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

[Amethyst]

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

Bud, Smith ruled the charge terms were incapable of being penal. The OFT didnt appeal. So that stands. On the terms that were judged. You can;t go back in and say ahhh but the OFT didnt argue it properly, because basically then you would be appealing Smith.

The only use of the penal argument as far as I can see, is that the banks mislead you into beliving they were penal. The banks thus either lied in court or lied in the contracts/letters etc.

Unless you can explain how you can put the penal argument back in and argue it against Smiths Judgment sucessfully. I think the only use of it is the terms were meant to sound like they were penaltys (ref the letters) but the banks knew they were really service charges.

The rest I agree with, or I misunderstand your post lol.

Askl is arguing 01-03 Natwest terms which were ruled capable of being penal - the problem is they came at the end of the charges, so didnt cause further charges, and the preceeding ones were judged service charges (as Phillips was all encompassing purpose) and he has been refunded the 01-03 charges so the rest of the case is burgered on penal aspects and has to go on reg 5 (which is out due to it being a business account damn law comission) which leaves us with mistake etc.

[askl]

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

"I still consider the relevant term in the NatWest 2001 conditions to be contractual and to impose a contractual prohibition on the customer," "I therefore remain unpersuaded that the relevant term in the NatWest 2001 conditions is not capable of being penal," The ruling by Mr Justice Andrew Smith Jan 09.
Note about £1.5k of the charges are from 2001, £1.9k 2000 when the terms appear to have been the same. Nothing has been repaid. The thing to note with Phillips is he was talking about personal accounts - free when in credit (a bit of a misunderstanding as it is actually free when in credit or authorised). This is not true of business accounts, where you pay a monthly account charge.

[Amethyst]

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

Oh yes, I realise that but the banks are being exceedingly good at getting the courts to agree the read across to business terms as the charging terms are materially the same. Anyway off to your thread now

[Budgie]

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

Everyone knows, even Vince Cable knows and in his Early Day Motion states that he believes the charges to be penal!!!

The problem lies in proving legally that they are penal.

Smith's decision ONLY states that the terms themselves are incapable of being penal. Why? Because in the terms and conditions reviewed as part of the test case the charging terms do not directly relate to a breach of contract.

Smith only reviewed certain terms of the contract.

The letters notifying me of the charges ( which are referred to in my bank contract and therefore an integral part of the contract, just as the leaflets detailing the various amounts of the charges are an integral part of the contract ) clearly link a breach of contract on my part with the resultant charging term and amount. The charges were in respect of my failure to have sufficient funds in my account to meet direct debit instructions and were levied by the bank to cover the increased costs to which they were put as a result of my breach. These matters are linked in the letter whereas they are not linked in the generic terms and conditions.

Smith did not review such letters in the High Court Hearing, if he had then maybe a different result would have been decided.

Smith's decisions are capable of being overturned, provided new arguments can be raised. The Supreme Court judgment wrt regulation 6 (2) is in itself evidence of an overturned Smith decision.

Even if a Claimant such as myself argued on the above basis and lost the argument it is clear that there is sufficient evidence to prove that the Claimant was justfied in believing that the charges were of a penal nature and not as the Supreme Court have ruled in exchange for a complete package of services. So the Common Law mistake argument would, in these particlaur circumstances naturally follow on from a common law penalty argument.

Bud, Smith ruled the charge terms were incapable of being penal. The OFT didnt appeal. So that stands. On the terms that were judged. You can't go back in and say ahhh but the OFT didnt argue it properly, because basically then you would be appealing Smith.

The only use of the penal argument as far as I can see, is that the banks mislead you into beliving they were penal. The banks thus either lied in court or lied in the contracts/letters etc.

Unless you can explain how you can put the penal argument back in and argue it against Smiths Judgment sucessfully. I think the only use of it is the terms were meant to sound like they were penaltys (ref the letters) but the banks knew they were really service charges.

The rest I agree with, or I misunderstand your post lol.

Askl is arguing 01-03 Natwest terms which were ruled capable of being penal - the problem is they came at the end of the charges, so didnt cause further charges, and the preceeding ones were judged service charges (as Phillips was all encompassing purpose) and he has been refunded the 01-03 charges so the rest of the case is burgered on penal aspects and has to go on reg 5 (which is out due to it being a business account damn law comission) which leaves us with mistake etc.

[Yoda]

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

Is there anything of use in the
COUNCIL DIRECTIVE 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts


It's all gobbledygook to me


http://eur-lex.europa.eu/smartapi/cg...model=guichett

[WendyB]

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

It's all gobbledygook to me

Thank God for that! I thought i was the only one!!:grin:

[Yoda]

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

I found this article on fairness

Finally, it should be noted that Paragraph (l) of Schedule 2 (UTCCR)provides that terms which allow the supplier to raise prices unilaterally or provide for the price to be determined at the time of delivery may be unfair. This provision is considered separately.

Fairness

The concept of fair dealing with the consumer is the central theme of the regulations. If a term is fair then the regulations will not apply.
A term will be regarded as unfair if, “contrary to the requirement of good faith,

20 it causes a significant imbalance in the parties’ rights and obligations under the contract, to the detriment of the consumer.”21

18

Bulletin 15 Case No. 7. This case was brought under regulation 7 which states that written terms must be expressed in plain intelligible language. The principles behind regulation 6(2) and regulation 7 are however
the same. 19 Complex financial contracts may be vulnerable to a finding of unfairness. There has been some recent media interest in the difficulty of calculating the interest to be charged on consumer credit contracts.
See
“Banks attacked for Confusing Charges” Glasgow Herald 5th Aug 2002. “Credit card charges which stumped a Maths Professor” Glasgow Herald 24th June 2002. It should be noted that stating the APR in consumer credit transactions is a requirement of law and the regulations do not apply to contractual terms which reflect mandatory statutory provisions. A term which reflected a mandatory statutory provision but did so in a confusing way may however still be subject to the regulation.

20

This provision is consistent with the terms of the Principles of European Contract Law Revised version 1998, Article 1:201 which holds: (1) Each party must act in accordance with good faith and fair dealing. The notion of good faith is beyond the scope of the article.

21

Article 3 and Regulation 5(1).

The assessment of fairness takes into “account of the nature of goods and services… to all the circumstances attending the conclusion of the contract and to all the other terms of the contract… on which it is dependent.”

22 The concepts of fairness and good faith are bound together. Fairness requires the supplier to act in good faith towards the consumer.

Lord Bingham has described the concept of good faith thus:

“The requirement… is one of fair and open dealing. Openness requires that
the terms should be expressed fully, clearly and legibly, containing no
concealed pitfalls or traps. Appropriate prominence should be given to terms
which might operate disadvantageously to the customer. Fair dealing
requires that a supplier should not, whether deliberately or unconsciously,
take advantage of the consumer's necessity, indigence, lack of experience,
unfamiliarity with the subject matter of the contract, weak bargaining
position or any other factor listed in or analogous to those listed in Schedule
2 of the regulations. Good faith in this context is not an artificial or technical
concept; nor, since Lord Mansfield was its champion, is it a concept wholly
unfamiliar to British lawyers. It looks to good standards of commercial
morality and practice.

23

Good faith requires that each party treats the other with commercial respect and does not seek to achieve an unfair advantage over the other by devious means.

LJ Brooke provided
the following example: -

“[I]t would be an affront to good faith to allow a party to rely on a "small
print" term of a contract which expressly removed the whole of the benefit of
the contract from the other party, with no diminution of the consideration

22

Article 4(1) and Regulation 6(1) 23 First National Bank, Para 17

which flowed from that party when it thought it was acquiring the benefit in
question.”

24

Good faith seeks to strike a balance between the legitimate interests of the supplier and consumer. The supplier should not seek to gain a contractual advantage over the consumer. Where a term exists for the benefit of the supplier there ought to be a counterbalancing term in favour of the consumer.

Contractual Interpretation

Regulation 7 (2) states that where, “

there is a doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail...”

The directive makes it clear that this rule of interpretation is not a defence against regulatory action.

25 Ambiguous terms may be challenged as being in themselves unfair for lack of certainty.

Regulation 8 provides:

(1) An unfair term in a contract concluded with a consumer by a seller or
supplier shall not be binding on the consumer.
(2) The contract shall continue to bind the parties if it is capable of
continuing in existence without the unfair term.

Suppliers cannot rely upon unfair terms in a contract. Unfair terms are void. A contract containing void terms continues to bind the parties’ so long as the remnants of the

contract are able so to do. A contract which minus the void terms is meaningless, is not binding.

Contractual Language and Presentation

Consumer contracts should be in plain English, be well presented, legible, highlight important terms and have no hidden terms. Ideally all of the contract should be found within a single document. The consumer must have the opportunity to become acquainted with the terms of the contract before he signs.
Regulation 7 (1) states:

A seller or supplier shall ensure that any written term of a contract is
expressed in plain intelligible language.

The OFT have consistently held that this means no legal language or jargon can be used in contracts. Legal terms may have a very precise and definite meaning to lawyers but mean very little to the consumer.
The OFT advise that:

“Ordinary words should be used as far as possible and in their normal
sense… Sentences should be short, and…text should be divided into easily
understood sub-headings…. Statutory references, elaborate definitions, and
extensive cross-referencing… should be avoided.”

26

Thus, ‘indemnify’

27, ‘E.&O.E.’28, tort29, ‘title, waiver and Bailee’, ‘without prejudice30,
‘without prejudice to the generality of the foregoing’31, ‘time of payment shall be of the

26

Guidance on Unfair Terms in Tenancy Agreements p56. OFT November 2001

27

Galleria Carpets Ltd t/a Posners Carpets and Posners the Floor Store Bulletin 16 No 8. Northern LPG
Supplies Ltd Bulletin 16 Case No. 11.

28

Homeform Group Ltd t/a Moben Kitchens, Kitchens Direct and Dolphin Bathrooms. Bulletin No 16 Case
No. 9.

29

Richard Parkin & Co Bulletin 16 case No 13.

30

The Student Support Centre (UK) Ltd Bulletin 14 Case No. 26.

31 Coomber Security Systems Ltd Bulletin 15 Case No. 4.

[PocketTheDifference]

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

Thank God for that! I thought i was the only one!!:grin:

Nope Im with you

[natweststaffmember]

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

Is there anything of use in the
COUNCIL DIRECTIVE 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts


It's all gobbledygook to me


http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&n umdoc=31993L0013&model=guichett

That is UTCCR in a nutshell. The legislation laid down in 1995 and in 1999 were as a result of the EC(at the time) Directive from 1993.

[Yoda]

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

That is UTCCR in a nutshell. The legislation laid down in 1995 and in 1999 were as a result of the EC(at the time) Directive from 1993.

So nothing new then? Oh well, I'd best leave it to the experts

[EXC]

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

----- Original Message -----
From: EXC
To: scotaffcom@parliament.uk
Sent: Friday, December 04, 2009 3:25 PM
Subject: Banking In Scotland 9 December



Dear Sir

Re the forthcoming House of Commons Scottish Affairs Committee - Oral Evidence Session 'Banking In Scotland' 9 December 2009.

During a previous Banking In Scotland session your committee held in March 2009, your witness Mr Archie Kane in answer to question 366, stated that ''The banking industry has generally come to an agreement that they will charge certain amounts for an overdraft letter''.

Surely this is an unambiguous admission that the banks operate as a cartel to maintain the price of their overdraft services throughout the industry. This is certainly the view of Lord Falconer who stated last week on BBC Question Time that banks do indeed operate as a cartel in imposing these charges.

http://www.bbc.co.uk/programmes/b00p36jw#p005c7vc Chapter 4.

I would be grateful if your committee would take the opportunity of following up on his answer and asking how exactly this industry ''agreement'' operates.

Kind regards

EXC

[WendyB]

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

Just a thought, probably very naive and simplistic of me and would only have relevance to Natwest, but, considering that they always stated "charges fair and justified" etc, and they have now slashed their charges dramatically, which are no doubt are still now referred to as "fair" (haven't checked the actual T & C's so would have to clarify exact wording) given the massive difference now, would there be any mileage in arguing that if so low a cost can be fair, then surely the previous higher charges were therefore unjustified and unfair? Don't know under what laws, regs or whatever this might be found, as I'm not that up on legalities, just thought it might be worth a mention.

Or am I just talking rubbish?

[natweststaffmember]

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

Just a thought, probably very naive and simplistic of me and would only have relevance to Natwest, but, considering that they always stated "charges fair and justified" etc, and they have now slashed their charges dramatically, which are no doubt are still now referred to as "fair" (haven't checked the actual T & C's so would have to clarify exact wording) given the massive difference now, would there be any mileage in arguing that if so low a cost can be fair, then surely the previous higher charges were therefore justified and unfair? Don't know under what laws, regs or whatever this might be found, as I'm not that up on legalities, just thought it might be worth a mention.

Or am I just talking rubbish?

I do understand the logic in that but they would say that they are reducing their prices for overdraft services in line with the wishes of their customers in a time of recessionary woes(Should I apply for RBS Media Relations now? )

[MIKE770]

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

What gets me they refer to::: the cost of a letter??? What overdraft letter, those days went out of the window years ago?

[Kafka]

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

There are a lot of interesting comments here about the penalty issue and the test case.

For a long time after the test case started, I always referred to it as 'Test Case', because it never was really a test case, in that it never fully examined real examples across a range of accounts in the way that the current credit agreement test cases are being done in Manchester, for example.

Instead, it dealt with the more abstract concepts of the T&Cs and how these should be interpreted in practice. Had the test case examined real cases, then the fact that the penalties were being cloaked as services should have been obvious to anyone (even High Court judges that clearly have no grasp of the practical realities of bank charges, based on their statements).

The point that business accounts are not free and cost service charges has already been made above. Another difference is with basic accounts, where the T&Cs expressly block any form of OD, which can only ever happen by the imposition of charges for bounced DDs or similar (there is no other way they can OD). The argument about the package of services and consideration of granting an OD simply cannot be applied to basic bank accounts in the same way, because the T&Cs are fundamentally different. This was another golden opportunity to reveal the cloaking that slipped through the fingers of the OFT (and hence the courts) and has lumbered us with incorrect judgments, with the reality that the OFT permitted the original judgment on penalties to stand unchallenged.

I suspect that the root of the problem is that the test case was instigated to play to the banks' agenda rather than one that dealt with the consumer or the nation. It will be very interesting to see what the OFT does next, and whether it has learnt anything from the failings of the last 2.5 years.