CCA and UTCCR arguments

[Amethyst]

This is MEANT to be in PIL Have tried anyway



Consumer Credit Act 1974 (as amended)

UNFAIR RELATIONSHIP

Only applies if you were overdrawn before April 2007 and stayed overdrawn until after April 2008 - then you can use the CCA back as far as you like.

If your account was closed before April 2008 or you werent in unauthorised overdraft very much. it is unlikely you can use the CCA

The whole contract / relationship was unfair to the Claimant under s.140a of the CCA 1974. The burden of proof rests on the bank. 140B provides that the debtor must allege that an unfair relationship exists before the creditor must show that it is not.


The Claimants must alledge and specify unfairness in order to put the burden of proof on the bank. (ie they can't just say it's unfair, prove it wasnt)

You can include issues of excessive price in the CCA Arguments as well as all the UTCCR arguments to show an unfair relationship existed.


UNFAIRNESS PER UTCCR 1999 REGULATION 5 (1)

IMBALANCE

This is again about the overall contract and YOUR (as an individual) relationship with the bank.

This is because the banks used the terms in the contract to your detriment, rather than the specific individual terms being unfair on their own.

You can't use issues of price.

You can go back as far as you like (subject to limitations act)

The Court must look at fairness of terms on their own motion in any claim.

The burden of proof is on the Bank once unfairness has been alledged.





OFT Consumer Credit Act Explanation of Unfair Relationships

Section 140A of the 1974 Act (as amended) provides that a court may determine that the relationship between a lender and a borrower arising out of a credit agreement (or the agreement taken with any related agreement) is unfair to the borrower because of:

• any of the terms of the credit agreement or a related agreement
• the way in which the lender has exercised or enforced its rights under the credit agreement or a related agreement, or
• any other thing done (or not done) by or on behalf of the lender either before or after the making of the credit agreement or a related agreement.

The courts have a wide range of powers where a credit relationship is found to be unfair, including:

• altering the terms of the credit agreement or a related agreement
• reducing the amount payable by the borrower
• requiring the lender to refund money to the borrower
• removing any duty placed on the borrower under the agreement, and
• imposing requirements on the lender or an associate.

CONSUMER CREDIT ACT SECTIONS


140A Unfair relationships between creditors and debtors

(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—

(a) any of the terms of the agreement or of any related agreement;

(b) the way in which the creditor has exercised or enforced any of
his rights under the agreement or any related agreement;

(c) any other thing done (or not done) by, or on behalf of, the
creditor (either before or after the making of the agreement or
any related agreement).


(2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).


140B Powers of court in relation to unfair relationships (1) An order under this section in connection with a credit agreement may do one or more of the following—

(a) require the creditor, or any associate or former associate of his, to repay (in whole or in part) any sum paid by the debtor or by a surety by virtue of the agreement or any related agreement (whether paid to the creditor, the associate or the former associate or to any other person);

(b) require the creditor, or any associate or former associate of his, to do or not to do (or to cease doing) anything specified in the order in connection with the agreement or any related
agreement;

(c) reduce or discharge any sum payable by the debtor or by a surety by virtue of the agreement or any related agreement;

(e) otherwise set aside (in whole or in part) any duty imposed on the debtor or on a surety by virtue of the agreement or any related agreement;

(f) alter the terms of the agreement or of any related agreement;

(g) direct accounts to be taken, or (in Scotland) an accounting to be made, between any persons.

(2) An order under this section may be made in connection with a credit agreement only—
(a) on an application made by the debtor or by a surety;
(b) at the instance of the debtor or a surety in any proceedings in any court to which the debtor and the creditor are parties, being proceedings to enforce the agreement or any related agreement;
or
(c) at the instance of the debtor or a surety in any other proceedings in any court where the amount paid or payable under the agreement or any related agreement is relevant.

(3) An order under this section may be made notwithstanding that its effect is to place on the creditor, or any associate or former associate of his, a burden in respect of an advantage enjoyed by another person.



UNFAIR TERMS IN CONSUMER CONTRACTS SECTIONS

Unfair Terms
5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

Effect of unfair term
8. - (1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.

INDICATIVE AND NON-EXHAUSTIVE LIST OF TERMS WHICH MAY BE REGARDED AS UNFAIR

1. Terms which have the object or effect of-

• (a) excluding or limiting the legal liability of a seller or supplier in the event of the death of a consumer or personal injury to the latter resulting from an act or omission of that seller or supplier;
  
  (b) inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him;
  
  (c) making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realisation depends on his own will alone;
  
  (d) permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract;
  
  (e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;
  
  (f) authorising the seller or supplier to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the seller or supplier to retain the sums paid for services not yet supplied by him where it is the seller or supplier himself who dissolves the contract;
  
  (g) enabling the seller or supplier to terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so;
  
  (h) automatically extending a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express his desire not to extend the contract is unreasonably early;
  
  (i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;
  
  (j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;
  
  (k) enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided;
  
  (l) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded;
  
  (m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract;
  
  (n) limiting the seller's or supplier's obligation to respect commitments undertaken by his agents or making his commitments subject to compliance with a particular formality;
  
  (o) obliging the consumer to fulfil all his obligations where the seller or supplier does not perform his;
  
  (p) giving the seller or supplier the possibility of transferring his rights and obligations under the contract, where this may serve to reduce the guarantees for the consumer, without the latter's agreement;
  
  (q) excluding or hindering the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract.

2. Scope of paragraphs 1(g), (j) and (l)


(a) Paragraph 1(g) is without hindrance to terms by which a supplier of financial services reserves the right to terminate unilaterally a contract of indeterminate duration without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof immediately.

(b) Paragraph 1(j) is without hindrance to terms under which a supplier of financial services reserves the right to alter the rate of interest payable by the consumer or due to the latter, or the amount of other charges for financial services without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof at the earliest opportunity and that the latter are free to dissolve the contract immediately.

Paragraph 1(j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract.

(c) Paragraphs 1(g), (j) and (l) do not apply to:

• - transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the seller or supplier does not control; - contracts for the purchase or sale of foreign currency, traveller's cheques or international money orders denominated in foreign currency;

(d) Paragraph 1(l) is without hindrance to price indexation clauses, where lawful, provided that the method by which prices vary is explicitly described.

[Darth Thundercloud]

Re: CCA and UTCCR arguments

If as in the case in Scotland the banks are to prove that their charges are not unfair in relation to price (S140A of the CCA) could we refer in court to the findings of Professors Molyneux and Struthers and Ian Jarrett?
I know this was a hot topic quite a while ago but if price is back on the legal agenda then there is strong evidence from the Professors to rebut any assertions from the banks that their charges are fair (in relation to price).
If this type of evidence is before the court then it blows the free if in credit argument put by the banks clear out of the water.

Q – Have I spectacularly missed the point?



I’ll get me coat.

[Amethyst]

Re: CCA and UTCCR arguments

can you link to the relevant reports please Darth.

yes CCA 140 unfair relationship so long as alledged properly does set burden of proof on the defendant.

My personal opinion is that in respect of the individual price per charge / per transaction there is no longer an argument. The arguments now should more be based on multiple charging, etc in repsect of creating the price of the overall relationship.

and just because you bought up pricing, and somebody somehwere WILL think the South African Competition Commission report (where the banks charged R40.00 before and now charge R5 max) is important (lol) here is an extract

Nevertheless, on savings accounts, FNB reported a transaction cost of R1.80 per successful debit order, while Nedbank reported a cost of R1.42 per successful debit order, compared with the cost of a rejected debit order of R4.18 and R4.88 respectively. These values bear no evident relationship to the fees charged per debit order and rejected debit order on, for example, the FNB Smart and Nedbank Transactor accounts.

actually SCoJ Judgment (most bizarre paragraph)

74. In each instance the Judge identified aspects of the provisions for payment of the Relevant Charges that would be anomalous if they were intended to be paid in exchange for the service to which they related. I will take one of the charges made by Barclays to illustrate such anomalies. A ‘Paid Referral Fee’ is charged when the Bank honours a cheque, standing order or direct debit in circumstances where the account is overdrawn without prior arrangement. The fee is not charged per transaction but at £30 per day. But the fee is only charged on a maximum of three days per month. A customer would not conclude that the fee was charged in exchange for the transaction or transactions concluded on the days when the charges were made but that any other similar transactions in the course of the month were provided free.

[hicskis]

Re: CCA and UTCCR arguments

By Darth Thundercloud:
"Q – Have I spectacularly missed the point?"

A. Yes. People are arguing section 140 (a) of the Consumer Credit Act and section 5(1) of the UTCCR - they both refer to contractual terms.

That means you would have to argue that the contractual term was unfair based on price which you cannot do because of the Supreme Court Ruling.

[natweststaffmember]

Re: CCA and UTCCR arguments

I think that UTCCR 1999 and the grey list is perhaps a red herring. I have to say that when you mull on things a while you kinda see that (e) is about price and level of the charge which is excluded. Some have mentioned that misrepresentation comes into the equation with regards to the charges and the way that the letters have been written ie to cover our administration costs. I think this is still not arguable in spite of the HOL appeal where it was found to be a business model for current accounts, ie the "administration costs for the breach" could be argued as being for administering the breach within the cross subsidy model. Unfortunately I do not buy the argument at the moment.
The CCA stuff will be interesting and the case in Scotland is yet to be concluded so we shouldn't raise our hopes unnecessarily but it is interesting to see what conclusion it has for Scottish cases. Furthermore let's not forget English and welsh cases which might be heard prior to this one.

[hicskis]

Re: CCA and UTCCR arguments

The banks defence was that these charges form part of the entire contract, therefore they are Fair charges, and are fair to be carried out.

The OFT won't challenge this further.

We know they are not..... However - we knew they existed - and that is a problem (so no misrepresentation). If we all kept our accounts in credit then the banks would not make any money - well not here.

I think that the Supreme Court Judges have indicated that we could challenge under section 5 of the UTCCR knowing that this would have to be done individually, as individual rights have been breached.

The 1000 dollar question then - is what right has been breached?

[Darth Thundercloud]

Re: CCA and UTCCR arguments

A. Yes. People are arguing section 140 (a) of the Consumer Credit Act and section 5(1) of the UTCCR - they both refer to contractual terms.

That means you would have to argue that the contractual term was unfair based on price which you cannot do because of the Supreme Court Ruling.

Quote from the GLC

"What this means is that the Bank of Scotland now has to prove its charges are fair in relation to price (under s.140A of the CCA). If you go back to pre-July 2007, that never happened. It always for claimants to prove charges were unfair, which historically was never easy given the banks failure to disclose their true business model etc., "

So how have I missed the point?

[hicskis]

Re: CCA and UTCCR arguments

By Darth Thundercloud:

"What this means is that the Bank of Scotland now has to prove its charges are fair in relation to price (under s.140A of the CCA)"

By Amethyst:

"CONSUMER CREDIT ACT SECTIONS


140A Unfair relationships between creditors and debtors

(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—

(a) any of the terms of the agreement or of any related agreement;

(b) the way in which the creditor has exercised or enforced any of
his rights under the agreement or any related agreement;

(c) any other thing done (or not done) by, or on behalf of, the
creditor (either before or after the making of the agreement or
any related agreement).

(2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor)."

Where does it say charges or the price thereof are fair or unfair. This is about the contract term that permits the charges in the first place and the Supreme Court has already ruled that the charges make up an integral part of the core contract and so are therefore fair.

[Amethyst]

Re: CCA and UTCCR arguments

As a practical example to back up what hicskis is saying about terms NOT price,

Nationwide - we contend that the following terms when taken as part as an overall contract and serve to create an unfair relationship (or imbalance) due in the main part to the following terms and the way those terms interact and the bank uses those terms to the 'claimant's' detriment.

FORM 2 Terms referenced from Nationwide 2007 standard terms and conditions include 1. 14. 18. 20. 21. 29. 30. 46. 48. 49. 50. 51. 52.



APPENDIX A - NATIONWIDE - Inexhaustive list of terms in Nationwide 2007 standard terms and condtions
(full terms and conditions attached)


Account Holding and Ownership
1. Your FlexAccount is a share of Nationwide Building Society. It will give membership rights to the account holder(s). We will ensure your membership will continue if you are overdrawn up to an agreed limit. Your membership may be withdrawn if you overdraw without agreement or exceed an agreed overdraft. By opening an account you agree to be bound by both our Rules and these Terms and Conditions. A copy of the Rules is available from any of our branches or on our website at Nationwide Building Society: Mortgages, Savings, Current Accounts, Banking, Insurance, Credit Cards, Loans, Investments.

14. Payments (direct debits, cheques, standing orders or bill payments) from your account will only be made if there are enough cleared funds available in your account. If you need to transfer funds from another Nationwide account this needs to be done by 5.00pm on the working day before payments are due. We may decline to make a payment if the amount exceeds any limit we set for monitoring or fraud prevention purposes.

18. We will debit your FlexAccount with:
i) All withdrawals made using your cards or cheque book.
ii) Any charges and/or interest that you have to pay from time to time
iii) Cheques paid into the account that are later returned unpaid.

20. Daily withdrawal limits may apply. Please see Nationwide FlexAccount: Open Online Bank Current Accounts Internet Banking or contact your branch for more information.

21. We can debit your account with additional charges in accordance with the scale applicable at the time you incur the charge. You can ask us for the latest scale of charges at any time.

We can change or add to the additional charges but the following are examples of when you will have to pay us such a charge:
i) If your account becomes overdrawn without our authority
ii) If a cheque you have written cannot be paid because of insufficient funds in the account
iii) If a Direct Debit or standing order on your account cannot be paid because of insufficient funds in the account

29. When we receive a request to authorise any transaction caused by use of your Debit Card, we have complete discretion as to whether we authorise it or not.

30. When deciding to authorise a transaction we will calculate the available funds in your account and may consider any outstanding Debit Card transactions; any authorisation given for a future Debit Card transaction; and any funds that we reasonably believe to have been credited or debited to or from your account.

46. If you ask us for an overdraft or to increase an existing overdraft, we may carry out searches with licensed credit reference agencies before deciding to grant you one.

48. Any agreed overdraft facility can be immediately withdrawn by us.

49. Cheque Guarantee Cards do not entitle you to overdraw your account or exceed a previously agreed overdraft limit. Cheques guaranteed with your card will be debited from your account and cannot be stopped. Suspension or cancellation of the card does not affect our right to debit your account with the amount of any cheque(s) that have been guaranteed - whether payment has been countermanded or not, or whether the cheque is technically irregular.

50. All authorised overdrafts are repayable on demand.

51. If withdrawals or payments made from your FlexAccount create an unauthorised overdraft, your account must be brought back into credit immediately.

52. If full settlement of any unauthorised borrowing is not made within 28 days from the date we issue a Notice of Formal Demand, we reserve the right to register the account as “defaulting” with one or more licensed credit reference agencies.

[hicskis]

Re: CCA and UTCCR arguments

These are indeed contractual terms Amethyst -

However the problem i see is that they are in clear language - in other words an individual should reasonably understand the consequences of breaching these terms.

Except for paragraph 46. (soz - you know me..xx)

46. If you ask us for an overdraft or to increase an existing overdraft, we may carry out searches with licensed credit reference agencies before deciding to grant you one.

So much for The Lending Code & due diligence.

[Amethyst]

Re: CCA and UTCCR arguments

With regards Nationwide terms below then -

Is there a breach if you go over your overdraft ?

Consequences are clear enough - You WILL be charged and you MAY have your membership withdrawn.

So are you breaching your contract ?

Or is an unauthorised overdraft just an informal service which the charge has no direct relation to and which forms a part of the price for a package of services ?

[natweststaffmember]

Re: CCA and UTCCR arguments

membership being withdrawn, to me, sounds like a penalty but legally speaking it may not be viewed that way since it is not operating outside the contract. I'll explain, if you steal from your employer then your employment is terminated. In a sense that is what nationwide are saying, if you break the rules then we will reserve the right to expel you for it.

[hicskis]

Re: CCA and UTCCR arguments

By Amethyst:
"Is there a breach if you go over your overdraft ?

Consequences are clear enough - You WILL be charged and you MAY have your membership withdrawn.

So are you breaching your contract ?"

There are breaches and then their are material breaches - it would depend on the circumstances of the case, but if you were to go over your overdraft facility then yes you have breached the contract and there are consequences - the severiest is termination of the contract or in this case loss of membership too.

"Or is an unauthorised overdraft just an informal service which the charge has no direct relation to and which forms a part of the price for a package of services?"

It's not a service per se - no one has a right to credit - however it is a facility the banks provide to facilitate payments, and if you were to use this facility then there are consequences, that are explained in clear language.

[Amethyst]

Re: CCA and UTCCR arguments

I'm using Nationwide as they are the only ones who did not change their charging terms after the commencement of the test case to ones which say a payment made which takes you over your agreed limit is actually an informal overdraft request. they continue to clearly (or not) state that going over your overdraft is a breach of terms.

Something I have struggled in trying to explain (even to myself) is that the Supreme Court Judgment doesnt look at individual banks actual terms and actual processes, it looks in much more general terms at the structure of a bank account and the customers ability (whether contractual or not) to exceed an agreed limit. And that essence of bank accounts is what the judgment was based on.

So in whatever terms it is couched by which ever bank it is, a situation where you exceed an agreed overdraft limit on a bank account, is part of the package of services and the charge is part of the price for the package of services.

That's what it is, whatever they have told you in the past, or represented it to you as, it is, what it is. Due to this, it CANNOT be a penalty (even if there weren't the Justice Smith judgment saying certain individual terms are not capable of being penal) AND the same applies to business accounts (despite being outside the UTCCR) because of the same reasons.

[hicskis]

Re: CCA and UTCCR arguments

Yeah but the banks are waving their hands around saying it's all part of the package - the contract - what we do. That cost's and we have the right to structure our revenue sources as we please. How we advertise that - market it - what we say it is - well it's all pert of the package.

The price of that package is what's contained in the "Charges" brochure - what services you will have to pay for - when, how, if etc.......

So i agree - the charge or the price of the services you choose to use are not penalties.

Therefore if you go overdrawn are you really in breach?

Oh i'm going around in circles - bed!