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God knows why this woman puts up with me. I 've given her so much grief in the past I'm surprised she's not binning my e-mails let alone using first names. But she's as sweet as they come. I have since sent her a little thank you note for the positive attitude the OFT have shown recently. Bless.
From: EXC
Sent: 05 November 2007 10:33
To: Kate Farrow OFT
Subject: Questions & Answers
Kate
I would be grateful if you could clarify your answer to a question in your updated ''questions & answers'' about the issues surrounding the OFT test case with the banks, published on 22 October 2007.
Question 18 asks ''Why can the banks continue to levy charges until the OFT's action is resolved, while consumer actions to reclaim charges are being suspended?''. The vast bulk of the answer deals with the entirely different question of why are consumer actions are being suspended while the banks can continue to levy charges. Of the appx 350 words that form your answer, only a mere fraction of them are actually devoted to why banks can continue to levy charges; ''As we have not yet completed our investigation into the fairness of the current levels of charges..''.
I and many others would attribute this to the OFT's continuing procrastination on the issue. I think it is worth reminding the OFT that
it's lengthy review into unauthorised overdraft charges was due for completion on 29 March claiming there was ''no quick fix'' to the problem even though you subsequently claimed ''We are committed to ensuring this process is resolved quickly''. The answer then goes on to reveal that ''..it would not be appropriate for us to ask banks to make changes to their charging structure at the moment''. To simply claim something is ''not appropriate'' is the kind of language one uses when stumped for an honest answer.
The answer also claims that prior to the test case announcement,litigation by consumers to reclaim charges was resulting in ''significant costs to individual consumers''. This is astonishing! On what evidence does the OFT base this belief? How many complaints has the OFT received about these costs? Is the OFT not aware that litigation costs are routinely recovered? Does the OFT not know that of the hundreds of thousands of court actions made by claimants, defeats can be counted on the fingers of one hand and therefore actual costs incurred apply to almost nobody.
I would also like to know what justification the OFT has for making regulatory decisions (based on an inaccurate belief) that consumers are spending too much on litigation. It is not within the OFT's remit to decide the level of legal expenditure incurred by consumers especially when these legal actions and costs are a direct result of the OFT's abject failure to resolve the issue to date.
The OFT has no business to effectively waive the fundamental human rights of everybody to challenge any charge made to them in a court of law.
I have not made this enquiry as a request under the Freedom of Information Act as I simply require clarification of information already given. Therefore I would consider it reasonable to receive your response within this week.
Many thanks
----- Original Message ----- From: Kate Farrow OFT
To: EXC
Sent: Tuesday, November 27, 2007 3:14 PM
Subject: RE: Questions & Answers
From: EXC
Sent: 05 November 2007 10:33
To: Kate Farrow OFT
Subject: Questions & Answers
Kate
I would be grateful if you could clarify your answer to a question in your updated ''questions & answers'' about the issues surrounding the OFT test case with the banks, published on 22 October 2007.
Question 18 asks ''Why can the banks continue to levy charges until the OFT's action is resolved, while consumer actions to reclaim charges are being suspended?''. The vast bulk of the answer deals with the entirely different question of why are consumer actions are being suspended while the banks can continue to levy charges. Of the appx 350 words that form your answer, only a mere fraction of them are actually devoted to why banks can continue to levy charges; ''As we have not yet completed our investigation into the fairness of the current levels of charges..''.
I and many others would attribute this to the OFT's continuing procrastination on the issue. I think it is worth reminding the OFT that
it's lengthy review into unauthorised overdraft charges was due for completion on 29 March claiming there was ''no quick fix'' to the problem even though you subsequently claimed ''We are committed to ensuring this process is resolved quickly''. The answer then goes on to reveal that ''..it would not be appropriate for us to ask banks to make changes to their charging structure at the moment''. To simply claim something is ''not appropriate'' is the kind of language one uses when stumped for an honest answer.
The answer also claims that prior to the test case announcement,litigation by consumers to reclaim charges was resulting in ''significant costs to individual consumers''. This is astonishing! On what evidence does the OFT base this belief? How many complaints has the OFT received about these costs? Is the OFT not aware that litigation costs are routinely recovered? Does the OFT not know that of the hundreds of thousands of court actions made by claimants, defeats can be counted on the fingers of one hand and therefore actual costs incurred apply to almost nobody.
I would also like to know what justification the OFT has for making regulatory decisions (based on an inaccurate belief) that consumers are spending too much on litigation. It is not within the OFT's remit to decide the level of legal expenditure incurred by consumers especially when these legal actions and costs are a direct result of the OFT's abject failure to resolve the issue to date.
The OFT has no business to effectively waive the fundamental human rights of everybody to challenge any charge made to them in a court of law.
I have not made this enquiry as a request under the Freedom of Information Act as I simply require clarification of information already given. Therefore I would consider it reasonable to receive your response within this week.
Many thanks
----- Original Message ----- From: Kate Farrow OFT
To: EXC
Sent: Tuesday, November 27, 2007 3:14 PM
Subject: RE: Questions & Answers
Nick
I write in reply to your email of 5 November regarding Question 18 of our question and answer document (question 17 in the latest published version) (‘the Relevant Question and Answer’).
The Relevant Question and Answer deals with two interrelated issues which have been raised by consumers: 1) why banks can continue to levy charges during the course of our investigation; and 2) why consumer actions to reclaim charges are being suspended as a result of the test case action we have begun.
Banks continuing to charge
You are concerned about what we say about why banks can continue to levy the relevant charges and you refer, in particular, to the sentence:
"As we have not yet completed our investigation into the fairness of the current level of charges, it would not be appropriate for us to ask banks to make changes to their charging structure at the moment."
This reflects the fact that our investigation is ongoing. In those circumstances, we do not have any basis to demand that the banks stop levying the charges. And, unless and until a court rules that the charges are unfair, there is no legal basis to say they must stop doing so.
We know some consumers may experience difficulties as a result of continuing to incur charges. But, the purpose of our test case action and our investigation is to clarify this area of the law. The banks, of course, deny the charges are unfair and refuse to stop levying them until a court rules they must.
We note, in passing, that there seems to be a misunderstanding in your email. Our investigation into the fairness of the relevant charges was announced on 29 March 2007. It was not, as you say, due for completion then.
Individual consumer claims
You also ask about the reference in the Relevant Question and Answer to the scale and cost of consumer litigation. You dispute that costs to consumers are an issue and you ask, ‘… what justification the OFT has for making regulatory decisions (based on an inaccurate belief) that consumers are paying too much for litigation.’ You go on to say that, ‘The OFT has no business to effectively waive the fundamental human rights of everybody to challenge any charge made to them in a court of law.’
It is not clear what OFT ‘regulatory decision’ you have in mind here. The Financial Services Authority has waived banks’ obligations to deal with consumers’ complaints about overdraft charges. The courts decide whether individual consumers’ cases should be stayed. The decision the OFT has taken, meanwhile, is to bring the test case and to investigate the fairness of the charges. The OFT has not, actually or effectively, waived any consumer’s right to complain about overdraft charges. They still can.
The OFT’s test case and its investigation aim to:
1. assist in a clear and orderly resolution of all complaints about the fairness of the relevant charges, whether currently before the courts or not; and
2. ensure that the charges are fair in future without the need for consumers to bring individual complaints.
Before the test case was launched the courts were being stretched by the number of cases being brought. There was a danger these cases would not be dealt with consistently. And, each of the involved individual consumers paying costs such as court fees and, where they chose to use it, the costs of representation, even if these costs may, ultimately, have been recoverable.
So, costs were (only) one factor in the OFT launching the test case and its investigation. The OFT strongly believes that both of those actions are a good way to resolve questions about the fairness of the relevant charges, for the benefit of all consumers.
Kind regards,
Kate
Kate Farrow | Retail Banking Team| Office of Fair Trading
Fleetbank House | 2-6 Salisbury Square | London EC4Y 8JX | T: 020 7211 8816 |F: 020 7211 8819
Kate Farrow | Retail Banking Team| Office of Fair Trading
Fleetbank House | 2-6 Salisbury Square | London EC4Y 8JX | T: 020 7211 8816 |F: 020 7211 8819
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