OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

[TANZARELLI]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

need more info on this in shock!!!!!

How tf more to the point CB isnt it.

[TUTTSI]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

I wonder if the waiver can now be lifted and we all continue with our court cases?

[MrsSkint]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Oh no! I don't believe it! What the fxxx happened?

[mim71]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

I simply cannot believe this decision - it smacks of injustice to me

[spacey2930]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

does this mean we all have to contact the courts again to start our individual cases again? or is it not worth it?

[TANZARELLI]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

lets get all the info in first and chew it over.

[grimberz]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

So we the taxpayer bail out the banks when they run out of money, we do it and get charged... and the supreme court find that acceptable!!

Will the last decent, taxpaying and law abiding person to leave the country please turn out the lights !!

[debtisbad]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Maybe there is more to come, this all seems a bit sudden and strange. Let the dust settle and let's see where we are.

[Dougal16T]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Morning all,

Well if that doesn't take the biscuit......

The question is if you have a claim stayed...is there any point in continuing with the claim even if the stay is lifted?

As always my best wishes to everyone

Dougal

[Mrleelee]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

I am shocked and disgusted about this decision. I just can't get my head around it at the moment.

[orc]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

To help you out, as everyone is in a state of shock, here is a link to the judgements.

I have not copied the full judgement as it is lengthy and Curly ben has loaded the documents in his post below.

OMG!

http://www.supremecourt.gov.uk/news/judgments.html

Full judgement

http://www.supremecourt.gov.uk/docs/...7_judgment.pdf

Press summary

http://www.supremecourt.gov.uk/docs/...09_0070_ps.pdf

PRESS SUMMARY
Office of Fair Trading (Respondents) v Abbey National plc & others (Appellants) [2009]
UKSC 6
On appeal from the Court of Appeal (Civil Division) [2009] EWCA Civ 116

JUSTICES:

Lord Phillips (President), Lord Walker, Baroness Hale, Lord Mance, Lord Neuberger

INTRODUCTION:

This appeal involved a relatively narrow issue. The Supreme Court had to decide not whether the

banks’ charges for unauthorised overdrafts were fair but whether the OFT could launch an

investigation into whether they were fair.
At present, banks provide retail banking services on the basis that customers whose accounts are kept
in credit (in other words who lend money to the banks) will not be charged for the services provided;
customers who have authorised overdrafts will be charged interest on the money that they borrow
from the bank; and customers who incur unauthorised overdrafts will be charged, not only interest on
the sums borrowed, but fixed fees for each particular service involved.
The OFT has power to assess the fairness of terms in consumer contracts but this is subject to the
limits laid down in the Unfair Contract Terms in Consumer Contracts Regulations 1999, which
implemented European Council Directive 93/13/EEC.
Regulation 6(2)(b) states that the assessment of the fairness of a term in a contract “shall not relate . . .
to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”.
In other words, the “value for money” equation is excluded.
The Court of Appeal held that this exclusion applied only to the “core terms” of the contract and not
to ancillary terms such as the charges for unauthorised overdrafts. The Supreme Court unanimously
held that the charges for unauthorised overdrafts fell within this exclusion. They were part of the price
paid by the customer for the banking services provided.
However, the charges might still be open to assessment by the OFT on other grounds under
Regulation 5.
BACKGROUND TO THE APPEAL:
The Office of Fair Trading (‘the OFT’) wished to investigate the fairness, under the Unfair Terms in
Consumer Contracts Regulations 1999 (‘the Regulations’), of the terms (‘the Relevant Terms’) in the
Appellant banks’ contracts with customers imposing charges (‘the Relevant Charges’) on unauthorised
overdrafts. The Regulations implemented European Council Directive 93/13/EEC. The OFT applied
for a declaration that it was entitled to make such an investigation, notwithstanding Regulation 6 (2) (b)
The Supreme Court of the United Kingdom
Parliament Square London SW1P 3BD

T: 020 7960 1886/1887 F: 020 7960 1901 www.supremecourt.gov.uk

of the Regulations, which stated that the assessment of fairness of a term in a contract ‘shall not

relate… to the adequacy of the price or remuneration, as against the goods or services supplied in

exchange’. Both the High Court and the Court of Appeal decided that Regulation 6 (2) (b) did not stop

the OFT from making such an investigation. The banks appealed.
JUDGMENT
The Supreme Court unanimously allowed the appeal by the banks.
REASONS FOR THE JUDGMENT


Lord Walker made clear that the scope of the appeal was limited – the court did not have the

task of deciding whether or not the system of charging current account customers was fair, but

whether the OFT could challenge the charges as being excessive in relation to the services

supplied in exchange (Paragraph 3). As Lord Phillips stated, even if such a challenge was not

possible, it might still be open for the OFT to assess the fairness of the charges according to
other criteria (Para 61).


The key issue was whether the charges constituted the ‘price and remuneration’ as against ‘the

goods or services supplied in exchange’ within the meaning of the Regulations. The Supreme

Court considered and decided a number of arguments as to whether the charges could be said

to be ‘price or remuneration’ under Regulation 6 (2) (b):

(1) The charges were not paid ‘in exchange’ for the transactions to which they related – eg.
honouring a cheque when the customer had insufficient funds to do so (Para 75).
(2) The Court of Appeal was wrong to find that Regulation 6 (2) (b) did not apply to charges that
were ‘ancillary’ to the core contract between the bank and customer (Paras 38-41, 47, 78, 112).
Lord Walker commented that Regulation 6 (2) (b) contained no indication that only the
‘essential’ price or remuneration was relevant. In fact, any monetary price or remuneration
payable under the contract would naturally fall within the language of Regulation 6 (2) (b)
(Para 41).
(3) The charges were not concealed default charges designed to discourage customers from
becoming overdrawn on their accounts without prior arrangement (Paras 88, 114). The High
Court had rejected this argument and was right to do so.
(4) The charges were properly to be regarded as falling within the scope of the Regulations (Paras
43, 80, 104)

. They were in fact part of the price or remuneration paid by the customer in

exchange for the package of services which made up a current account (Paras 47, 89). The

fact that liability to pay the charges depended on specific events occurring was irrelevant to

that conclusion (Paras 47, 104).



Accordingly, since any assessment of the fairness of the charges, which related to their

appropriateness as against the services supplied in exchange, fell within Regulation 6 (2) (b), no

such assessment could take place and so the appeal would be allowed (Paras 51, 90, 92, 118,

119).

Further Comments


Lord Phillips also noted that in the absence of the charges the banks would not be able

profitably to provide current account services without a fee (Para 88). He stated that it might

be open to question whether it is fair to subsidise some customers whose accounts always

remain in credit by levies on others who experienced events they did not foresee when they

opened their accounts (Para 80).


Lord Walker commented that ministers and Parliament had decided to transpose the directive

as it stood rather than to confer the higher degree of consumer protection afforded by the

national laws of some other member states. Parliament might wish to consider whether to

revisit that decision (Para 52). Lord Mance endorsed this comment (Para 118).

The Supreme Court of the United Kingdom
Parliament Square London SW1P 3BD

T: 020 7960 1886/1887 F: 020 7960 1901 www.supremecourt.gov.uk



Lady Hale commented that if Lord Walker’s invitation to ministers and Parliament was to be

taken up, it might not be easy to find a satisfactory solution. She questioned whether the real

problem was not the charging model, but the lack of competition between the banks as to the

product they offered (Para 93).

No Reference to European Court of Justice


The court decided that although the interpretation of the European directive which the

Regulations implemented was a question of European law it was not necessary to refer the

matter to the European Court of Justice (Paras 49, 91, 115, 120).

NOTE

This summary is provided to assist in understanding the Court’s decision. It does not form
part of the reasons for the decision. The full judgment of the Court is the only authoritative
document.
Judgments are public documents and are available at:

www.supremecourt.gov.uk/decidedcases/
index.html

[TUTTSI]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Hi Dougal

That will depend if the FSA lift the waiver. The way I see it they have no reason now to carry on with the waiver so it should open the gfloodgates again.

Time will tell, Tom Brennan is looking at the Judgement as we speak. So watch this space.

Tuttsi

Morning all,

Well if that doesn't take the biscuit......

The question is if you have a claim stayed...is there any point in continuing with the claim even if the stay is lifted?

As always my best wishes to everyone

Dougal

[Dougal16T]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

So we the taxpayer bail out the banks when they run out of money, we do it and get charged... and the supreme court find that acceptable!!

Will the last decent, taxpaying and law abiding person to leave the country please turn out the lights !!

Sorry Grimberz,

I think they have all (apart from those on LB) left the country already....!

As ever

Dougal

[Ruby]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

The full document will have to be read before we drown our sorrows. The OFT may have other ways of claiming the charges are unfair and go to the European courts. One thing for certain good riddence to Gordon Brown he has no chance in hell of winning the next election!!!!!

[Angry&Informed]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

This country is FUBARd! If the evil pinstriped b**tar*s think i'm sticking round here paying for their mistakes they can think again. I propose a revolution!