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Re: OFT Test Case on Bank Charges update - Supreme Court Judgment coming soon !
"20 That may be a convenient moment to answer a question
21 which I left over from yesterday from my Lord Mance as
22 to the extent to which the OFT could pursue a fairness
23 assessment of the relevant terms, even if this appeal
24 succeeds and the OFT's case fails.
25 The position that the OFT takes on that is that, in
light of the accumulation of factors one has just been
2 going through in paragraph 81, the OFT's position is
3 that the assessment that the relevant charges are unfair
4 based on the matters that presently cause it concern
5 would not be excluded by article 4(2), even if
6 your Lordships were to conclude that the charges are the
7 price for services supplied in exchange within the
8 meaning of the exemption.
9 When considering that submission, we would suggest
10 that it is appropriate to identify what, for present
11 purposes, is the obligation or term that the OFT is
12 assessing. It is easy, we would suggest, to lose sight
13 of that, because discussion about the fairness of the
14 charges tends to bring into view only one aspect of the
15 payment obligation, whose fairness the OFT is reviewing,
16 but the payment obligations in question contain two
17 relevant elements: first, the trigger that gives rise to
18 the obligation to pay; and, secondly, the amount of the
19 payment.
20 Looking at the OFT's various concerns about those
21 terms, it is important to note that the OFT's thinking
22 has developed. One wouldn't want your Lordships to have
23 the view that the August 2008 letter you saw is somehow
24 carved in stone for all time as a permanent expression
25 and a definitive encapsulation of the OFT's concerns,
but be that as it may, the concerns relate substantially
2 to the interplay between the amount -- we have never
3 shied away from that; it is central to our concerns --
4 but, secondly, to the fact that the customer doesn't
5 truly consent to the payment obligation for reasons we
6 have been looking at in paragraph 81 of our case.
7 Those two concerns, the amount and the absence of
8 true consent, are closely interrelated and the OFT would
9 not be concerned if the relevant charges were a penny.
10 So amount matters, we are not shy of that.
11 Equally, the OFT would not be concerned under the
12 regulations about a consumer paying his bank £70 for
13 a one penny overdraft for 10 days if he had truly
14 consented to the charges, in the way that a consumer
15 usually consents to a price when he buys goods, well
16 understanding the implications of what he is doing, but
17 that is not this case, and although I wouldn't want to
18 stress that one is giving here an inexhaustive statement
19 of the matters of concern and the process is not being
20 completed, but it is the interaction between the amount
21 of the charges and the impairment of the consumer's
22 consent that forms the substantial foundation of the
23 OFT's concerns, and what we mean by "the impairment of
24 consent" is the absence of true, genuine consent in the
25 way that I have been attempting to describe in relation
112
1 to the relevant charges.
2 That impairment arises at two stages, both when the
3 consumer enters into the contract and also when he
4 performs the conduct that results in the obligation
5 being triggered, the obligation to pay the relevant
6 charge being triggered.
7 My Lord, the impairment arises on entering into the
8 contract essentially for the reasons that we have been
9 looking at in paragraph 81; the charges don't apply in
10 the normal performance of the contract, so the
11 consumer's attention doesn't focus on them; there is no
12 opting out of the terms if the consumer wants the full
13 range of current account banking services.
14 Even if the consumer were to study the terms, he
15 wouldn't be able to ascertain with any precision how
16 they would be applied by the bank, for the various
17 reasons we have been looking at.
18 The impairment of the consumer's consent also occurs
19 when he actually performs the conduct which incurs the
20 charge, because the charges are triggered by what the
21 law and the terms treat as an implied request, not by
22 something which is in fact a true and express request.
23 The evidence of the market study is that they are
24 often incurred by mistake, and we have given the
25 references to the evidence in paragraph 81(n) of our
1 case. I haven't wearied you by going through all of
2 those references.
3 Quite apart from the evidence that the charges are
4 often incurred in error, it is not difficult to infer
5 that that must be so, because they don't represent
6 a sensible form of borrowing, and anyone acting
7 responsibly would want to avoid them. So the OFT is
8 concerned that the charges unfairly capitalise on
9 mistake.
10 The upshot of all that is that, when he performs the
11 conduct that results in the charge, the customer will
12 often have conducted no assessment of whether the
13 unauthorised overdraft represents good value for money
14 and, therefore, whether he should make his implied
15 request, and will not have asked himself whether he
16 wants to pay £70 for a one penny loan.
17 If he had foreseen the consequences, he would either
18 not have instructed the payment or would have ensured
19 that there were sufficient funds in the account.
20 My Lords and my Lady, that is our analysis and
21 summary of why we would say that the concerns that give
22 rise to the OFT's current investigation would remain,
23 even if this appeal succeeds, because it is not simply
24 a concern about the sheer money/price figure; it is
25 a concern about the method in which these terms operate
1 and the absence of true consent. An assessment of the
2 unfairness in those respects is not precluded, even by
3 the application of article 4(2)."
Apologies for the long quote but it is pages 110-114 3rd day of the HOL appeal.
"20 That may be a convenient moment to answer a question
21 which I left over from yesterday from my Lord Mance as
22 to the extent to which the OFT could pursue a fairness
23 assessment of the relevant terms, even if this appeal
24 succeeds and the OFT's case fails.
25 The position that the OFT takes on that is that, in
light of the accumulation of factors one has just been
2 going through in paragraph 81, the OFT's position is
3 that the assessment that the relevant charges are unfair
4 based on the matters that presently cause it concern
5 would not be excluded by article 4(2), even if
6 your Lordships were to conclude that the charges are the
7 price for services supplied in exchange within the
8 meaning of the exemption.
9 When considering that submission, we would suggest
10 that it is appropriate to identify what, for present
11 purposes, is the obligation or term that the OFT is
12 assessing. It is easy, we would suggest, to lose sight
13 of that, because discussion about the fairness of the
14 charges tends to bring into view only one aspect of the
15 payment obligation, whose fairness the OFT is reviewing,
16 but the payment obligations in question contain two
17 relevant elements: first, the trigger that gives rise to
18 the obligation to pay; and, secondly, the amount of the
19 payment.
20 Looking at the OFT's various concerns about those
21 terms, it is important to note that the OFT's thinking
22 has developed. One wouldn't want your Lordships to have
23 the view that the August 2008 letter you saw is somehow
24 carved in stone for all time as a permanent expression
25 and a definitive encapsulation of the OFT's concerns,
but be that as it may, the concerns relate substantially
2 to the interplay between the amount -- we have never
3 shied away from that; it is central to our concerns --
4 but, secondly, to the fact that the customer doesn't
5 truly consent to the payment obligation for reasons we
6 have been looking at in paragraph 81 of our case.
7 Those two concerns, the amount and the absence of
8 true consent, are closely interrelated and the OFT would
9 not be concerned if the relevant charges were a penny.
10 So amount matters, we are not shy of that.
11 Equally, the OFT would not be concerned under the
12 regulations about a consumer paying his bank £70 for
13 a one penny overdraft for 10 days if he had truly
14 consented to the charges, in the way that a consumer
15 usually consents to a price when he buys goods, well
16 understanding the implications of what he is doing, but
17 that is not this case, and although I wouldn't want to
18 stress that one is giving here an inexhaustive statement
19 of the matters of concern and the process is not being
20 completed, but it is the interaction between the amount
21 of the charges and the impairment of the consumer's
22 consent that forms the substantial foundation of the
23 OFT's concerns, and what we mean by "the impairment of
24 consent" is the absence of true, genuine consent in the
25 way that I have been attempting to describe in relation
112
1 to the relevant charges.
2 That impairment arises at two stages, both when the
3 consumer enters into the contract and also when he
4 performs the conduct that results in the obligation
5 being triggered, the obligation to pay the relevant
6 charge being triggered.
7 My Lord, the impairment arises on entering into the
8 contract essentially for the reasons that we have been
9 looking at in paragraph 81; the charges don't apply in
10 the normal performance of the contract, so the
11 consumer's attention doesn't focus on them; there is no
12 opting out of the terms if the consumer wants the full
13 range of current account banking services.
14 Even if the consumer were to study the terms, he
15 wouldn't be able to ascertain with any precision how
16 they would be applied by the bank, for the various
17 reasons we have been looking at.
18 The impairment of the consumer's consent also occurs
19 when he actually performs the conduct which incurs the
20 charge, because the charges are triggered by what the
21 law and the terms treat as an implied request, not by
22 something which is in fact a true and express request.
23 The evidence of the market study is that they are
24 often incurred by mistake, and we have given the
25 references to the evidence in paragraph 81(n) of our
1 case. I haven't wearied you by going through all of
2 those references.
3 Quite apart from the evidence that the charges are
4 often incurred in error, it is not difficult to infer
5 that that must be so, because they don't represent
6 a sensible form of borrowing, and anyone acting
7 responsibly would want to avoid them. So the OFT is
8 concerned that the charges unfairly capitalise on
9 mistake.
10 The upshot of all that is that, when he performs the
11 conduct that results in the charge, the customer will
12 often have conducted no assessment of whether the
13 unauthorised overdraft represents good value for money
14 and, therefore, whether he should make his implied
15 request, and will not have asked himself whether he
16 wants to pay £70 for a one penny loan.
17 If he had foreseen the consequences, he would either
18 not have instructed the payment or would have ensured
19 that there were sufficient funds in the account.
20 My Lords and my Lady, that is our analysis and
21 summary of why we would say that the concerns that give
22 rise to the OFT's current investigation would remain,
23 even if this appeal succeeds, because it is not simply
24 a concern about the sheer money/price figure; it is
25 a concern about the method in which these terms operate
1 and the absence of true consent. An assessment of the
2 unfairness in those respects is not precluded, even by
3 the application of article 4(2)."
Apologies for the long quote but it is pages 110-114 3rd day of the HOL appeal.
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