Tweet
Re: responseS to MSE template letter
Responses from Halifax (from Can you still claim now? - MoneySavingExpert.com Forums )
Dear XXXX,
Thank you for writing to us on dd/mm/2010. I am sorry that this situation has occurred and you have had to bring this issue to our attention.
You have told us that you think the fees are unfair because of regulation 5 of the Unfair Terms in Consumer Contracts Regulations (the Regulations) and Section 140A of the Consumer Credit Act (the Act).
In your letter you referred to the Lending Code and Banking Conduct of Business Sourcebook and FSA principles. [I referred to none of these three documents in my complaint!]
You also indicate in your letter that because the fees are disproportionate compared to the level or cost of the borrowing, this isn't fair. To answer this point, the Supreme Court said in its judgement that it was wrong to compare the level of the fees with the specific services a bank supplies when it returns a payment or grants an unarranged overdraft. This is because such challenges are based on the false premise that the fees are for individual services.
To get a true idea of what customers are paying for - it's better to compare the whole price paid for fees against all the services supplied in exchange for these by the bank. The same also applies to claims under the Consumer Credit Act. Overall we think the price for the total package of services you receive is fair and was clearly explained when you first took out the bank account.
You have also asked us to consider, under regulation 5(1) of the Regulations and Section 140 of the Act, further reasons to support your claim that the fees are unfair. We believe our fees are fair and after careful consideration, we do not think the arguments put forward in your letter meet the tests set out in the Regulations or under the Act.
It also appears that you have made these claims under the Act regarding all the fees you have paid for an unarranged overdraft or unpaid item fees.
The unfair relationships test in Section 140A of the Consumer Credit Acts 1974 only applies to the paid item fees and unarranged overdraft fees incurred from 6 April 2007 onwards. The test does not applied to unpaid item fees because section 140A only applies to credit agreements and these fees are not paid under a credit agreement. We have looked at your claim in relation to paid item fees and unarranged overdraft fees paid from 6 April 2007.
Up until now, this letter has been a summary of your concerns and complaints, along with our answers to them. Here is a more detailed response:
1 and 9 - You have said the charges had the potential to be excessive or punitive in comparision with the costs to the bank in dealing with the charges or to the level of borrowing that triggered the fees. (As explained in our previous letter,) [What letter - this is the first letter they've sent me???], the court proceedings did not consider whether these fees could amount to penalties and found that they did not. In addition, when considering the Regulations, the Supreme Court said in it's judgement that it was wrong to compare the level of the fees with the specific services a bank supplies when it returns a payment or grants an unarranged overdraft. This is because such challenges are based on the false premise that the fees are for individual services. Any comparison of the price paid by a customer should compare the whole price paid as against all the services supplied in exchange by the bank. This also applies to claims under the Act. We think the price for the overall package of services you receive is fair and has been clearly explained to you.
2 - We understand that you believe that the fees were unfair because they were used to subsidise the provision of current accounts by the bank to other customers. We believe that the argument relating to cross-subsidisation is really suggesting that the prices of these fees are too high. This type of challenge under regulation 5 is not permitted as a result of the Supreme Court judgement. In addition, the Regulations are concerned with the fairness of a contract between an individual and a supplier. Your concern is about the relationship between the supplier and classes of consumer and so would not succeed under the Regulations. We believe this would also apply under the Act.
The Supreme Court also said that the cross-subsidisation (the practice of using profits generated from one product or service to support another provided by the same operating entity) was obvious. We're required to explain our prices, such as the fees, to you clearly and have done this. But we're not required to explain our costs or revenue.
3 - You said that 'in the premises the bank did not deal fairly between you and other customers' We are not clear as to what you mean by this. If i relates to your concern about cross-subsidisation, then we believe the above in point 2 also applies. However we take our obligations to treat our customers fairly very seriously. And we believe that these fees and the way that they are applied are fair and consistent with our obligations.
4 - We understand that you feel that these fees were not adequately explained when you opened your account, gave and instruction that resulted in a fee, or before the fee was applied. These fees are outlined in the Terms and Conditions leaflet which was given to you when you opened your account and we would have told you when we made any changes to these fees. We also teel customers when they have incurred a fee and our letters explain ways in which to avoid incurring fees in future. Customers can therefore take steps to avoid them. When a fee is incurred, we also give you at least 14 days notice before the fees are deducted from your account so that you can plan for this cost. As a result, we don't think our charging structure is unfair.
5 - We understand that you think the charging structure can give rise to the application of further charges. We disagree as we do not charge 'charges on charges'. We do not take unarranged fees (unplanned fees) into account when calculating whether further unarranges fees have been incurred.
6 and 7 - You have said you think the charges are too complicated and individual circumstances make it difficult to predict when you will incur these fees or the amounts in advance. We do not agree that our charging structure is unclear, unpredictable or complex. Our fees are explained clearly and customers can always ask our staff for advice. We also offer a range of services so that customers can keep track of their balance at any time, such as, using our telephone banking on 08457 20 30 40, online banking at www.halifax.co.uk or www.bankofscotland.co.uk, mini statements at cash machines or by calling into your local branch and speaking to one of our banking advisors. However I should point out that ultimately it is your responsibility to manage your account.
8 - The argument that the fees are unfair because accounts with different charging structures are not available from current account providers would not succeed under the Regulations. This is because the Regulations are concerned with the fairness of individual contracts between a consumer and a supplier. But not with the choice available in the wider market. In any event, we don't agree that competition in the current account market has been restricted. There are a wide range of accounts available with differing pricing structures.
Following the Supreme Court decision, the Office of Fair Trading (OFT) considered whether there were any other ways it could challenge the fairness of unarranged overdraft fees under Regulation 5 of the UTCCR. The arguments the OFT looked at included the ones above, for example; banks can choose whether or not to make payments; customers may incur the fees in error; customers don't necessarily understand the banking system and customers who pay the fees may be subsidising services provided to other customers. The OFT's view was that these arguments are unlikely to succeed and that's why it has ended its investigation into unarranged overdraft fees.
For more information on the OFT's decision please visit http://www.oft.gov.uk/advice_and_res...eted/personal/
Whilst we are sympathetic to our customer' personal circumstances we do believe it is only fair to pass these added costs onto the account concerned, rather than absorb them into other areas of our operations affecting all our other customers. I am sorry, but we are not going to be able to uphold your fees complaint under the Regulations or the Act.
If you do not agree with our decision you can refer the matter to the Financial Ombudsman Service (FOS). Making sure you do this within 6 months of the date of this letter I've enclosed their leaflet, "Your complaint and the Ombudsman" for you.
If you want the FOS to consider your complaint independently, you may also find it helpful to check the FOS' website which explains how they will deal with bank fees complaints following the end of the legal proceedings. You can find this at http://www.financial-ombudsman.org.u...k-charges.html.
In the meantime, please get in touch if you have any other concerns or there's anything else we can do to help.
Yours Sincerely
xxx xxxx
Customer Relations
Responses from Halifax (from Can you still claim now? - MoneySavingExpert.com Forums )
Dear XXXX,
Thank you for writing to us on dd/mm/2010. I am sorry that this situation has occurred and you have had to bring this issue to our attention.
You have told us that you think the fees are unfair because of regulation 5 of the Unfair Terms in Consumer Contracts Regulations (the Regulations) and Section 140A of the Consumer Credit Act (the Act).
In your letter you referred to the Lending Code and Banking Conduct of Business Sourcebook and FSA principles. [I referred to none of these three documents in my complaint!]
You also indicate in your letter that because the fees are disproportionate compared to the level or cost of the borrowing, this isn't fair. To answer this point, the Supreme Court said in its judgement that it was wrong to compare the level of the fees with the specific services a bank supplies when it returns a payment or grants an unarranged overdraft. This is because such challenges are based on the false premise that the fees are for individual services.
To get a true idea of what customers are paying for - it's better to compare the whole price paid for fees against all the services supplied in exchange for these by the bank. The same also applies to claims under the Consumer Credit Act. Overall we think the price for the total package of services you receive is fair and was clearly explained when you first took out the bank account.
You have also asked us to consider, under regulation 5(1) of the Regulations and Section 140 of the Act, further reasons to support your claim that the fees are unfair. We believe our fees are fair and after careful consideration, we do not think the arguments put forward in your letter meet the tests set out in the Regulations or under the Act.
It also appears that you have made these claims under the Act regarding all the fees you have paid for an unarranged overdraft or unpaid item fees.
The unfair relationships test in Section 140A of the Consumer Credit Acts 1974 only applies to the paid item fees and unarranged overdraft fees incurred from 6 April 2007 onwards. The test does not applied to unpaid item fees because section 140A only applies to credit agreements and these fees are not paid under a credit agreement. We have looked at your claim in relation to paid item fees and unarranged overdraft fees paid from 6 April 2007.
Up until now, this letter has been a summary of your concerns and complaints, along with our answers to them. Here is a more detailed response:
1 and 9 - You have said the charges had the potential to be excessive or punitive in comparision with the costs to the bank in dealing with the charges or to the level of borrowing that triggered the fees. (As explained in our previous letter,) [What letter - this is the first letter they've sent me???], the court proceedings did not consider whether these fees could amount to penalties and found that they did not. In addition, when considering the Regulations, the Supreme Court said in it's judgement that it was wrong to compare the level of the fees with the specific services a bank supplies when it returns a payment or grants an unarranged overdraft. This is because such challenges are based on the false premise that the fees are for individual services. Any comparison of the price paid by a customer should compare the whole price paid as against all the services supplied in exchange by the bank. This also applies to claims under the Act. We think the price for the overall package of services you receive is fair and has been clearly explained to you.
2 - We understand that you believe that the fees were unfair because they were used to subsidise the provision of current accounts by the bank to other customers. We believe that the argument relating to cross-subsidisation is really suggesting that the prices of these fees are too high. This type of challenge under regulation 5 is not permitted as a result of the Supreme Court judgement. In addition, the Regulations are concerned with the fairness of a contract between an individual and a supplier. Your concern is about the relationship between the supplier and classes of consumer and so would not succeed under the Regulations. We believe this would also apply under the Act.
The Supreme Court also said that the cross-subsidisation (the practice of using profits generated from one product or service to support another provided by the same operating entity) was obvious. We're required to explain our prices, such as the fees, to you clearly and have done this. But we're not required to explain our costs or revenue.
3 - You said that 'in the premises the bank did not deal fairly between you and other customers' We are not clear as to what you mean by this. If i relates to your concern about cross-subsidisation, then we believe the above in point 2 also applies. However we take our obligations to treat our customers fairly very seriously. And we believe that these fees and the way that they are applied are fair and consistent with our obligations.
4 - We understand that you feel that these fees were not adequately explained when you opened your account, gave and instruction that resulted in a fee, or before the fee was applied. These fees are outlined in the Terms and Conditions leaflet which was given to you when you opened your account and we would have told you when we made any changes to these fees. We also teel customers when they have incurred a fee and our letters explain ways in which to avoid incurring fees in future. Customers can therefore take steps to avoid them. When a fee is incurred, we also give you at least 14 days notice before the fees are deducted from your account so that you can plan for this cost. As a result, we don't think our charging structure is unfair.
5 - We understand that you think the charging structure can give rise to the application of further charges. We disagree as we do not charge 'charges on charges'. We do not take unarranged fees (unplanned fees) into account when calculating whether further unarranges fees have been incurred.
6 and 7 - You have said you think the charges are too complicated and individual circumstances make it difficult to predict when you will incur these fees or the amounts in advance. We do not agree that our charging structure is unclear, unpredictable or complex. Our fees are explained clearly and customers can always ask our staff for advice. We also offer a range of services so that customers can keep track of their balance at any time, such as, using our telephone banking on 08457 20 30 40, online banking at www.halifax.co.uk or www.bankofscotland.co.uk, mini statements at cash machines or by calling into your local branch and speaking to one of our banking advisors. However I should point out that ultimately it is your responsibility to manage your account.
8 - The argument that the fees are unfair because accounts with different charging structures are not available from current account providers would not succeed under the Regulations. This is because the Regulations are concerned with the fairness of individual contracts between a consumer and a supplier. But not with the choice available in the wider market. In any event, we don't agree that competition in the current account market has been restricted. There are a wide range of accounts available with differing pricing structures.
Following the Supreme Court decision, the Office of Fair Trading (OFT) considered whether there were any other ways it could challenge the fairness of unarranged overdraft fees under Regulation 5 of the UTCCR. The arguments the OFT looked at included the ones above, for example; banks can choose whether or not to make payments; customers may incur the fees in error; customers don't necessarily understand the banking system and customers who pay the fees may be subsidising services provided to other customers. The OFT's view was that these arguments are unlikely to succeed and that's why it has ended its investigation into unarranged overdraft fees.
For more information on the OFT's decision please visit http://www.oft.gov.uk/advice_and_res...eted/personal/
Whilst we are sympathetic to our customer' personal circumstances we do believe it is only fair to pass these added costs onto the account concerned, rather than absorb them into other areas of our operations affecting all our other customers. I am sorry, but we are not going to be able to uphold your fees complaint under the Regulations or the Act.
If you do not agree with our decision you can refer the matter to the Financial Ombudsman Service (FOS). Making sure you do this within 6 months of the date of this letter I've enclosed their leaflet, "Your complaint and the Ombudsman" for you.
If you want the FOS to consider your complaint independently, you may also find it helpful to check the FOS' website which explains how they will deal with bank fees complaints following the end of the legal proceedings. You can find this at http://www.financial-ombudsman.org.u...k-charges.html.
In the meantime, please get in touch if you have any other concerns or there's anything else we can do to help.
Yours Sincerely
xxx xxxx
Customer Relations
Comment