the Law Commission in 2001 with their report, following their consultation on reform of the Limitation Act 1980. There is a shorter, 31 page, executive summary from 2001.

http://www.lawcom.gov.uk/docs/lc270sum%281%29.pdf


Law Commission Report - Pre-Judgment Interest on Debts and Damages
Summary

Report Law Com No 287 (Summary)

http://www.lawcom.gov.uk/docs/lc287sum.pdf

[EXC]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

Cheers Bud interesting stuff.

Actually was just looking over the House of Lords appeal transcripts and though I'm sure we must have highlighted it before, Jonathon Sumption - the banks' lead QC - thinks that not only could the Limitations Act not apply and that charges would be unenforceable from 1995 but current account contracts in their entirety could be unforceable. The mind boggles.


17
18 The basic problem which the OFT's argument presents
19 for the banks, and the reason why this is such an
20 important case, is that if the charging structure is
21 assessable for fairness, then the risk to which the
22 banks are exposed is that one of two things may happen:
23 either charges comprising a large proportion of the
24 revenue stream generated by personal current accounts
25 will be held to have been unenforceable against the
18
1 consumer, ever since the directive came into force in
2 the United Kingdom, or else it will be held that, since
3 the unenforceability of these terms would unbalance the
4 whole interlocking contractual scheme of mutual rights
5 and obligations involved in a personal current account
6 contract, it follows that the proviso to article 6 of
7 the directive applies and all personal current account
8 contracts issued by High Street banks will be held to
9 have been unenforceable in toto since the directive came
10 into force in the United Kingdom.

[Budgie]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

I remember that bit, isn't that where the "1995" idea came from OTR and from the media's point of view.

But, I will toddle off and have a look at that the "proviso" to article 6 of the directive. But methinks it might just have been a bit of over dramatisation by Sumption.

IMO a personal current account is quite capable of operating without the unfair charging structure, indeed isn't it one of the OFT's main arguments ( and ours ) that these are not core terms !!

[scoobydoo]

So the Treasury were invoved in dicussions prior to the test case announcement. Be intersting to know why so I'll whack off an FoIA request.


Q233 Mr Davidson: Coming back to the question of your treatment of your customers, the overdraft charges and the Office of Fair Trading inquiry, you are taking legal action at every stage that you possibly can along with some other banks to try to stop the OFT making a judgment on the fairness or otherwise of your overdraft charges. Given that you are now majority owned by the Government, are you reconsidering your position? Or have you come under any pressure to do so?

Mr Pell: No. Could I for the record correct the opening point of your statement? The OFT opened the box by way of a press release two and a half years ago when they announced that in their view they considered overdraft charges to be illegal and unfair. When challenged by the banking industry, not by us as a bank, on what basis they justified it, they admitted actually that this was not within their "gift" to make this judgment. It was certainly a view they held, but the only way it could be tested would be in court. This left the banking industry in an almost impossible position because the box had been opened and yet the main regulator was then not really in a position to close it. In discussion with the OFT and all the regulators and the Treasury, it was agreed that the only way we could really resolve this issue was to get it taken to court and get legal certainty. The OFT was invited by the banks to bring a legal action against the banks in order that we could get clarity on this. That is the legal action which is going on at the moment. The OFT in the meantime has perfect right to come up with a ruling on fairness. It has been two and a half years, no ruling has emerged. That sits entirely within their gift.

Look I know I am being thick - and I apologise in advance - but I thought we were waiting for a decision on whther the OFT could rule on fairness? I thought the legality question had already been quashed? ( although I know it was discussed at the hearing)

So in this statement Mr pell is saying the OFT can already rule on fairness - they just have not done it???

Sorry I am sure I have missed the point and will be posting a red face soon.

[EXC]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

I remember that bit, isn't that where the "1995" idea came from OTR and from the media's point of view.

But, I will toddle off and have a look at that the "proviso" to article 6 of the directive. But methinks it might just have been a bit of over dramatisation by Sumption.

IMO a personal current account is quite capable of operating without the unfair charging structure, indeed isn't it one of the OFT's main arguments ( and ours ) that these are not core terms !!

I'd agree with all of that.

It was part of Sumption's summing up and he was obviously scare-mongering but there has to be something in it as not one of the five Lords voiced any disagreement.

This was where Sumption uttered the 'restitution' word in the very next paragraph:


18
11 In either case, the financial consequences of that,
12 operating retrospectively back to the limitation period,
13 are appalling. One must expect an avalanche of
14 restitution claims, the prospect of lengthy and
15 contentious litigation and, indeed, obviously a review
16 of the pricing model in which it is possible, but, on
17 the whole, rather unlikely, that "free-if-in-credit"
18 banking will survive.

Where he mentions 'limitation period' I can only assume he's not referring to the Limitation Act as it would of course invalidate his previous paragraph.

[huntingdon]

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

Nickij01,

erm you can afford the court fees based upon a means tested application. Download the court form ex160.

when you put your court application in, send the ex160 with it. They will not charge you based on the fact that it may cause hardship, and if they do charge you it may be deferred until you win or reduced dramatically.

Hope this assists.

[natweststaffmember]

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

Nickij01,

erm you can afford the court fees based upon a means tested application. Download the court form ex160.

when you put your court application in, send the ex160 with it. They will not charge you based on the fact that it may cause hardship, and if they do charge you it may be deferred until you win or reduced dramatically.

Hope this assists.

what benefit is there from putting in a claim in court?
As they have received an acknowledgement from the bank what more could they do by filing a claim in county court?

[WendyB]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

Look I know I am being thick - and I apologise in advance - but I thought we were waiting for a decision on whther the OFT could rule on fairness? I thought the legality question had already been quashed? ( although I know it was discussed at the hearing)

So in this statement the statement is saying the OFT can already rule on fairness - they just have not done it???

Sorry I am sure I have missed the point and will be posting a red face soon.

I'm so glad you aske dthat question Scoobs cos I have been thinking exactly the same thing ever since I read it on Friday. I thought it was just me reading it the wrong way round, or I'd missed something!

[EXC]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

Look I know I am being thick - and I apologise in advance - but I thought we were waiting for a decision on whther the OFT could rule on fairness? I thought the legality question had already been quashed? ( although I know it was discussed at the hearing)

So in this statement Mr pell is saying the OFT can already rule on fairness - they just have not done it???

Sorry I am sure I have missed the point and will be posting a red face soon.

If I understand you correctly, here's my take on it:

Although the OFT can give a view that the charges are unfair and have statutory powers to seek to take enforcement action, based on this view, enforement is dependant on a court ruling that the charges are unfair.

The current test case issue is not about whether the OFT can give a view on fairness under UTCCR but whether the charges apply to UTCCR in principle.

Is that any good to you Scoobs?

[natweststaffmember]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

Look I know I am being thick - and I apologise in advance - but I thought we were waiting for a decision on whther the OFT could rule on fairness? I thought the legality question had already been quashed? ( although I know it was discussed at the hearing)

So in this statement Mr pell is saying the OFT can already rule on fairness - they just have not done it???

Sorry I am sure I have missed the point and will be posting a red face soon.

The OFT can say that the interplay of charges ie you get charged for one item and then are charged because of the original charge. This is about whether they consider the way the charges act in conjunction with each other are fair. The OFT test case is about more than just this but about whether the term that causes it is a fair term. It is just slightly different. I'll see if I can get the quote from the HOL transcripts.

[Budgie]

Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !

Look I know I am being thick - and I apologise in advance - but I thought we were waiting for a decision on whther the OFT could rule on fairness? I thought the legality question had already been quashed? ( although I know it was discussed at the hearing)

So in this statement Mr pell is saying the OFT can already rule on fairness - they just have not done it???

Sorry I am sure I have missed the point and will be posting a red face soon.

In simple terms, at the time of the above interview ( March this year ) the OFT were in the process of finalising an update to their report into Personal current accounts in the UK, this updated report has now been issued and copies of it can be found on this website (Beagles formal response to OFT PCA Market Study Consultation Nov 2008 - Legal Beagles) and of course on the OFT website. The report, of course, makes reference to the charges issue, details the OFT's concerns regarding the charges and basically leaves the matter open pending the currently awaited Supreme Court Judgment.

Hope that helps

Budgie