OFT WIN

[helpmeclaim]

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.

I think they will have no option but to use their powers and make the banks reduce the charges. If the banks appeal and the OFT do not cap the fees' we would be outraged they would have no choice but to cap the fee's.

Also with this in mind am i right in thinking the OFT can now step in and say yes your fees are to high you can only charge £12 and then we would be able to start reclaiming or do we have to wait for the court case to see if the fees are unfair???

The OFT have enough power now to put a stop to all this and stop it dragging on. It would not be in the publics intrest for the case to go on for several years. Lets see if the OFT use their powers and if not waht can we do.

I also note from the update on the OFT's website

""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""

They seem to shy away from mentioning if they have looked into if the banks charges are fair

[righty]

Re: OFT WIN

This looks interesting

449. As for the position at common law, I accept the Banks’ submission that none of the terms which I have considered (the terms now generally used by the Banks for personal current accounts other than basic accounts and also certain of the terms used until recently by Clydesdale and RBSG) could be unenforceable on the grounds that they are penal (paragraph 323 above).

I read that in the case of these accounts they can reject payment but are not be able to charge you

[argentarius]

Re: OFT WIN

Whilst it may seem frustrating that things remain on hold, I can't see the sense in the OFT doing anything whilst any appeals remain in progress, and I doubt they would seek to do so.

But I also doubt it will take the OFT long, once the dust has settled, to determine what they believe is or isn't a fair charge. Agreeing a solution with the banks may take longer, though, as it's far from being as simple as the credit card £12 approach.

Re righty's comments, I don't think he was saying anything special about being able/unable to charge on basic bank accounts, merely that they weren't the terms & conditions he chose to analyse in the case.

[grimbell]

Re: OFT WIN

I have a basic account with Halifax.
Recently I went 60p over and recieved a letter saying that if it occurred again then they would apply a charge of £39.

[ed.]

Re: OFT WIN

£2 per instance plus average, at no more than current standard unauth (interest)would be fair and accurate all round and be in the region of true cost surely.

[grimbell]

Re: OFT WIN

This is from the BBA website

The Banks are pleased that the Court has agreed that their current charges are not unenforceable penalties. The Banks believe that the same analysis will apply to charges under their historic terms.
In relation to the UTCCRs, the Court has emphasised in the judgment that the question of whether the Banks' charges satisfy the fairness requirement of the UTCCRs has not been determined by the Court. That is a question that can only ultimately be decided by the Court and not, for example, by the OFT.

This seems to be saying that they won't accept capping by the OFT or am I wrong?

[ed.]

Re: OFT WIN

Reads that way. But then again the nonsense on penalties being universally historical is also crap. Older T&C's said breach, admin costs etc.

Nice try though.

[Tom Brennan]

OFT Test Case

Today’s decision in the OFT test case against the banks is long, and necessarily complicated. It will be some time before the extent and the implications of this judgment will be fully understood.





However, the essential contention by the OFT, namely that these bank charges are subject to the requirement of fairness under the 1999 Regulations, was accepted by the judge. This means that the OFT has the necessary jurisdiction and statutory powers to take action against the banks for the imposition of “unfair” penalty charges on consumer bank accounts.





It should be noted that the OFT conducted an extensive investigation into the “fairness” of the current bank charges, and widened that investigation to include all aspects of personal current accounts. That report was due out at the end of last year, but in light of the ongoing test case that report has not been published. The OFT have not yet given an indication as to when that report will be published. Nevertheless, it is safe to assume that the OFT have concluded that the current charging structure is unfair; the current proceedings would be entirely superfluous if the OFT had not reached that conclusion. The courts are not given to entertaining purely academic points.





I think it is very likely that the banks will appeal this ruling. Given the number of individuals affected, and the amounts of money involved (some sources speculate billions of pounds of charges may be at stake), the banks will be compelled to challenge this ruling. A hearing has been scheduled for the 22 May 2008 to determine how this case and any application to appeal are to be dealt with.





The real question however, is what will the OFT do next? They have a ruling in their favour that the charges are subject to the test for fairness, and they have an as-yet unpublished report that the charges are unfair. It follows that the OFT must discharge its duty (under EU Directive 93/13) to prevent the continued use of these unfair charges. Will the OFT and FSA discharge that duty now, by removing the current “waiver” for the banks, and preventing the banks from continuing to impose these unfair charges, or will the OFT await some final determination by the House of Lords a year or so from now?





For my part, I believe that the OFT should release this report at the earliest possible moment. To allow the banks to continue charging unfair charges is unconscionable. Consumers should be entitled to redress in the courts, and no more delays should be contemplated or allowed. The OFT should no longer be dancing to the tune of the banks.






Postscript:
Importantly, the 1999 Regulations only apply to consumers. Anyone who is operating a business account can only rely on the “penalty charges” argument, which states that such penalty charges are unenforceable at common law. However, the judge in this case ruled that the charges imposed on current accounts did not amount to “penalties”. This is because they are not brought about as a direct result of a breach of contract, but rather the provision of a loan (i.e. the unauthorised overdraft), even if that loan is a result of a breach of contract. I must confess I do not quite follow this line of argument, and you should read paragraphs 295-324 to gain a better understanding of the rationale for this part of the decision.





The effect of this decision is to render any claims by businesses, large or small, against the imposition of these charges, bound to fail on that basis. It may be that this consequence is an unintended consequence of the judge’s ruling; there was certainly no reference to business accounts that I could find in the judgment. It may be that the OFT will appeal this specific point, and it is hoped for the sake of many small businesses that they do appeal that point.

[ed.]

Re: OFT WIN

I've commented on business angle in other thread, so won't repeat lol

[argentarius]

Re: OFT Test Case

Postscript:
Importantly, the 1999 Regulations only apply to consumers. Anyone who is operating a business account can only rely on the “penalty charges” argument, which states that such penalty charges are unenforceable at common law. However, the judge in this case ruled that the charges imposed on current accounts did not amount to “penalties”. This is because they are not brought about as a direct result of a breach of contract, but rather the provision of a loan (i.e. the unauthorised overdraft), even if that loan is a result of a breach of contract. I must confess I do not quite follow this line of argument, and you should read paragraphs 295-324 to gain a better understanding of the rationale for this part of the decision.

I don't really understand your point here, Tom. The ruling is pretty clear IMHO that none of the circumstances raised by the OFT in the case, in respect of any of the banks' current Ts & Cs, convinced him that there was a contractual obligation to keep the account in credit or within the "authorised" overdraft limit.

In other words, I don't accept this part of your argument:

even if that loan is a result of a breach of contract

because the judge is saying that the loan (i.e. the unauthorised overdraft) doesn't represent a breach of contract under any of the banks' current Ts & Cs.

The whole reason the banks have re-worded their Ts & Cs is precisely to avoid the penalty argument; I'm surprised therefore that you don't follow the line of argument used by the judge.

I should emphasise that when I say "is precisely to avoid the penalty argument" I don't mean that in a "getting round the law" way at all - the banks have explicitly changed their terms to allow customers to enter into an unauthorised overdraft position, at the appropriate cost. Previous terms obviously didn't make it clear that this position was allowed.

[Vortex]

Re: OFT WIN

I have to comment that I have as yet not read the judgement(leaving that for a bit of weekend reading as it seems it could be a long judgement). With regards to the no breach of contract argument for current T&C's is that because of the language used ie unplanned, informal requests, etc,etc,?
I have to say I suspected that the aspect of unarranged overdrafts could be determined as an overdraft request fee. It seems that is how the judge may have viewed this. As I said I have not read the text of the judgement at all.

[borgbaiter]

Re: OFT WIN

hi

light bulb moment

there subject to unfairness says the judge.... but he hasnt said there unfair.... he also says there in plain intelligible language..... he also says there not penalty charges....


forgive me if im wrong but this seems like a loss to me not a victory

the ultimate spin

ok there subject to unfair terms yes

but if there in plain intelligible language then they dont have to be reasonable

if they arnt subject to common law then they dont have to relate to cost

so in my opinion banks have won because they can charge what they say, if its in plain inteligible language. which is what judge says it is. reasonable only enters into it if it isnt in plain inteligible language.

the common law argument has also gone so were all screwed.


anyone with a reasoned argument let me know im wrong

[sam]

Re: OFT WIN

I did post this link already but seems to have gone. Here it is again anyway.

http://news.bbc.co.uk/1/hi/business/7364422.stm

[tomterm8]

Re: OFT WIN

hi

light bulb moment

there subject to unfairness says the judge.... but he hasnt said there unfair.... he also says there in plain intelligible language..... he also says there not penalty charges....


forgive me if im wrong but this seems like a loss to me not a victory

the ultimate spin

ok there subject to unfair terms yes

but if there in plain intelligible language then they dont have to be reasonable

if they arnt subject to common law then they dont have to relate to cost

so in my opinion banks have won because they can charge what they say, if its in plain inteligible language. which is what judge says it is. reasonable only enters into it if it isnt in plain inteligible language.

the common law argument has also gone so were all screwed.


anyone with a reasoned argument let me know im wrong

the common law argument is only one argument... which is still potentially valid for historic agreements (i.e. ones that explicitly said they were penalties).

The unfair terms argument is still good to go, and it is likely the OFT will set a similar "limit" to credit cards.

personally, I think the entire judgement will be appealed anyway, because it has serious flaws. Not the least of which is it renders late payment and overlimit as within the contractual rights of the customer... which means, all the CCJs granted upon late payment are now invalid, from what I can see, except for historic agreements.

(Note, I have not reviewed anything like the entire case)



Interesting times.

[borgbaiter]

Re: OFT WIN

id welcome a credit card situation