Tweet
Well I've attempted to draft an amended POC which has to be in by close 1st Feb 2010 and need Nattie or Amethyst to peruse.
Comments etc welcome.
1. Between about August 1996 and November 2001 the Claimant and the Defendant ("the Bank") agreed ("the Banking Contract") that the Bank would operate for the Claimant an account, number XXXXXXXXXX, ("the Account") at the Harrogate branch of the Defendant bank.
2. The Account was a current account, under which, at all material times, in substance:
4. The Bank has debited charges from the Claimants' account in respect of unauthorised overdrafts and unpaid items, relying on terms of the Banking Contract, which were:
9. At all material times the Claimant was a consumer within the Regulations.
10. At all material times the terms of the Banking Contract providing for the Charges were unfair within regulation 5 (1) of the Regulations in that contrary to the requirement of good faith they caused a significant imbalance in the parties' rights and obligations under the Contract, to the detriment of the consumer.
11. Without prejudice to the burden of proof, the Claimant will refer to the following matters in support of the contention that the terms are to be assessed as unfair as at the time of the conclusion of the Banking Contact, and of each revision to the Standard Terms.
THE MISREPRESENTATION ACT 1967
13. The Claimant believes it is possible to bring an argument under the Misrepresentation Act 1967 or, at common law, as a unilateral mistake from which Abbey National knowingly benefited.
14. Historically either;
i. Abbey National misrepresented that their relevant terms were penal as opposed to contracting to provide services, or
ii. Abbey National was aware of the Claimants' "mistaken belief" that their relevant terms were penal but failed to correct this, to the detriment of the Claimant but to the benefit of the Bank, or
iii. Abbey National was aware that the relevant terms were penal in nature but realised they could argue they were in exchange for a package of services and misrepresented to the Court accordingly.
15. In any case, the Claimant would aver that the Defendant had been acting on a misrepresented but reasonable assumption that the relevant terms were related to costs rather than service charges and would contend that the charges should not have been part of the consideration in exchange for any so-called contracted "package" of services.
16. Should it matter if the relevant charges are for a service disguised as a penalty or for a cross-subsidy disguised as a service? At the end of the day it is £2 disguised as £38 and simply a deceitful description. After all, say in the utmost extreme the Defendant charged £1,000,000 for the same "service", what would the learned opinion be then? Indeed, to charge £30 for an unpaid Standing Order or Direct Debit would be stretching credibility if it were a fee for a service, as what actually does this automated service perform that is not
different to other free services?
17. Until the recent OFT litigation, the Defendant had failed to be transparent about their charges in that they had denied that cross-subsidy took place at all and had even attempted to suggest that their charges were informed by the administrative costs of dealing with insufficient funds situations.
18. It is submitted that this deceptive information was calculated to deny the Claimant a chance to judge whether the Claimant was really receiving value for money in respect of the charges the Claimant was being forced to pay. The information was not given to the Claimant in good faith and was calculated to be detrimental to the Claimant.
THE COMPETITION ACT 1998, CHAPTER II
19. The Claimant contends that consumers have suffered loss due to the anti-competitive behaviour of Abbey National and other Banks.
20. The Competition Act 1998, Chapter II states;
S.18 - Abuse of dominant position
1) Subject to Section 19, any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.
2) Conduct may, in particular, constitute such an abuse if it consists in;
a) Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions.
21. Chapter II is usually difficult to apply to oligopolies as it is hard to demonstrate the collective dominant position. However, the Banks have publicly admitted to the collective dominant position via the British Banking Association (BBA) and individually all UK Banks are members of the BBA - this
covers 100% of the personal current account providers.
22. The stated position is that free-if-in-credit is the Banks' preferred model and there is general agreement to keep to this model. This model relies on cross-subsidy via the Relevant Charges.
23. The free-if-in-credit model is effectively price discrimination on the basis of property, i.e. the less money a customer has, the higher the overall cost of the package account.
24. This is evidenced by the OFT PCA study data showing customers with less than £1000 in savings are much more likely to incur charges.
25. Also, from the Supreme Court judgement, bank revenue from these charges accounts for 30% of revenue from only 20% of the customer base.
26. Banks via the Relevant Terms cause the overall price of an account to be higher than in a competitive market for the people that incur them. This is evidenced by the OFT PCA study data showing a steep upward trend in Relevant Charge levels over the years.
27. Therefore the Banks may be in breach of Chapter II by imposing unfair selling prices upon and engaging in price discrimination against their most vulnerable customers including the Claimant.
28. The Claimant has long suspected that the Banks collude to artificially maintain the price of insufficient funds charges. During a House Of Commons Scottish Affairs select committee oral evidence session - "Banking In Scotland" - in March 2009, Group Chief Executive, Scotland, for Lloyds Banking Group, in answer to question 366, told the committee that, "The Banking industry has generally come to an agreement that they will charge certain amounts for overdraft letters." Uncorrected Evidence 319.
29. The lack of competition amongst High Street banks has been the focus of concern by the Government and the OFT, and was even highlighted by Lady Hale in her judgement in the recent OFT litigation against 8 UK banks. Indeed, Lady Hale even suggested that the lack of competition was the cause of the present bank charges problems. (Para 93 of the Supreme Court judgement.
UNDUE INFLUENCE (COMMON LAW)
30. It has long been recognised that the relationship between banker and customer is that of debtor-creditor (Foley v Hill 1848).
31. It is also recognised that when the banker transacts on the customer's instruction he does so as agent (Westminster Bank Ltd v Hilton 1923).
32. These transactionary functions were originally described as 'superadded', or extra to the main bargain, 'by custom' (Foley v Hill 1848).
33. The Supreme Court has ruled that current accounts are contracted as a package of services and that is the main bargain - these services are not ancillary or extra (OFT v Abbey National 2009).
34. These services are provided not against the customer's money, as it is now the Bank's, but against the resulting chose in action constituted by the account.
35. It follows that in the context of modern current accounts the main relationship is no longer banker-customer rather service provider-customer; the majority of transactions are no longer deposits and debits between banker and client, rather credits and debits between the customer and third parties via the bank.
36. Under Common Law, Undue Influence lends support to this characterisation, not by automatically presuming an agent-principal relationship, but deriving the characteristics of such a relationship in the particular case (National Westminster Bank plc v Morgan 1985).
37. The exact nature of a relationship is determined by contract but also by the level of trust, confidence, reliance, dependence and vulnerability of the customer. (Royal Bank of Scotland v Etridge 2001).
38. Where the customer pays their wages / benefits into the hands of the bank it is submitted that to do so requires a high degree of trust and confidence in the way the bank will transact against the resulting account.
39. Where most of the customer's outgoings are through the account it is submitted there is reliance and even a dependence upon the bank.
40. Where the customer has no great savings in the event of misfortune, it is submitted that the customer is vulnerable.
41. When all the above is true and where the customer is already indebted to the bank it is submitted that the customer is yet more vulnerable.
42. It is not unusual for points (38) through (41) to be true in an individual case such as the Claimants'.
43. Given that the customer allows the bank to make use of their money as if the banks own, or pays interest to the bank for their debts, it is submitted that it would be inequitable to allow the bank to take advantage of the customer's circumstances.
44. It is submitted that any transactions entered into that are manifestly against the Claimants' interest are done so under undue influence.
45. This undue influence arises either as an abuse of the agent-principal relationship when transacting against the account or alternatively, due to abuse of the circumstances described at points (38) through (41) above, amounting to the same.
Also:
46. The Claimant was vulnerable in addition to the above because the Claimant lacked understanding of the complex charge structure (item fee / daily fee / monthly fee) and how this will operate upon the account.
47. Furthermore, daily maintenance fees are unnecessary to both the customer and the bank. When the overdraft assessment is initially performed the bank should be able to determine how long they are willing to loan the money for so a daily assessment is redundant. The Claimant understands that the overdraft is repayable on demand and is already paying interest at the 'unauthorised' overdraft rate. This is an artificial device to inflate the interest rate beyond what would normally be considered an acceptable level, again made possible by the undue influence of the bank.
48. As noted above, when Relevant Transactions are manifestly not in the Claimants' interest, they are only entered into because of the bank's undue influence.
49. It is strange that companies providing such a fundamental service to our society cannot be assumed to be trustworthy? It's hard to imagine that caveat emptor should be applied to stock brokers, personal assistants or the Post Office for example - we should be able to trust these agents implicitly.
50. The fundamental service isn't using the Claimants' money for their own ends; it's in acting as the Claimants' financial intermediary.
THE CONSUMER CREDIT ACT 1974 (as amended), UNFAIR RELATIONSHIP
51. The Claimant considers there was an unfair relationship in favour of the Defendants' as per s.140A & s.140B of the above Act due to the behaviour and conditions described above.
52. Alternatively, or in addition, this unfair relationship existed because the terms operated on the Claimants' account to create an unfavourable financial position, thereby limiting the Claimants' ability to switch accounts, or to negotiate. If the Claimant, as was the case, wanted to switch Banks, the Claimant would have to settle his account with the current provider or face legal action to recover what was allegedly owed. The Claimant feels it would have been untenable and would have created more stress and hassle if I had opened another account with a different Bank. Thus the Claimant feels that he was trapped in a spiral of charges upon charges.
53. Additionally, the Defendant further compounded the unfavourable financial situation of the Claimant by increasing the Relevant Charges over a number of years (contrary to and or in excess of what a competitive market would normally expect or allow).
THE SUPPLY OF GOODS AND SERVICES ACT 1982, PART II SUPPLY OF SERVICES
54. The Claimant believes that if the Charge was not a Penalty or a Cost but a Service then under the above Act s.15 Implied term about consideration (1) & (2) applies;
1) Where, under a contract for the supply of a service, the consideration for the service is not determined by the contract, left to be determined in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the party contracting with the supplier will pay a reasonable charge.
2) What is a reasonable charge is a question of fact.
55. The Claimant believes that the only method of factually determining what a "reasonable" charge is, indeed, to provide a breakdown of their true costs.
56. The Claimant contends that if the fees charged are a fee for a service then the Claimant is at a loss to explain why the charges levied on the Claimants' account due to unpaid items are a service? The vast majority if not all fees levied on the Claimants' account are for unpaid Standing Orders and Direct Debits. Since it is highly improbable it was for any manual intervention, then this would have been an automated service. If the Claimant attempted to withdraw cash from a teller or from a cash machine without sufficient funds the transaction would have been refused, but importantly, no fee charged. One was a manual intervention, the other automated.
57. The Claimant believes that any analysis performed on the way fees were levied on the Claimants' account would stand as being extortionate and unfair in practice and as such would fail any unfairness test.
58. An accurate copy of Abbey National's Terms and Conditions from 1998 and the period covering 2002-2004 is attached in Schedule 1. (attached)
59. The Bank wrongly debited the Account with Charges totalling £1351.50 between August 1996 and November 2001. Particulars appear at schedule 2.
60. In July 2007 the Claimant demanded repayment of the sums wrongly debited.
61. The Defendant has not repaid them or any of them.
The Claim for Compound Interest
62. The Claimant seeks restitution of the time value of the wrongly debited sums by way of an award of compound interest calculated at the banks typical unauthorised overdraft borrowing rate of 28.70%.
63. The Claimant contends that the defendant would be unjustly enriched if the claimant's entitlement was limited to recovery of the wrongfully debited fees and a compensatory award of simple interest at the statutory rate. The bank has had use of the Claimant's funds for a considerable period of time whilst they were in its wrongful possession and as a lending institution has earned profit by way of interest by re-lending those funds at its commercially compounded rates. Conversely, the Claimant having been denied use of its funds in the banks wrongful possession was forced to replace those funds by lending from the bank by way of overdraft at its commercially compounded rates. Thus an award of compound interest is necessary to provide full restitution and a just remedy.
64. The Claimant in its submissions will rely on the recent case of Sempra Metals v Inland Revenue Anor [2007] UKHL 34 where the House of Lords held that compound interest is available at common law where the Claimant seeks a restitutionary remedy for the time value of money paid under a mistake. The Claimant paid the charges in the belief that they reflected the true cost of administering the contractual breaches. The Claimant has now discovered, following revelations relating to a similar organisation, that the true costs are much lower and that the belief held by Claimant was in fact mistaken.
The Limitations Act 1980
65. The Claimants reliance on the claim being permissible is supported by the Limitations Act 1980 Section 32 (b) & (c) which stipulates:
o (b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or
o (c) the action is for relief from the consequences of a mistake;
Then the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it....
66. Accordingly, the Claimant seeks;
(1) A declaration that the sums totalling £1351.50 have been wrongly and unlawfully debited from the Account.
(2) Payment of the said sum of £1351.50. (See attached "Schedule 2" for a breakdown)
(3) A restitutionary award of Compound Interest at the banks standard typical unauthorised overdraft rate of 28.70% per annum from the date of wrongful debit to date in the sum of £44067.04 as of 25th January 2010, continuing to accrue daily at the same rate thereafter until judgement or sooner payment. Or in the alternative, the S.69 interest of 8%.
(4) Court Fees of £400.
Comments etc welcome.
1. Between about August 1996 and November 2001 the Claimant and the Defendant ("the Bank") agreed ("the Banking Contract") that the Bank would operate for the Claimant an account, number XXXXXXXXXX, ("the Account") at the Harrogate branch of the Defendant bank.
2. The Account was a current account, under which, at all material times, in substance:
(1) the Bank agreed to hold monies deposited by or for the Claimant, and to make payments to and on behalf of the Claimant;
(2) in return, the Bank was entitled to the use of the monies so deposited, and to be paid interest on monies borrowed by the Claimant.
3. At all material times the Account was subject to the Bank's standard terms and conditions ("the Standard Terms"). The Standard Terms were varied from time to time when the Bank issued revised terms. (2) in return, the Bank was entitled to the use of the monies so deposited, and to be paid interest on monies borrowed by the Claimant.
4. The Bank has debited charges from the Claimants' account in respect of unauthorised overdrafts and unpaid items, relying on terms of the Banking Contract, which were:
(1) a penalty payable on breach of contract and unenforceable at common law, and/or;
(2) an imbalance of rights and obligations, contrary to good faith, and to the detriment of the consumer within the Unfair Terms in Consumer Contract Regulations 1999 5 (1), (The Regulations"), and unenforceable, and/or;
(3) related to the mistaken assumption that the relevant terms were related to actual costs rather than service charges under The Misrepresentation Act 1967 or Common Law mistake, and/or;
(4) anti-competitive behaviour within The Competition Act 1998, Chapter II, and/or;
(5) unjust and unfair under Common Law and Undue Influence, and/or;
(6) an unfair relationship within The Consumer Credit Act 1974 (as amended), s.140A & s.140B, and/or;
(7) not a reasonable charge for the "service" under the Supply Of Goods and Services Act 1982 (Part II s.15).
PENALTY
5. Prior to the Test Case, the Claimant believed the relevant terms to be unenforceable common law penalties.
6. Justice Smith's High Court judgement stated that the relevant terms were incapable of being common law penalties, because it was not possible, using a contractual construction of the standard terms, to link the relevant terms directly with a breach of contract.
7. However, Justice Smith only reviewed certain terms from certain periods from each of the Banks. Not taken into consideration were the Banks' charge notification letters. These letters clearly form part of the overall Personal Current Account (PCA) contract just as the leaflets detailing the various amounts of the charges are an integral part of the contract. The Terms and Conditions taken into consideration did not represent those from the periods the Claimant is claiming for. Indeed, the Defendant has failed to disclose a true copy of one of these letters, or even the template letter, sent to the Claimant during the period of 1996 - 2001 from a CPR Part 18 request.
8. The Claimant believes that these letters clearly link a breach of contract, on the Claimants' part, with the resultant charging term and amount. The charges were in respect of failure to have sufficient funds in the account to meet transaction instructions and were levied by the Bank to cover the alleged increased costs to which they were put as a result of the breach. These matters are linked in the letter whereas they are not linked in the generic terms and conditions. This further adds to the argument for misrepresentation.
THE UNFAR TERMS IN CONSUMER CONTRACTS REGULATIONS 1999(2) an imbalance of rights and obligations, contrary to good faith, and to the detriment of the consumer within the Unfair Terms in Consumer Contract Regulations 1999 5 (1), (The Regulations"), and unenforceable, and/or;
(3) related to the mistaken assumption that the relevant terms were related to actual costs rather than service charges under The Misrepresentation Act 1967 or Common Law mistake, and/or;
(4) anti-competitive behaviour within The Competition Act 1998, Chapter II, and/or;
(5) unjust and unfair under Common Law and Undue Influence, and/or;
(6) an unfair relationship within The Consumer Credit Act 1974 (as amended), s.140A & s.140B, and/or;
(7) not a reasonable charge for the "service" under the Supply Of Goods and Services Act 1982 (Part II s.15).
PENALTY
5. Prior to the Test Case, the Claimant believed the relevant terms to be unenforceable common law penalties.
6. Justice Smith's High Court judgement stated that the relevant terms were incapable of being common law penalties, because it was not possible, using a contractual construction of the standard terms, to link the relevant terms directly with a breach of contract.
7. However, Justice Smith only reviewed certain terms from certain periods from each of the Banks. Not taken into consideration were the Banks' charge notification letters. These letters clearly form part of the overall Personal Current Account (PCA) contract just as the leaflets detailing the various amounts of the charges are an integral part of the contract. The Terms and Conditions taken into consideration did not represent those from the periods the Claimant is claiming for. Indeed, the Defendant has failed to disclose a true copy of one of these letters, or even the template letter, sent to the Claimant during the period of 1996 - 2001 from a CPR Part 18 request.
8. The Claimant believes that these letters clearly link a breach of contract, on the Claimants' part, with the resultant charging term and amount. The charges were in respect of failure to have sufficient funds in the account to meet transaction instructions and were levied by the Bank to cover the alleged increased costs to which they were put as a result of the breach. These matters are linked in the letter whereas they are not linked in the generic terms and conditions. This further adds to the argument for misrepresentation.
9. At all material times the Claimant was a consumer within the Regulations.
10. At all material times the terms of the Banking Contract providing for the Charges were unfair within regulation 5 (1) of the Regulations in that contrary to the requirement of good faith they caused a significant imbalance in the parties' rights and obligations under the Contract, to the detriment of the consumer.
11. Without prejudice to the burden of proof, the Claimant will refer to the following matters in support of the contention that the terms are to be assessed as unfair as at the time of the conclusion of the Banking Contact, and of each revision to the Standard Terms.
i. The Claimant believes that the Relevant Terms are contrary to the requirements of good faith, as they cause a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the Claimant. The Claimant is of the opinion that, by analogy to paragraph (e) of Schedule 2 to the 1999 Regulations: Indicative and Non-Exhaustive List of terms which may be regarded as unfair, that the Terms which are unfair include those that are: Requiring any consumer who fails to fulfill his obligation to pay a disproportionately high sum in compensation. Notwithstanding the belief that the UTCCR 1999 regulations were not specifically intended to cover financial services such as PCA's it is unthinkable that the original intention of regulation 6.2 would be to totally preclude an assessment of fairness as to price under Regulation 5 (1) using some of the price based reasons for unfairness as referenced in the "grey terms" Schedule 2 including paragraph (e). The Claimant believes that regulation 6.2 must have originally been intended as a standalone clause in respect of a limited number of potential issues and not an all encompassing, "get out of jail", free type clause.
ii. The other reasons would include (for example) arguments related to Schedule 2 paragraph e: "Requiring any Consumer who fails to fulfill his obligation to pay a disproportionately high sum in compensation."
iii. The Claimants' standard account contract was not individually negotiated, because the Defendant imposes its own standard terms and conditions on all its customers and is not prepared to agree or to permit any individually agreed variations to the supplier/customer relationship.
iv. The Claimant considers that the Banks can choose which service they offer without consideration for, or confirmation of, what the Consumer intended. For example, the Banks could consider a request for overdraft and pay or simply reject payment on grounds of lack of funds. In performing these services the Banks act as agent for the Consumer and therefore should have had regard to the Consumer's intent. The Consumer's intent may be for the request to be facilitated if there are sufficient funds, to be rejected if there are not or to be asked for confirmation (where practicable) otherwise. However the contract denies the Claimant the opportunity to express that or any specific intent other than that determined by the Banks.
v. The Claimant considers that a request to pay is not necessarily a request for overdraft except by virtue of the non-negotiated contract terms. The overdraft assessment is not optional, additionally there was no opt out possibility at commencement of the contract and therefore it acts contrary to good faith and is therefore unfair.
vi. The Claimant suggests that if an "overdraft extension request" was declined, there is no reason why the Bank's answer for any subsequent requests should be any different if the account balance has not changed other than by virtue of the Relevant Charges being applied? The Consumer could therefore not intend subsequent payments to be requests for assessment, and it would be to their detriment for them to be regarded as such. If the fee was argued to be for checking the Claimants' account, the Banks would actually be providing the same service as they otherwise provide for free and therefore no further consideration should be required unless the circumstances are materially different.
vii. It is beyond dispute that the relevant terms were not available to the Claimant in advance, or have been included in the relevant contracts since conclusion. Either way the Claimant has become irrevocably bound to terms with which they had no real opportunity of becoming acquainted before the conclusion of the contract or were unable to negotiate if they were included after conclusion.
viii. It is apparent that the Claimant is required to subsidise the running and/or operation costs of accounts other than that of the Claimant. In so doing the Bank's charging structure reverses the usual pattern of cross subsidisation by delivering heavily subsidised banking services to those with the most financial competence or resources at the expense of those with the least.
ix. The Claimant contends that the Banks have control over the distribution of the Claimants' salary and/or benefits, and the relevant terms allow for the automatic application of the relevant Charges, with little or no notice to the Claimant.
x. In the Claimants' experience the Banks, by virtue of the relevant contracts, have priority over the Consumer's other debtors with regards to the application and payment of the relevant Charges to the Account. There is no consideration in advance of applying the charge as to whether or not the bank applies the charge.
xi. Additionally, the Banks' contracts include a right of offset by which they are able to offset an unauthorised overdraft from the Claimants savings or other accounts. An imbalance exists in the contract as there is no equivalent equitable arrangement in favour of the Claimant. There is no contractual means by which additional funds, required to enable payment of a transaction and which would otherwise trigger relevant charges, could automatically be transferred from the Claimants' savings account to the relevant personal current account by the Bank.
xii. In the Claimants' experience the relevant terms have frequently forced individual Consumers including the claimant into a cycle of debt, where the Relevant Charges directly or indirectly give rise to the application of additional charges to the account, without any restriction or limitation.
12. By reason of the said matters the terms were not binding under regulation 8 of the Regulations.ii. The other reasons would include (for example) arguments related to Schedule 2 paragraph e: "Requiring any Consumer who fails to fulfill his obligation to pay a disproportionately high sum in compensation."
iii. The Claimants' standard account contract was not individually negotiated, because the Defendant imposes its own standard terms and conditions on all its customers and is not prepared to agree or to permit any individually agreed variations to the supplier/customer relationship.
iv. The Claimant considers that the Banks can choose which service they offer without consideration for, or confirmation of, what the Consumer intended. For example, the Banks could consider a request for overdraft and pay or simply reject payment on grounds of lack of funds. In performing these services the Banks act as agent for the Consumer and therefore should have had regard to the Consumer's intent. The Consumer's intent may be for the request to be facilitated if there are sufficient funds, to be rejected if there are not or to be asked for confirmation (where practicable) otherwise. However the contract denies the Claimant the opportunity to express that or any specific intent other than that determined by the Banks.
v. The Claimant considers that a request to pay is not necessarily a request for overdraft except by virtue of the non-negotiated contract terms. The overdraft assessment is not optional, additionally there was no opt out possibility at commencement of the contract and therefore it acts contrary to good faith and is therefore unfair.
vi. The Claimant suggests that if an "overdraft extension request" was declined, there is no reason why the Bank's answer for any subsequent requests should be any different if the account balance has not changed other than by virtue of the Relevant Charges being applied? The Consumer could therefore not intend subsequent payments to be requests for assessment, and it would be to their detriment for them to be regarded as such. If the fee was argued to be for checking the Claimants' account, the Banks would actually be providing the same service as they otherwise provide for free and therefore no further consideration should be required unless the circumstances are materially different.
vii. It is beyond dispute that the relevant terms were not available to the Claimant in advance, or have been included in the relevant contracts since conclusion. Either way the Claimant has become irrevocably bound to terms with which they had no real opportunity of becoming acquainted before the conclusion of the contract or were unable to negotiate if they were included after conclusion.
viii. It is apparent that the Claimant is required to subsidise the running and/or operation costs of accounts other than that of the Claimant. In so doing the Bank's charging structure reverses the usual pattern of cross subsidisation by delivering heavily subsidised banking services to those with the most financial competence or resources at the expense of those with the least.
ix. The Claimant contends that the Banks have control over the distribution of the Claimants' salary and/or benefits, and the relevant terms allow for the automatic application of the relevant Charges, with little or no notice to the Claimant.
x. In the Claimants' experience the Banks, by virtue of the relevant contracts, have priority over the Consumer's other debtors with regards to the application and payment of the relevant Charges to the Account. There is no consideration in advance of applying the charge as to whether or not the bank applies the charge.
xi. Additionally, the Banks' contracts include a right of offset by which they are able to offset an unauthorised overdraft from the Claimants savings or other accounts. An imbalance exists in the contract as there is no equivalent equitable arrangement in favour of the Claimant. There is no contractual means by which additional funds, required to enable payment of a transaction and which would otherwise trigger relevant charges, could automatically be transferred from the Claimants' savings account to the relevant personal current account by the Bank.
xii. In the Claimants' experience the relevant terms have frequently forced individual Consumers including the claimant into a cycle of debt, where the Relevant Charges directly or indirectly give rise to the application of additional charges to the account, without any restriction or limitation.
THE MISREPRESENTATION ACT 1967
13. The Claimant believes it is possible to bring an argument under the Misrepresentation Act 1967 or, at common law, as a unilateral mistake from which Abbey National knowingly benefited.
14. Historically either;
i. Abbey National misrepresented that their relevant terms were penal as opposed to contracting to provide services, or
ii. Abbey National was aware of the Claimants' "mistaken belief" that their relevant terms were penal but failed to correct this, to the detriment of the Claimant but to the benefit of the Bank, or
iii. Abbey National was aware that the relevant terms were penal in nature but realised they could argue they were in exchange for a package of services and misrepresented to the Court accordingly.
15. In any case, the Claimant would aver that the Defendant had been acting on a misrepresented but reasonable assumption that the relevant terms were related to costs rather than service charges and would contend that the charges should not have been part of the consideration in exchange for any so-called contracted "package" of services.
16. Should it matter if the relevant charges are for a service disguised as a penalty or for a cross-subsidy disguised as a service? At the end of the day it is £2 disguised as £38 and simply a deceitful description. After all, say in the utmost extreme the Defendant charged £1,000,000 for the same "service", what would the learned opinion be then? Indeed, to charge £30 for an unpaid Standing Order or Direct Debit would be stretching credibility if it were a fee for a service, as what actually does this automated service perform that is not
different to other free services?
17. Until the recent OFT litigation, the Defendant had failed to be transparent about their charges in that they had denied that cross-subsidy took place at all and had even attempted to suggest that their charges were informed by the administrative costs of dealing with insufficient funds situations.
18. It is submitted that this deceptive information was calculated to deny the Claimant a chance to judge whether the Claimant was really receiving value for money in respect of the charges the Claimant was being forced to pay. The information was not given to the Claimant in good faith and was calculated to be detrimental to the Claimant.
THE COMPETITION ACT 1998, CHAPTER II
19. The Claimant contends that consumers have suffered loss due to the anti-competitive behaviour of Abbey National and other Banks.
20. The Competition Act 1998, Chapter II states;
S.18 - Abuse of dominant position
1) Subject to Section 19, any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.
2) Conduct may, in particular, constitute such an abuse if it consists in;
a) Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions.
21. Chapter II is usually difficult to apply to oligopolies as it is hard to demonstrate the collective dominant position. However, the Banks have publicly admitted to the collective dominant position via the British Banking Association (BBA) and individually all UK Banks are members of the BBA - this
covers 100% of the personal current account providers.
22. The stated position is that free-if-in-credit is the Banks' preferred model and there is general agreement to keep to this model. This model relies on cross-subsidy via the Relevant Charges.
23. The free-if-in-credit model is effectively price discrimination on the basis of property, i.e. the less money a customer has, the higher the overall cost of the package account.
24. This is evidenced by the OFT PCA study data showing customers with less than £1000 in savings are much more likely to incur charges.
25. Also, from the Supreme Court judgement, bank revenue from these charges accounts for 30% of revenue from only 20% of the customer base.
26. Banks via the Relevant Terms cause the overall price of an account to be higher than in a competitive market for the people that incur them. This is evidenced by the OFT PCA study data showing a steep upward trend in Relevant Charge levels over the years.
27. Therefore the Banks may be in breach of Chapter II by imposing unfair selling prices upon and engaging in price discrimination against their most vulnerable customers including the Claimant.
28. The Claimant has long suspected that the Banks collude to artificially maintain the price of insufficient funds charges. During a House Of Commons Scottish Affairs select committee oral evidence session - "Banking In Scotland" - in March 2009, Group Chief Executive, Scotland, for Lloyds Banking Group, in answer to question 366, told the committee that, "The Banking industry has generally come to an agreement that they will charge certain amounts for overdraft letters." Uncorrected Evidence 319.
29. The lack of competition amongst High Street banks has been the focus of concern by the Government and the OFT, and was even highlighted by Lady Hale in her judgement in the recent OFT litigation against 8 UK banks. Indeed, Lady Hale even suggested that the lack of competition was the cause of the present bank charges problems. (Para 93 of the Supreme Court judgement.
UNDUE INFLUENCE (COMMON LAW)
30. It has long been recognised that the relationship between banker and customer is that of debtor-creditor (Foley v Hill 1848).
31. It is also recognised that when the banker transacts on the customer's instruction he does so as agent (Westminster Bank Ltd v Hilton 1923).
32. These transactionary functions were originally described as 'superadded', or extra to the main bargain, 'by custom' (Foley v Hill 1848).
33. The Supreme Court has ruled that current accounts are contracted as a package of services and that is the main bargain - these services are not ancillary or extra (OFT v Abbey National 2009).
34. These services are provided not against the customer's money, as it is now the Bank's, but against the resulting chose in action constituted by the account.
35. It follows that in the context of modern current accounts the main relationship is no longer banker-customer rather service provider-customer; the majority of transactions are no longer deposits and debits between banker and client, rather credits and debits between the customer and third parties via the bank.
36. Under Common Law, Undue Influence lends support to this characterisation, not by automatically presuming an agent-principal relationship, but deriving the characteristics of such a relationship in the particular case (National Westminster Bank plc v Morgan 1985).
37. The exact nature of a relationship is determined by contract but also by the level of trust, confidence, reliance, dependence and vulnerability of the customer. (Royal Bank of Scotland v Etridge 2001).
38. Where the customer pays their wages / benefits into the hands of the bank it is submitted that to do so requires a high degree of trust and confidence in the way the bank will transact against the resulting account.
39. Where most of the customer's outgoings are through the account it is submitted there is reliance and even a dependence upon the bank.
40. Where the customer has no great savings in the event of misfortune, it is submitted that the customer is vulnerable.
41. When all the above is true and where the customer is already indebted to the bank it is submitted that the customer is yet more vulnerable.
42. It is not unusual for points (38) through (41) to be true in an individual case such as the Claimants'.
43. Given that the customer allows the bank to make use of their money as if the banks own, or pays interest to the bank for their debts, it is submitted that it would be inequitable to allow the bank to take advantage of the customer's circumstances.
44. It is submitted that any transactions entered into that are manifestly against the Claimants' interest are done so under undue influence.
45. This undue influence arises either as an abuse of the agent-principal relationship when transacting against the account or alternatively, due to abuse of the circumstances described at points (38) through (41) above, amounting to the same.
Also:
46. The Claimant was vulnerable in addition to the above because the Claimant lacked understanding of the complex charge structure (item fee / daily fee / monthly fee) and how this will operate upon the account.
47. Furthermore, daily maintenance fees are unnecessary to both the customer and the bank. When the overdraft assessment is initially performed the bank should be able to determine how long they are willing to loan the money for so a daily assessment is redundant. The Claimant understands that the overdraft is repayable on demand and is already paying interest at the 'unauthorised' overdraft rate. This is an artificial device to inflate the interest rate beyond what would normally be considered an acceptable level, again made possible by the undue influence of the bank.
48. As noted above, when Relevant Transactions are manifestly not in the Claimants' interest, they are only entered into because of the bank's undue influence.
49. It is strange that companies providing such a fundamental service to our society cannot be assumed to be trustworthy? It's hard to imagine that caveat emptor should be applied to stock brokers, personal assistants or the Post Office for example - we should be able to trust these agents implicitly.
50. The fundamental service isn't using the Claimants' money for their own ends; it's in acting as the Claimants' financial intermediary.
THE CONSUMER CREDIT ACT 1974 (as amended), UNFAIR RELATIONSHIP
51. The Claimant considers there was an unfair relationship in favour of the Defendants' as per s.140A & s.140B of the above Act due to the behaviour and conditions described above.
52. Alternatively, or in addition, this unfair relationship existed because the terms operated on the Claimants' account to create an unfavourable financial position, thereby limiting the Claimants' ability to switch accounts, or to negotiate. If the Claimant, as was the case, wanted to switch Banks, the Claimant would have to settle his account with the current provider or face legal action to recover what was allegedly owed. The Claimant feels it would have been untenable and would have created more stress and hassle if I had opened another account with a different Bank. Thus the Claimant feels that he was trapped in a spiral of charges upon charges.
53. Additionally, the Defendant further compounded the unfavourable financial situation of the Claimant by increasing the Relevant Charges over a number of years (contrary to and or in excess of what a competitive market would normally expect or allow).
THE SUPPLY OF GOODS AND SERVICES ACT 1982, PART II SUPPLY OF SERVICES
54. The Claimant believes that if the Charge was not a Penalty or a Cost but a Service then under the above Act s.15 Implied term about consideration (1) & (2) applies;
1) Where, under a contract for the supply of a service, the consideration for the service is not determined by the contract, left to be determined in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the party contracting with the supplier will pay a reasonable charge.
2) What is a reasonable charge is a question of fact.
55. The Claimant believes that the only method of factually determining what a "reasonable" charge is, indeed, to provide a breakdown of their true costs.
56. The Claimant contends that if the fees charged are a fee for a service then the Claimant is at a loss to explain why the charges levied on the Claimants' account due to unpaid items are a service? The vast majority if not all fees levied on the Claimants' account are for unpaid Standing Orders and Direct Debits. Since it is highly improbable it was for any manual intervention, then this would have been an automated service. If the Claimant attempted to withdraw cash from a teller or from a cash machine without sufficient funds the transaction would have been refused, but importantly, no fee charged. One was a manual intervention, the other automated.
57. The Claimant believes that any analysis performed on the way fees were levied on the Claimants' account would stand as being extortionate and unfair in practice and as such would fail any unfairness test.
58. An accurate copy of Abbey National's Terms and Conditions from 1998 and the period covering 2002-2004 is attached in Schedule 1. (attached)
59. The Bank wrongly debited the Account with Charges totalling £1351.50 between August 1996 and November 2001. Particulars appear at schedule 2.
60. In July 2007 the Claimant demanded repayment of the sums wrongly debited.
61. The Defendant has not repaid them or any of them.
The Claim for Compound Interest
62. The Claimant seeks restitution of the time value of the wrongly debited sums by way of an award of compound interest calculated at the banks typical unauthorised overdraft borrowing rate of 28.70%.
63. The Claimant contends that the defendant would be unjustly enriched if the claimant's entitlement was limited to recovery of the wrongfully debited fees and a compensatory award of simple interest at the statutory rate. The bank has had use of the Claimant's funds for a considerable period of time whilst they were in its wrongful possession and as a lending institution has earned profit by way of interest by re-lending those funds at its commercially compounded rates. Conversely, the Claimant having been denied use of its funds in the banks wrongful possession was forced to replace those funds by lending from the bank by way of overdraft at its commercially compounded rates. Thus an award of compound interest is necessary to provide full restitution and a just remedy.
64. The Claimant in its submissions will rely on the recent case of Sempra Metals v Inland Revenue Anor [2007] UKHL 34 where the House of Lords held that compound interest is available at common law where the Claimant seeks a restitutionary remedy for the time value of money paid under a mistake. The Claimant paid the charges in the belief that they reflected the true cost of administering the contractual breaches. The Claimant has now discovered, following revelations relating to a similar organisation, that the true costs are much lower and that the belief held by Claimant was in fact mistaken.
The Limitations Act 1980
65. The Claimants reliance on the claim being permissible is supported by the Limitations Act 1980 Section 32 (b) & (c) which stipulates:
o (b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or
o (c) the action is for relief from the consequences of a mistake;
Then the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it....
66. Accordingly, the Claimant seeks;
(1) A declaration that the sums totalling £1351.50 have been wrongly and unlawfully debited from the Account.
(2) Payment of the said sum of £1351.50. (See attached "Schedule 2" for a breakdown)
(3) A restitutionary award of Compound Interest at the banks standard typical unauthorised overdraft rate of 28.70% per annum from the date of wrongful debit to date in the sum of £44067.04 as of 25th January 2010, continuing to accrue daily at the same rate thereafter until judgement or sooner payment. Or in the alternative, the S.69 interest of 8%.
(4) Court Fees of £400.
the new forms are wonderfully PIL'd.
if only eh? Still we wish....
Comment