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

[EXC]

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

The OFT have secured a High Court enforcement order against Ashbourne Management services in respect of gym membership contracts - much of it under s5.1 of UTCCR.

http://www.oft.gov.uk/shared_oft/con.../ams/order.pdf

The judgment in the case makes numerous references to the Supreme Court bank charges judgment. Tom reckons that paragraphs 170 - 175 support his theory that the requirement of good faith argument can be successfully applied where 6.2 (a) and (b) can't.

http://www.bailii.org/cgi-bin/markup...method=boolean

[ncf355]

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

Now this sounds like the start of some good news at long last!

Thanks for the update EXC

[EXC]

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

I wouldn't get too excited but I can't help thinking that the reasoning in paragraph 175 could apply to bank charges. The OFT and others have conducted research that found that people don't consider bank charges when entering into a current account contract because the circumstances in which they incur them are unforeseen.

''This brings me to the final part of the analysis, namely whether this assessment of fairness relates to the definition of the main subject matter of the agreements. In my judgment it does not. The assessment does not relate to the meaning or description of the length of the minimum period, the facilities to which the member gains access or the monthly subscription which he has to pay; nor does it relate to the adequacy of the price as against the facilities provided. Instead it relates to the obligation upon members to pay monthly subscriptions for the minimum period when they have overestimated the use they will make of their memberships and failed to appreciate that unforeseen circumstances may make their continued use of a gym impractical or their memberships unaffordable. Put another way, it relates to the consequences to members of early termination in light of the minimum membership period. Accordingly I believe the assessment is not precluded by regulation 6(2).''

[EXC]

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

In a speech given to the BBA yesterday, FSA Chief Executive Hector Saints confirmed that the new Financial Conduct Authority (FCA) - which comes into being in 2013 - will have the power to regulate prices ''where they relate to fairness''. As far as I know this kind of power will be unprecedented for a financial services regulator.

''A word on the enhanced competition mandate which has already attracted comments and is a key feature of the proposed FCA remit. In the past the FSA understood that within the current regulatory framework competition matters were primarily for the OFT, and in particular that it should not use its powers in relation to fairness to intervene in respect of price. This is a simplification of our historic approach, but suffices for the purposes of my comments today, since the principal point I wish to make is that the new framework makes clear that government now expects the FCA to take a central role in the promotion of competition. The government is not expecting the FCA to become an economic regulator but is expecting it to utilise its powers to make judgements on pricing issues where they relate to fairness. Delivering on this mandate will require a step change relative to the FSA in the FCA’s technical skills and philosophy.''

BBA Speech

This follows what FSA Chairman Lord Turner told the Treasury Select Committee in November last year:

''But the answer is, when and if all that is tidied up, yes, I do think the appropriate regulatory authority [FCA]should be directly looking at both the transparency and indeed the level of unauthorised overdraft charges. That should be part of our regulatory machinery.''

http://www.publications.parliament.u.../612/612ii.pdf

[EXC]

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

I was listening to another interview with Hector Sants in which he was talking about the proposed powers the Government is considering giving to the FCA to regulate prices, which he believes will be enough to use ''particularly in the area of bank charges''.

BBC News - Hector Sants on the FCA

So it's beginning to look like that the coalition's pledge to ''end unfair bank charges'' will be achieved via the powers is bestows on the FCA.

As the FCA has to be up and running by 2013 with it's remit in place it could be a quicker route to dealing with the level of bank charges than the government going through the laborious process of introducing primary legislation through parliament to, for example, rewrite UTCCR.

[EXC]

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

House of Commons Written Answer: Bank Charges

Graeme Morrice (Lab: Livingston) asked BIS what progress has been made on the coalition agreement commitment to introduce stronger consumer protections, including measures to end unfair bank and financial transaction charges; and if he will make a statement. Responding, Ed Davey said:

''The Government are taking forward the commitment to end unfair bank charges in the context of a wider strategic approach to strengthen and streamline consumer protections and advocacy, and as part of the joint Department for Business, Innovation and Skills (BIS) and HM Treasury Consumer Credit and Personal Insolvency Review.''

''In July 2011, this Department and HM Treasury published a summary of responses to the call for evidence to the review. The evidence shows that there have been significant developments in the market in recent years. As part of the Office of Fair Trading’s work, banks have committed to introduce measures to improve the transparency of unarranged overdraft charges and many have also revised their charging structures. However, there are still serious concerns about how charges affect consumers, particularly where charges may not be clear or transparent. The Government are working with current account providers to determine the most appropriate course of action to deliver further improvements to consumers. We will, however, regulate to address consumer detriment if suitable alternatives cannot be agreed.''

''The Government will make an announcement on this later this year.''

''In relation to financial transaction charges, the Government supported an amendment to the consumer rights directive to ban payment surcharges that exceed the costs borne by the trader for use of that means of payment. This will address consumer concerns about the high level of fees charged by some businesses when consumers pay by debit or credit card. The directive should be adopted by the EU shortly and will be implemented into UK law.''

[teaboy2]

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

Well i wonder if my letter to David Cameron, forwarded to the department dealing with this issue, making it clear the effects such charges can have on those most vulnerable and those living of on the breadline, i.e. leaving them with no money to pay for food for their children till their next payment of Benefits where further charges would be taken from them until they manage to borrow money from friends to pay of the charges before they took them overdrawn again. Something many of my friends have experienced and i myself had experienced prior to starting my company up.

Basically think of the never ending circle of debt and repayments people get stuck in with payday loans, as it were and in somecases still is the same for those stuck in an endless circle of benefits paid and charges taken out as soon as the benefits are paid and the account yet again being taken overdrawn, so more charges will be taken out of the next benefits. Though it has improved in recent years i.e. banks stopping the daily charges on overdrawn accounts and reducing the charges. But still a hell of a lot needs to be done.

[Dougal16T]

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

Morning all,

'...a hell of a lot still needs to be done'

I could not agree more, including (but not limited to) the following:

1. Prompt response from all financial service provider - (especially the banks and sub prime lenders) - to letters/emails/telephone calls.

2. Full refunds of excessive charges made prior to the 'OFT Test Case'.

3. Those refunds to be made without undue delay - time scale within 8 weeks.

4. Full, proper and adequate training of all staff who are in touch with the consumer, no matter which form of media is used for that contact.

Apart from that,

Have a good day everybody

Dougal

[leclerc]

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

Morning all,

'...a hell of a lot still needs to be done'

I could not agree more, including (but not limited to) the following:

1. Prompt response from all financial service provider - (especially the banks and sub prime lenders) - to letters/emails/telephone calls.
That should already be in place with regards to FSA rules around complaint handling. However, how can the bank guarantee that they have received a complaint that may have been posted or lost in the postal system?
2. Full refunds of excessive charges made prior to the 'OFT Test Case'.
Unreasonable as the courts have already stated that charges are for consideration. Furthermore, how do you define excessive? Are all charges excessive or just some charges? Are for example, the odd charge not excessive?
3. Those refunds to be made without undue delay - time scale within 8 weeks.
The timescale is unreasonable based on the amount of charges that were levied purported to be in the billions of pounds mark. If you see how "badly" the banks are dealing with PPI currently then you can imagine how badly it will be dealt with on the charges issue.
4. Full, proper and adequate training of all staff who are in touch with the consumer, no matter which form of media is used for that contact.
Banks would say that their staff are trained fully via their induction program prior to going live with customers so you need to define the topics that you think they should have knowledge of? Should branch staff who count your cash be taught about processing loans which are dealt with through advisors in the branch, for example?
Apart from that,

Have a good day everybody

Dougal

Dougal, you know where I am coming from but I think the above would be responded by the banks in the method above......how would you counter it?
If you say that they do not do this then the banks would bring up statistics and state that "rogue" staff are making the genuine staff look stupid...

[CleverClogs]

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

"rogue" staff are making the genuine staff look stupid...

That hardly seems necessary.

[Dougal16T]

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

Dougal, you know where I am coming from but I think the above would be responded by the banks in the method above......how would you counter it?
If you say that they do not do this then the banks would bring up statistics and state that "rogue" staff are making the genuine staff look stupid...

Evening All,

A good post and one which deserves a prompt response.

1. (a) I agree there 'should' be a system in place, but is there? (b)It is up to the Consumer at this point to ensure that the complaint gets there, and sadly the only way is by 1st Class Recorded delivery [ it's just the age we live in...].

2. (a) Yes the Court have said that, but there is a move afoot to change that view. (b) Excessive is any charge which exceeds the ACTUAL cost of carrying out the task involved. The 'odd' charge may be excessive and possibly unreasonable as well.

3. (a) Strange is it not that if the Banks want the consumer to do anything they hardly allow 4 weeks, yet here we are saying that 8 weeks is not enough time, and I am afraid I do not agree. (b) The Banks should have adequate facilities to cope with all eventualities - Businesses that haven't generally fail.

4. (a) Well the Banks would say that wouldn't they, otherwise they are admitting their position is poor. (b) I agree that staff who perhaps take the money may not need other training - but the person who deals with the Customer on either face to face occasions or in loan processing (or indeed other involved financial aspects of Banking), should be fully trained in all aspects. An untrained member of staff, or one with limited ability can also be a liability.

It is a sad admission for an employer to admit they have rogue staff and are doing nothing about it! Customers can and will vote with their feet......! I would not like my business to make such statements, and for me not to rectify the problem would be death to my business.

Finally, my own personal view is that they have had it too good for too long (jealous? - maybe..), but the Consumer has (as a matter of historical record) been treated appallingly on far too many occasions for it to be acceptable in today's World.

As always

Best wishes to everyone

Dougal

[leclerc]

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

Evening All,

A good post and one which deserves a prompt response.

1. (a) I agree there 'should' be a system in place, but is there? (b)It is up to the Consumer at this point to ensure that the complaint gets there, and sadly the only way is by 1st Class Recorded delivery [ it's just the age we live in...].

2. (a) Yes the Court have said that, but there is a move afoot to change that view. (b) Excessive is any charge which exceeds the ACTUAL cost of carrying out the task involved. The 'odd' charge may be excessive and possibly unreasonable as well.
That is crossing the boundaries of the penalty charges argument and that was thrown out immediately and is unsustainable.
3. (a) Strange is it not that if the Banks want the consumer to do anything they hardly allow 4 weeks, yet here we are saying that 8 weeks is not enough time, and I am afraid I do not agree. (b) The Banks should have adequate facilities to cope with all eventualities - Businesses that haven't generally fail.
Not with the amount of customers because I suspect a lot of customers may have been charged even the odd charge and it will be plus interest and plus statutory interest which is no easy task.
4. (a) Well the Banks would say that wouldn't they, otherwise they are admitting their position is poor. (b) I agree that staff who perhaps take the money may not need other training - but the person who deals with the Customer on either face to face occasions or in loan processing (or indeed other involved financial aspects of Banking), should be fully trained in all aspects. An untrained member of staff, or one with limited ability can also be a liability.
you need to define all aspects because some would say that it means investments, share dealing, etc, etc, which is unlikely to be the case.
It is a sad admission for an employer to admit they have rogue staff and are doing nothing about it! Customers can and will vote with their feet......! I would not like my business to make such statements, and for me not to rectify the problem would be death to my business.

Finally, my own personal view is that they have had it too good for too long (jealous? - maybe..), but the Consumer has (as a matter of historical record) been treated appallingly on far too many occasions for it to be acceptable in today's World.

As always

Best wishes to everyone

Dougal

Large organisations will rarely state that it is there policies, targets or failures that is the cause so the idea of rogue staff fits the profile.

[Dougal16T]

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

Evening all,

Well there are some good extra points here, but I am afraid I am unable to concur with them.

This post is my own opinion, but based substantially on factual evidence (some of which is yet to be in the public domain).

2. This response will be resolved in favour of the Consumer, although this may be a few months ahead. (I did say there are major changes afoot.)

3. This would be a typical Bankers response, but as I have said this is no defence, and will be overcome.

4. I do not think that I do actually need to define these, as we would be moving away from the main question.
It is up to the Banks to decide how they train their staff, BUT they must ensure that each and every member of staff are correctly trained for the position they hold and retrained (if necessary) when moving to another post within the Banking world.

As I have said, I have received information that there are some radical developments due in the near future, but I regret that I am unable to disclose their nature, at this stage.

Meanwhile I wish everyone all the best,

Dougal

[EXC]

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

20 MPs have signed an Early Day Motion for the Coalition to meet it's commitment to end unfair bank charges.

Early day motion 2277 - BANK AND FINANCIAL TRANSACTION CHARGES - UK Parliament


Notably not a single Conservative has signed up to it.

[EXC]

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

I understand that there will be a bank charges case (an appeal of a County Court judgment) heard probably early in the new year.

AFAIK this will be the first bank charges claim ever to be heard in the High Court.