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9 December - the FSA and OFT published their fourth and final update on their joint action plan to increase collaboration on matters of joint regulatory interest. Since the last update in May 2008, the two bodies have been updating their Concordats on Unfair Terms in Consumer Contracts and Consumer Protection Regulations and have also agreed a concordat on the Banking Conduct regime which covers joint working on the Consumer Credit Act 1974, the Financial Services and Markets Act 2000 and the Payment Services Regulations 2009. The action plan can be accessed via http://www.fsa.gov.uk/pubs/other/oft_fsa_jap.pdf
Unfair Contract Terms
The OFT and the FSA co-ordinate their work on unfair contract terms to provide effective
delivery of consumer protection under the Unfair Terms in Consumer Contracts Regulations
1999. This coordination ensures that the work of the OFT and the FSA is complementary and
joined up. It avoids duplication of effort and ensures that action is taken by the body best
placed to lead on any given issue by regular contact and joint access to the Consumer
Regulation Website, where relevant information on unfair contract terms can be found and
shared by enforcers.
In November 2009, we updated the Concordat on UTCCR's 1999 and Enterprise Act 2002 which
details the working relationship and division of responsibilities between the OFT and the FSA.
Personal Current Accounts
(i) Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) Investigation
into the fairness of unarranged overdraft charges & Test Case
The OFT launched an investigation into the fairness of unarranged overdraft charging terms
in April 2007. In July 2007 it entered into a litigation agreement with banks and the
FSA to bring a test case to ensure an orderly and efficient process for resolving the relevant
legal issues.
On 25 November 2009 the Supreme Court (formerly the House of Lords) handed down its
judgment in the bank charges test case. The court allowed the banks’ appeal and held that
the banks’ unarranged overdraft charging terms were not fully assessable for fairness under
the UTCCRs.
The OFT liaised closely with the FSA throughout the test case process, with coordination
arrangements in place at all levels. The FSA supported the test case in several ways – in
particular by granting firms a waiver so that they would not have to deal with complaints
about unarranged overdraft charges in the time specified under FSA rules.
The waiver lapsed on the Supreme Court’s ruling. Firms can now resume dealing with
consumers’ complaints in line with the FSA’s complaints-handling rules. The OFT is considering
the detail of the judgment before it decides whether to continue its investigation into
unarranged overdraft charging terms. The OFT is also seeking discussions with banks, consumer
organisations, the FSA and the Government in the light of the judgment.
(ii) Personal Current Accounts market study
In addition, following the OFT's 2008 market study into Personal Current Accounts (PCAs) in
the UK, which identified problems with the market, the FSA participated in the OFT's work to
seek solutions to those problems. The FSA joined the OFT-chaired Transparency Working Group,
offering an expert resource on the relevant Payment Services Directive requirements. The two
authorities continue to cooperate closely on matters in this area of mutual interest, including
on the provision of information to consumers on choosing and using PCAs.
In the follow-up report of October 2009, which announced solutions to these problems,
the OFT quoted research showing that consumers would value a price comparison site run by a
government body, to allow them to search the cost of a PCA. As a result, the FSA will launch a
feasibility study into introducing such a site onto its 'Moneymadeclear' website.
Unfair Contract Terms
The OFT and the FSA co-ordinate their work on unfair contract terms to provide effective
delivery of consumer protection under the Unfair Terms in Consumer Contracts Regulations
1999. This coordination ensures that the work of the OFT and the FSA is complementary and
joined up. It avoids duplication of effort and ensures that action is taken by the body best
placed to lead on any given issue by regular contact and joint access to the Consumer
Regulation Website, where relevant information on unfair contract terms can be found and
shared by enforcers.
In November 2009, we updated the Concordat on UTCCR's 1999 and Enterprise Act 2002 which
details the working relationship and division of responsibilities between the OFT and the FSA.
Personal Current Accounts
(i) Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) Investigation
into the fairness of unarranged overdraft charges & Test Case
The OFT launched an investigation into the fairness of unarranged overdraft charging terms
in April 2007. In July 2007 it entered into a litigation agreement with banks and the
FSA to bring a test case to ensure an orderly and efficient process for resolving the relevant
legal issues.
On 25 November 2009 the Supreme Court (formerly the House of Lords) handed down its
judgment in the bank charges test case. The court allowed the banks’ appeal and held that
the banks’ unarranged overdraft charging terms were not fully assessable for fairness under
the UTCCRs.
The OFT liaised closely with the FSA throughout the test case process, with coordination
arrangements in place at all levels. The FSA supported the test case in several ways – in
particular by granting firms a waiver so that they would not have to deal with complaints
about unarranged overdraft charges in the time specified under FSA rules.
The waiver lapsed on the Supreme Court’s ruling. Firms can now resume dealing with
consumers’ complaints in line with the FSA’s complaints-handling rules. The OFT is considering
the detail of the judgment before it decides whether to continue its investigation into
unarranged overdraft charging terms. The OFT is also seeking discussions with banks, consumer
organisations, the FSA and the Government in the light of the judgment.
(ii) Personal Current Accounts market study
In addition, following the OFT's 2008 market study into Personal Current Accounts (PCAs) in
the UK, which identified problems with the market, the FSA participated in the OFT's work to
seek solutions to those problems. The FSA joined the OFT-chaired Transparency Working Group,
offering an expert resource on the relevant Payment Services Directive requirements. The two
authorities continue to cooperate closely on matters in this area of mutual interest, including
on the provision of information to consumers on choosing and using PCAs.
In the follow-up report of October 2009, which announced solutions to these problems,
the OFT quoted research showing that consumers would value a price comparison site run by a
government body, to allow them to search the cost of a PCA. As a result, the FSA will launch a
feasibility study into introducing such a site onto its 'Moneymadeclear' website.
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