Regulatory failing ? / Bank Charges - interesting blog

[Amethyst]

In my last post I set out 4 Tests which I believe must be met to justify my belief that resolving the question of Bank charges being fair or unfair falls to Lord Turner and the FSA, not the OFT.

It is worth recording again that the eventual Supreme Court decision concluded that the OFT did not have a legal right to investigate whether such charges were fair or unfair.

The Justices did point out that there were alternative avenues which the OFT could continue to pursue, the OFT decided not to do so.

So with the OFT completely out of the picture, it does leave us with the inevitable question - what was, and what remains, the position of the FSA as regards fairness? Is it something they ignore or something they regard as fundamental, for themselves and for those they regulate - including the Banks?

Trial and Error

Have been following this blog for a few days and its an interesting 'other' view on the bank charges ''fiasco''. It is, in the main, looking at the evidence surrounding events over bank charges and whether there was a serious regulatory failing.

Way back when, when the OFT and FSA poked their noses in, we looked at a possible judicial review of the FSA's decision to impose a waiver. It didn't go ahead for various reasons and we came to agree with the waiver and the reasons behind it.

We have spend the past year looking at the judgment and working as much as possible with our limited resources with the OFT, LSB and so on about the next steps, incredibly disappointed with the progress the OFT have made (reading their latest update to the PCA published a couple days ago was a bit depressing) but still weirdly hopeful that we have in a small way made a difference to the future of current accounts in this country.

This blog looks at the higher echelons a bit more in depth and is worth a read.

This Blog is designed for that purpose - it is open for anyone who may have an interest to read and form their own conclusions.

So am I correct in my opinion that the manner in which the FSA, and the OFT, and the manner in which the Treasury Select Committe accepted the situation over the subject of Bank Charges is an example of regulatory failing?

We're not in any way responsible or affiliated with the blog but I think some of you who have taken a interest in the background of the bank charges case handling will find it a good read.

Let us know your thoughts, I'm sure the author would be appreciative of input too.

[enaid]

Re: Regulatory failing ? / Bank Charges - interesting blog

My thougths, what a brilliant piece of writng and how simple it is to digest and for me especially that is a bonus.
I also think yes indeed the FSA have failed as did the OFT and maybe it is right we have been 'misdirected' and have been looking in the wrong place for our answers and resolve of the 'bank charges' campaign.
The FSA are indeed the ones who should be making sure that all the financial industry is doing its best for its cutomers, but how could, or indeed would they bite the hands that feed them.

From the FSA website
"Our powers and objectives are given to us by the Financial Services and Markets Act 2000 (FSMA). We also aim to promote efficient, orderly and fair financial markets and follow our principles of good regulation.

We are an independent body and we receive no government funding – we are funded entirely by the firms we regulate. However, we are accountable to the Treasury and, through them, Parliament."

Looks like another case of 'you scratch my back and I will scratch yours' .
Thats my opinion, but I wish the blogger all the luck in the world and really hope he gets the answer he is after in black and white.
Enaid x

[*MF*]

Re: Regulatory failing ? / Bank Charges - interesting blog

Time I said Hi! So Hi!

My sincere thanks to Ameythst for allowing the blog to be mentioned, and Enaid the feedback is appreciated just as much - it is not an easy subject.

Those who continue to follow it, be aware as Amethyst already knows, I am building a case just as it would occur in a court, each piece of evidence being listed item by item (with my own thoughts and comments added, which as is posted above, for which I take total responsibility), and then I will sum up - leaving you to form your own final verdict.

But the blog is not the end, (altho' I hope to finish it by the end of this week) it is far from it, and having found this link - I will keep you posted as I then take the whole issue forward - meantime I hope you will continue to read the blog - and let others know it is there.

PS: Yep - my eyesight is improving, Amethyst, lol! Was posting this as I got your PM.

[EXC]

Re: Regulatory failing ? / Bank Charges - interesting blog

MF

A couple of points if I may.

Firstly, what form of 'fairness' are you seeking the views of Lord Turner on? I ask this as 'fairness' as in TCF is an entirely different concept to 'fairness' that meets the requirements of UTCCR.

Secondly I'm struggling to see what it matters what the FSA did or didn't do in relation to unauthorised overdraft charges as the regulation of them does not fall to the FSA. I appreciate that the FSA announced that the scope of their regulation of bank accounts widened in November last year but it fell short of overdrafts:

''Areas of retail banking which fall outside the FSA’s remit, such as overdrafts and credit card lending, will continue to be regulated by the Office of Fair Trading....'' FSA begins new banking regulation to promote fairness for consumers

[*MF*]

Re: Regulatory failing ? / Bank Charges - interesting blog

Hi EXC ... I know this will sound weak, and most certainly does not respond (yet) to the two points you raise.

I am now roughly halfway through the blog, more specifically I am now through 2 of the 4 tests I have set, 4 tests without which I don't think my comments and more importantly the evidence I am listing, will withstand the severe scrutiny they most probably will receive, and yep, which they deserve.

The points you raise fall into the second half - and I (genuinely - not dodging it) think I need to keep my powder dry to make the impact this subject needs.

Could I leave you with this agreement - if I don't cater well enough or specifically enough, with the points you raise as I finish the blog, I will be more than happy to do so on here, in due course.

Can make this comment though, I am treating the Supreme Court decision as it stands (nobody has the option to do otherwise), so I hope you will see if you follow the blog - that "fairness" as it relates to the UCCTR does not get encompassed in the way you are thinking - it is not a this -v - that situation in terms of the definition of fairness.

*EDIT*

EXC, decided to also add this comment because it is already referred to in the blog, Go to Bank Charges - Test 1, and you will find a reference to dates and why they may prove important - it ties in directly with the link you used above. However, as in my response to you, you will also see me keeping the powder dry, as to why.

[EXC]

Re: Regulatory failing ? / Bank Charges - interesting blog

Ok I think I understand.

A couple of points concerning your latest entries:

Your estimation that the banks were facing a liability of £1b in refunds is very low. A more realistic figure would be in the region of £20b. This is based on the OFT's Market Study for 2006 which gave a figure of £2.6b in annual revenue derived from charges. Times this by six (the number of years before the Limitations Act applies) gives you £15.6b and add a few billion in interest.

Although I understand that the FSA estimated that it could be in excess of £20b.

On your point that the FSA were a party to the test case, they were not a litigant party, although they would have become one if the case had proceeded to the fairness stage.

An FSA representative did attend the first instance test case hearing and explained the FSA's position with regards to the case - although amusingly the judge didn't know she was there until she did. And interesting that the OFT QC (Brian Doctor) seemed keen to shut her up:


MR JUSTICE ANDREW SMITH: There has been no suggestion the FSA want to be heard at all.

MR RABINOWITZ: I don't know whether they do or don't. I think they are in court, if they want to be heard no doubt they will say so, my Lord. But that is really the issue that the banks have been grappling with: how to try and accommodate both, with respect, very important aspects of that in a way that leaves no one thinking that the banks aren't doing what they should to progress this case properly.

So, as I say, in relation to PIL, we hope to have a solution which will satisfy most if not all of the factors that are identified. My Lord has raised penalties, again we would like to work towards a situation which will satisfy the FSA insofar as they can be satisfied.

I have to say that so far as the banks are concerned, my Lord, the FSA needs and no doubt will take into account that even the identification of clear principles advances this matter very substantially, even if one doesn't go through each and every set of terms, and I have no doubt they understand that.

MR MILLIGAN: My Lord, the only thing I might mention is you might take the opportunity to ask the FSA, if they are represented here today, what their position is in the
light of what have Mr Rabinowitz has said.

MR JUSTICE ANDREW SMITH: Is there anyone from the FSA?

MR DOCTOR: Perhaps I can deal with that. I was going to say that Miss Boase is here present really as a watching brief rather than I think to address your Lordship on
anything.

MR JUSTICE ANDREW SMITH: I am a very reasonable person in these circumstances. I didn't catch your name.

MISS BOASE: Miss Boase.

MR JUSTICE ANDREW SMITH: You have heard that exchange, is that something that you could consider in the course of the next 24 plus hours, and see whether you can contribute anything to what Mr Rabinowitz is proposing. What particularly interests me is whether the FSA would be able to consider the questions that the bank is suggesting could usefully be dealt with, and make any comments as to whether they think it would assist in the management of the county court litigation if something was said, or if they so to speak were neutral, or if they thought it would be positively counterproductive. Obviously you couldn't begin to consider that until you've seen what the banks are going to produce, but if the FSA felt able to make a contribution in that way, it would be welcomed.

MISS BOASE: My Lord, yes, I will take instructions and will be interested to see what the banks put in. We appreciate (inaudible) party litigation but the FSA, is obviously not a party to these proceedings and doesn't wish to interfere, but FSA has granted a waiver to these banks and to many others and these banks have a obligation under that waiver to ensure for example there is a case that considers a representative (inaudible) the relevant historic and current terms and all issues which are substantially raised in county court proceedings and (inaudible) advance are dealt with. The FSA is realistic about the extent to which everything can be dealt in the course of these proceedings, but it is very concerned and that is the reason why I am instructed to attend and observe. But I will take instructions on the point you mention.

[*MF*]

Re: Regulatory failing ? / Bank Charges - interesting blog

Thanks EXC .. to carry the blog thru' at the speed I am trying to achieve, and the behind the scenes activity I am also carrying out I placed some restrictions on myself - esentially to get it out there, and not get too involved in debate until I had done so - please don't read that (again) as ducking any issues, that is not my style.

The points you make about the monies involved - understood - would you consider making those comments on the blog at all? Tied in with the above, I have at the moment placed one of these things I personally hate as a restriction to comments (again for the above reason) ... one of these type out what you see type things - hate them, but at the moment it serves a purpose.

Keep your eyes open for something that I will post shortly about the limitations act - don't want to say more again keeping my powder dry.

I said to Amethyst in a PM that it never ever ceased to amaze me how much info was out there with everyone that has been involved in this - your quotes above are a perfect example.

What in the end I hope may happen is I may touch on details in a way that have not been raised in the manner I am using - and bring some new aspects to the table - and from that the whole issue could be turned on its head as it stands now.

If I then take a back seat from the blog - and move forward on what are behind the scenes work pro tem, and bring these into the debate with you and every one else - then I will be happy at that outcome - but for now it is the blog I need to complete.

[*MF*]

Re: Regulatory failing ? / Bank Charges - interesting blog

MF

A couple of points if I may.

Firstly, what form of 'fairness' are you seeking the views of Lord Turner on? I ask this as 'fairness' as in TCF is an entirely different concept to 'fairness' that meets the requirements of UTCCR.

Secondly I'm struggling to see what it matters what the FSA did or didn't do in relation to unauthorised overdraft charges as the regulation of them does not fall to the FSA. I appreciate that the FSA announced that the scope of their regulation of bank accounts widened in November last year but it fell short of overdrafts:

''Areas of retail banking which fall outside the FSA’s remit, such as overdrafts and credit card lending, will continue to be regulated by the Office of Fair Trading....'' FSA begins new banking regulation to promote fairness for consumers

EXC ... Not sure that this is yet in sufficient detail to draw your attention to, it may still leave you wondering where I am heading, but my latest post on the blog begins to address those two aspects, more will follow which I think will interest you far more.

As a general update - the blog is now firmly on the desks of those at the OFT, FSA, TSC and others.

[Amethyst]

Re: Regulatory failing ? / Bank Charges - interesting blog

Have you read the BIS response on the CCD ancillary and contingent charges consultation MF ?

[*MF*]

Re: Regulatory failing ? / Bank Charges - interesting blog

I made contact with David Evans (?) at BIS when the first "restricted list" and "time restricted" consultation came out and am due to follow this up (lmao - why are there only 24 hours!) - BIS are amongst the others I mentioned above.

[paulb2905]

Re: Regulatory failing ? / Bank Charges - interesting blog

Not an area i know much about in all honesty.

But for 10pence wiorth I think it is important that the OFT be the "main" determinator in anything to do with the persecuting/prosecuting/enforcing these kind of charges or fairness thereon.

The FSA is supposed to be a regulatory body ie making sure they follow the rules - they have already demonstrated their inability and unpreparedness to do even this following and allegedly during - (if you watched the Ch4 Despatches tv programme) the Financial Crisis.

Even more worrying is the simple fact that there is a conflict of interest between the FSA and the Financial Institutions as the "head" of the FSA is usually a former banker in one form or another.

So perhaps its safer all round to leave these decisions to the OFT.

[righty]

Re: Regulatory failing ? / Bank Charges - interesting blog

Trial and Error

Have been following this blog for a few days and its an interesting 'other' view on the bank charges ''fiasco''. It is, in the main, looking at the evidence surrounding events over bank charges and whether there was a serious regulatory failing.

Way back when, when the OFT and FSA poked their noses in, we looked at a possible judicial review of the FSA's decision to impose a waiver. It didn't go ahead for various reasons and we came to agree with the waiver and the reasons behind it.

We have spend the past year looking at the judgment and working as much as possible with our limited resources with the OFT, LSB and so on about the next steps, incredibly disappointed with the progress the OFT have made (reading their latest update to the PCA published a couple days ago was a bit depressing) but still weirdly hopeful that we have in a small way made a difference to the future of current accounts in this country.

This blog looks at the higher echelons a bit more in depth and is worth a read.



We're not in any way responsible or affiliated with the blog but I think some of you who have taken a interest in the background of the bank charges case handling will find it a good read.

Let us know your thoughts, I'm sure the author would be appreciative of input too.

I said at the time the OFT action was a fit up simply designed to bring claims to an end and so it subsequently proved

[*MF*]

Re: Regulatory failing ? / Bank Charges - interesting blog

As I have explained above, due to my own time constraints, I need to develop the blog, step by step, before entering into debate on the details, but as above I will post when I think there may be posts which address points raised by members - as in my post to EXC above.

However, for those following the blog - I think this extract may prove interesting - from a recent and current BIS consultation. Read the blog (even just the last post) and you will see a 100% direct parallel with the blog content.

The Government is considering whether a fundamental weakness in regulation is caused by the split in responsibility for consumer finance between the OFT, which regulates consumer credit, and the FSA, which regulates most consumer financial services activity including, for example, mortgages.

From here:

http://www.bis.gov.uk/assets/biscore...r-evidence.pdf

[EXC]

Re: Regulatory failing ? / Bank Charges - interesting blog

It appears that your question to Lord Turner - Do you believe that the charges levied by Banks on their customers were and are fair or unfair? - was answered yesterday when he gave evidence before the Treasury Select Committee.

Speaking in the context of whichever authority will eventually be regulating consumer credit in the future he said:

''I do think that the appropriate regulatory authority should be looking directly at both the transparency and indeed the level of unauthorised overdraft charges''

For the full context watch from 12.04 Player

[*MF*]

Re: Regulatory failing ? / Bank Charges - interesting blog

Firstly, my apologies, particularly to Amethyst, that I appeared to have disappeared without trace, without going into detail, I stalled the blog last October but did not stop my activities, which have included contact with the FSA, the OFT, the ICB, and with individual members of the Treasury Select Committee and others.

I post again, for two reasons, the principal one being that I will start the completion of the blog, and the evidence involved very shortly.

But Mike Dailly of the Govan Law Centre has recently posted a Guest Opinion on the MSE site, which raises some of the issues to which the blog is directed, and I have posted a response to his comments there, and I believe it would be remiss of me were I not to make reference here to the issues involved given Amethyst's oriiginal acceptance of my contact.

I will add to this post, as I restart the blog, which will be very shortly.



*EDIT* Now restarted and I have included a full extract for the comments made by Mike Dailly.