OFT lose against banks in supreme court judgment

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OFT lose the right to assess charges under the UTCCR

Today in the Supreme Court in a shock judgment Lord Phillips handed down the lords verdict that the banks terms which allow them to impose charges on current accounts for unauthorised transactions are incapable of being assessed for fairness under the UTCCR.

The OFT have previously stated that they will continue their work into making the banking system fairer and will look at competition rules for ensuring future charges are fair and reasonable. However they will be massively dissapointed in this judgment but havent yet stated whether they intend to appeal.

We are of course extremely disappointed in the judgment, however we congratulate the OFT and the Banks for taking this action through the courts to ensure the legalities are fully tested, and for making changes to charging structures and fee levels over the past few months.

What does this mean for you ?

It means that the terms are considered to be lawful and the door to reclaiming historical charges is closed for most consumers.

If you are in hardship banks must still treat you sympathetically and reasonably and you may still be able to obtain small refunds of charges imposed during your period of hardship, however this will need arguing under BCOBS (the new banking code) rather than UTCCR. We will outline steps you need to take if in SEVERE financial difficulty shortly.

Those who have already reclaimed charges and received payments from the bank WILL NOT be asked to repay any of the money, as in the majority of cases the payments were made as gestures of goodwill.

We will try and keep you updated and give more information as soon as possible.

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Re: OFT lose against banks in supreme court judgment

Judges unanimously agree that the terms invoking charges are core terms and form a substantial part of the price for holding a bank account

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Re: OFT lose against banks in supreme court judgment

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. As Lord Phillips stated, even if such a challenge was not possible it might still be open to the OFT to assess the fairness of the charges according to other criteria.


The key issue was whether the charges constitute the price and renumerationb as against the goods or services supplied in exchange within the meaning of the regulations. The Spreme court considered and decided a number of arguments as to whether the charges could be said to be price or renumeration under regulation 6 (2) b

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Re: OFT lose against banks in supreme court judgment

1) The pcharges were no paid in exchange for the transactions to which they related eg honouring a cheque when the customer had insufficient funds to do so.

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 bank and customer. Lord Walker commented that regulation 6 (2) b contained no indication that only the essential price or renumeration was relevant, in fact any monetary pri ce or renumeration payable under the contract would naturally fall within the lanugage of regulation 6 (2) b


3) The charges were not concealed default charges designed to discourage customers from becoming overdrawn on their accounts without priior arrangement 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 dscope of the regulations. They were in fact part of the price or renumeration paid by the customer in exchange for the package of services which made up a current account. The fact that liability to pay the charges depended on specific events occuring was irrelevant to that conclusion.


Accordingly since assessment of fairness of the charges which regulated to their appri]opriatemness as against the services supplied in exchange fell with regulation 6 (2)b no such assessment could take place and so the appeal would be allowed.

[gaz2006]

Re: OFT lose against banks in supreme court judgment

What a shock I didnt think that would happen

[StoneLaughter]

Re: OFT lose against banks in supreme court judgment

Gutted

[Brian]

Re: OFT lose against banks in supreme court judgment

This is not over yet
the OFT are making a statement today PM on this

[Smasher]

Re: OFT lose against banks in supreme court judgment

There are still a huge number of claims in the system argued under historical terms (pre-Sept 2007). Even if there has been a ruling that they couldn't be penalties, it has still not been established what they are!

Even if the OFT can't assess the fairness of 'the prices of services', these older cases are not a dispute about 'services'..

[gaz2006]

Re: OFT lose against banks in supreme court judgment

But if they have overruled other judges whove made decisions doesnt that mean maybe the charges can be "challenged on a penalty basis 2 rather than unfairness as if judge wrong on fairness he could be wrong saying they werent penalties ? Regards Gaz

[Yoda]

Re: OFT lose against banks in supreme court judgment

Everyone who has had a claim on hold should now send a letter to Gordon Brown requesting he overturns thid decision. That would be how many? over a million letters on his desk?

I can see why people are desparate to leave this scumbag country

[Smasher]

Re: OFT lose against banks in supreme court judgment

But if they have overruled other judges whove made decisions doesnt that mean maybe the charges can be "challenged on a penalty basis 2 rather than unfairness as if judge wrong on fairness he could be wrong saying they werent penalties ? Regards Gaz

The historical charges could be challenged on the basis of truth. They said that it cost them £35 when you went into unauthorised overdraft. Let's examine that.
If it turns out it cost them only around £2, then whether or not you can call it a penalty should be irrelevant. The point is, it would mean they have deliberately misled you and therefore also knowingly misled the courts in their written defence for thoudsands of claims..

[kev2b3]

Re: OFT lose against banks in supreme court judgment

Bloody hell i did'nt see that coming.

[ROBSTER]

Re: OFT lose against banks in supreme court judgment

Do I remember Dame (?) Angela Knight banging the table on a money box prog. last summer insisting that "only a court could rule on the fairness of bank charges" ?

May be she's right?

Stop the Court stays and let the court judge it (Will the banks defence be "well the OFT are not allowed to say they are unfair so they must be fair" )


BRING IT ON !:beagle:

[olivercromwell]

Re: OFT lose against banks in supreme court judgment

So its OK for bankers to screw up the finances of the companies they manage and then transfer the liabilities onto its OWN customers

does this apply to my PPI claim against the alliance and leicester?

[Yoda]

Re: OFT lose against banks in supreme court judgment

It's not over yet! The SC suggessted of another way for the OFT to move forward. I think that s5 of the UTCCR may be that