OFT WIN

[ed.]

Re: OFT WIN

Arg - I've just gone past that part in the Judgment.

Basically it does for now only apply to the new T&C's that they cannot be considered penalties in common. But he is going back after today and looking at 'some' historic T&C's to see if his Judgment in that regard can be universally placed on older T&C's or not.

So it's a case of very little change for now, you would expect new T&C's to do something for them, but he's still got to make a decision on the historical sets on the penalty issue. With differences in new T&C's - I'm honestly not sure who has changed and who hasn't. Nothing can really be done until May 22nd anyway, so it could simply be a case of if any bank hasn't changed T&C's yet, they've indicated they will be doing so and they will be along the lines of others banks newer T&C's.

So to save time Smith didn't distinguish between them?

[Tools]

Re: OFT WIN

The judge has indicated that preparation for provision of a service can not be used in calculation of the cost of that service. (ie. the set up of the systems to do the banking transactions and maintenance of etc cant be used as a cost)

[ed.]

Re: OFT WIN

Interesting!

[argentarius]

Re: OFT WIN

The judge has indicated that preparation for provision of a service can not be used in calculation of the cost of that service. (ie. the set up of the systems to do the banking transactions and maintenance of etc cant be used as a cost)

I don't interpret the ruling that generally. I think the section you are referring to relates specifically to charges for rejecting transactions, and the judge is saying that the process of deciding whether to pay a transaction or not is not part of the "service" of rejecting the transaction.

That's different, isn't it, to the overall costs of running the banking system which I think you are alluding to.

But also, is the judgement saying that rejecting a transaction can never represent a service at all, and therefore there can never be a fair charge for this as it isn't the provision of a service? That would indeed be an interesting point if I'm reading it correctly. (I'm looking at para. 372 specifically here).

Further thoughts: It's interesting that Martin Lewis (for example) thinks that there is no chance of banks introducing charges for accounts in credit. I don't think I agree with him. Whilst there is competitive pressure, I'm also not sure that it is affordable for the banks to put up with a situation where they can only charge (presumably) capped amounts for paying transactions, and (if my reading of the ruling is correct) nothing at all for rejecting transactions.

I also don't understand how any "capped amount" regime would deal with innovative charging structures, such as banks which charge an unauthorised overdraft fee per day. The credit card regime is pretty much a charge per "offence", isn't it - but why is a £12 charge "per offence" fairer than (for example) a £5 charge per day in unauthorised overdraft? And, indeed, why should banks (as it seems) be able to charge any unauthorised interest rate they like, but have a cap on fees which are specific amounts?

I'm just throwing out questions because I don't have a clue about the right answers here.

[EXC]

Re: OFT WIN

Tom spoke to the OFT - They would not confirm when they would publsh there bank charges report. This is the report that has done the groundwork on the fairness of the charges so when it is published it is expected that a decision on the fairness would be fairly quick.

The OFT would not be drawn on whether they would issue an interim injunction to cap the level of charges.

[Tools]

Re: OFT WIN

I was considering the para 368 & para 370 leading on to 372 @ argentarius.

[ed.]

Re: OFT WIN

I'm only on 332 - stop rushing ahead you lot lol

Interesting point Arg, as you say no service if rejected, so why the charge. And yes I take the point about what's fairer a fiver a day for being overdrawn or unlimited £12 per offence per month.

Not sure, I just think an arrangement will be made still.

Exc - I still see the argument that an injunction on taking charges would be deemed an indication of the fairness - not that I agree with it mind, but I can't see interim relief being brought in now.

[argentarius]

Re: OFT WIN

I wasn't reading it in order, ed., but trying to find the bit that Tools was referring to.

Is it really likely that an injunction would be sought (or would be successful) if an appeal is lodged by the banks? It seems somewhat unlikely to me.

[ed.]

Re: OFT WIN

lol I'm going in order.

I agree with the points above 372 to me clearly says if banks don't pay then no service has taken place. So - are we moving towards unfair charges for bounces, returned CHQ's etc BUT not unfair charges when the bank pays out?

I think it's a given the banks will appeal, whoever lost always said they would. I can't see late in the day now interim relief is more of an option (because it presumes fault more than anything which is the FSA angle), if the OFT didn't go for it before, I can't see them doing it now.

[TANZARELLI]

Re: OFT WIN

At the end of the day its a battle won but the war continues folks.

I would just like it on record that I am very very grateful to EXC and everyone else who attended the Test Case throughout. Your info has been massively useful.

So again thanks for that.

Tanz

[stevokenevo]

Re: OFT WIN

At the end of the day its a battle won but the war continues folks.

I would just like it on record that I am very very grateful to EXC and everyone else who attended the Test Case throughout. Your info has been massively useful.

So again thanks for that.

Tanz

good shout! :okay:

[enaid]

Re: OFT WIN

Seconded, thanks from me too, especially for helping me understand a little of what it's all about. Enaid xx

[TUTTSI]

Re: OFT WIN

Abbey have posted this up on their site http://www.abbey.com/csgs/Satellite?.../GS_DetallePie
You are here: Abbey home page > Judgment on first stage of oft test case
Search:




Judgment on first stage of OFT test

case


Abbey and six other banks and one building society are engaged in a High Court test case with the Office of Fair Trading ("OFT") to decide the legality of unauthorised overdraft charges. The first stage of the test case was heard by the Court between 16 January and 8 February 2008 and dealt with certain preliminary issues of legal principle.
On 24 April 2008 the Court issued its judgment on this first stage of the test case. The judgment is complex and the Banks are currently considering its implications.
Further Court hearings will be required before the test case process is concluded. The likely timetable for the next steps in the test case will be decided by the Court at a hearing which is expected to be held during the next few weeks. We will confirm the exact date of this hearing as soon as possible.
As previously agreed with the Financial Ombudsman Service and the FSA, customer complaints relating to unauthorised overdraft charges will currently remain on hold. The Banks will continue to ask County and Sheriff Courts to keep cases relating to unauthorised overdraft charges on hold until the test case process is concluded.
In the meantime, if you have already registered your complaint, you need to take no further action and it will remain on hold. Please continue to refer to our website for further information. It will be updated with more details relating to the test case as soon as possible.
Where can I find out more?
You can find more information through the following links:
Update to OFT test case - January 16 2008
The British Bankers' Association
The Financial Services Authority
The Office of Fair Trading
The Financial Ombudsman Service

[TUTTSI]

Re: OFT WIN

From the OFt web site
http://www.oft.gov.uk/news/press/2008/55-08

Newsroom

Press releases 2008


OFT welcomes High Court ruling on unarranged overdraft charges

55/08 24 April 2008
The High Court has today confirmed the OFT's view that personal current account unarranged overdraft charges can be assessed for fairness.

This is an important early milestone for the OFT and our investigation into this area of high consumer interest. We are now analysing the implications of the judgment for our overall investigation into the fairness of the terms. There may need to be further hearings to determine any outstanding issues arising from the judgment. The timetable for next steps will be decided by the court at a hearing before the end of May.

This case was brought by the OFT in agreement with eight of the largest current account providers. We will be working with them and other interested parties to ensure this market works well for consumers.

It is important to note that this judgment only covers points of legal principle and does not determine whether the relevant charges are actually unfair. We are continuing our investigation into the fairness of these terms and will consider our position after reviewing the detail of this judgment.

NOTES

1. The judgment today sets out the judge's ruling and reasoning on a range of legal issues, including ruling that the banks' relevant terms and conditions were in, or largely in, plain intelligible language; and that the banks' unarranged overdraft charges were not penalties at common law.
2. All businesses have a duty to ensure that they are complying with the law. Current account providers will need to consider whether there are any implications from today's judgment for their current terms and conditions.
3. In April 2007 the OFT announced its investigation into the fairness of unarranged overdraft and returned item fees (referred to as 'unarranged overdraft charges'). This followed on from the OFT's initial review of such charges, where the OFT concluded that it shared the public concern about the level and incidence of bank current account charges.
4. In July 2007 the OFT entered into an agreement with the largest current account providers in relation to bringing a test case in order to ensure an orderly and timely resolution of the legal issues associated with its investigation. This stage of the case was heard between 17 January and 8 February 2008, and dealt with certain preliminary issues of legal principle relating to whether the Unfair Terms in Consumer Contracts Regulations 1999 ('UTCCRs') apply to the banks' various current terms and conditions and whether the charges are capable of amounting to penalties at common law.
5. The other parties to the test case are Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc, HSBC Bank plc, Lloyds TSB Bank plc, Royal Bank of Scotland Group plc, and Nationwide Building Society. Together these current account providers account for about 90 per cent of personal current accounts in the UK.
6. In parallel with the legal action on the preliminary issues in the test case we are continuing our detailed analysis of the terms and conditions of current account providers.
7. In the course of its work on the issue we have liaised closely with the Financial Services Authority and have also held discussions with the main banks.
8. The OFT has also been conducting a market study which is taking a wide-ranging look at whether the personal current account market is working well for consumers. In particular we will assess the extent to which consumers help drive competition. The OFT plans to publish our findings in the next few months having taken account of the implications of the judgment. Further information on the background to the case can be found on this website. The FSA has also published guidance for consumers on its website.

Download the High Court judgement (pdf 652 kb).

[ed.]

Re: OFT WIN

Absolutely echo that Tanz!