Success! Judgement AGAINST Egg...

[barcote]

In around June of this year I decided to pursue 3 financial institutions that charged me penalty fees during my days at university. I discovered this site mid way through my action and read the section re: Egg with interest.

There seems to be a great deal of hyperbole surrounding Egg. There is no need for this. The only difference in reality seems to me that they do not roll over as do other institutions and settle but rather choose to take it all the way and as some put it ‘play dirty’ especially when people have outstanding balances with them. I see it more as taking advantage of their position, and regret to admit that I would use similar tactics to theirs if acting for them as a client. I would generally advise caution against taking action against Egg or indeed any institution with whom you have outstanding debt as this makes you a sitting target should the institution wish to so target you. I am fortunate enough to have been able to pay off all my uni debt.

I have refrained from posting anything on the subject of Egg until my claim had been heard but yesterday I am pleased to say a hearing was held and unsurprisingly (to my mind at least) the judge found against Egg and I was awarded costs of £80 in addition to judgement for attending to make a total of approx £570.00. Mr St Clair Nelson whose name many readers will be familiar with requested that the court consider the actual costs incurred by Egg. I made no objection to this as this would have been pointless and after both my and his submission, the judge decided £5 to be a fair amount.

IMPORTANT: I would offer the following as some guidance to pursuing this type of claim which applies as much to banks in many respects as to credit cards. This is not given in a professional capacity however and should be takn under advisement and at your own risk. I take no responsibility for any consequences of following the same and would advise if you have any concerns whatsoever to seek independent professional legal advice.

Right the nasty bit over, on with the useful stuff (hopefully).

Essentially these cases are very straightforward and I see a good deal of posts get bogged down in unnecessary detail. You will be aware of the law on which your claim will be founded – UTCCRs and various common law decisions Dunlop etc so I will dispense with this but essentially this is the basis on which you take action in law. This established:

Essentially there are three major parts to succeeding: 1) showing that there has in fact been a breach of contract on your part 2) showing that the charges incurred as a result are in excess of the cost to the institution 3) attempting to satisfy the court as to as to the true cost to the bank. That’s it.

I will deal with each point in turn.

1) many institutions (Egg included) are now couching going overdrawn/overlimit as an extra service to you. It is normally accepted by the defence though not always that missing payments is a breach of contract. Institutions are attempting to portray however that going overdrawn/overlimit is not a breach but merely an additional service whereby inter alia they agree to temporarily increase your credit limit etc. They would love this to wash as the issue of fairness is less likely to be assessed, if at all if the charge is shown to be for a service. It should not take much however to show that this argument is unsustainable. Terms and conditions used to almost always include a provision that you as a customer would agree to stay within your credit limit. This has been to a large extent written out of T/Cs now in order to support the bank’s above assertion that there is no breach. However, you can still find it if you look hard as there is no getting away from the fact that they have to specify their charges. You will therefore find in T/Cs something along the lines of “…if you go over your limit we may charge you…”. This is strong evidence that this is considered to be a breach of contract and that charges are a pre-estimate of loss. If this is not enough to convince a judge, one only has to point out that these charges are generally applied once in each month you are over your limit. Even if you were to run with the idea that there is no breach of contract by going over your limit and that you are being charged a fee for a ‘service’ presumably their agreeing to temporarily increase your credit limit this fee would not be applied once in every month you remain over your limit. A reasonable judge should be convinced by this.
2) The OFT have done the hard work here for you. Refer the judge to this report £12/£16 and make sure you stress that the OFT stated that just because a charge is below this level does not make it fair but merely that the OFT would not take action themselves. Make it clear that your view is the real cost in your case to the bank is very low. In Egg’s case, I stressed the lack of overheads – branches etc. and the high level of automation.
3) Sort of hand in hand with 2 here. I note Bankfodder (who seems to have earned himself the position of pseudo-deity status here no doubt with justification) has suggested a reply to defence whereby part of the claim is admitted i.e. the actual costs to the bank. This in my humble opinion whilst not damaging is neither the trump card it is portrayed to be as the judge is unlikely to order disclosure in respect of Egg’s costs. I am a little rusty on my civil procedure rules but I am not sure in the Small Claims Court whether he even has the power to do this. The point is Egg are not going to disclose their costs in any circumstance because they would show that they are much lower than the charges they are levying. If they weren’t then Egg would publish them far and wide as they would be the obvious defence against claims such as these.

You are not going to get disclosure but this is not the Holy Grail you should be seeking. You do not need it. Egg are as much on the back foot if not more so than you by not being able to show it’s true costs since they cannot make any sensible justification to the judge on which to base their costs. Egg have reproduced part of an internal report into their costs in their defence in my case which they sort to rely on which showed their costs to be higher than the charges they levied. I had this struck out as evidence on the basis that they had not produced the whole report nor made it available to my or the judge, it had not been audited independently, had been produced 2-3 years after my charges had been levied and it’s conclusions were at odds with the OFT report’s conclusions. I also put evidence of investigations into American and Australian banks (reproduced below) which show the cost to financial institutions to be pence to single pounds.

The judge in my case decided £5 to be a fair estimate of the banks costs made but it clear that this figure was somewhat arbitrary given Egg’s inability to substantiate its true costs.

Re: Egg’s delaying tactics – stress the inconvenience of attending Court and Egg’s sufficient time to have dealt with submission etc by the time of the hearing. Respectfully ask the judge if he is prepared to deal with the matter that day based on the evidence he has as you see a delay to be prejudicial to your case and unfair in all the circumstances - be very polite and deferencial here.

Good luck everyone! Aside from those with outstanding debts who I would advise to proceed with extreme caution (ideally transferring those debts elsewhere if possible prior to action) plod on – eventually you will be successful.


Reports referred to above:
In a recent study undertaken in Australia [Nicole Rich, “Unfair fees: a report into penalty fees charged by Australian Banks] it was estimated that the cost of processing a dishonoured cheque by an Australian Bank was (generously) likely to be in the region of $3.00 to $6.00. A direct debit dishonour was estimated to be in the likely region of 54 cents. No data was published by the Australian banks to confirm or deny this. By reviewing the banks’ charges against the above figures, the study estimated that banks could be charging: a. between 5 to 16 times what it costs them to process a cheque dishonour.
b. between 64 to 92 times what it costs them to process a direct debit dishonour.
The study’s key findings stated that in its opinion the Australian Bank’s cheque and direct debit dishonour fees (bank charges) were likely to be penalties at law.
Further in an American study [1998 American Study on cheque dishonour fees by the Consumer Federation of America “Bounced Cheques : Billion Dollar profits II] (also referred to in the above Australian study) it had been estimated that the American’s Banks’ cost to process a dishonoured cheque was between US$ 0.50 and US$1.50 (estimated actual cost being 11 to 32 times less than the bank’s actual charge). To process a dishonoured direct debit payment was between US$0.48 and US$0.65 (estimated actual cost therefore being 9 to 11 times less than the banks’ actual charge).

[bram stoker]

Congratulations on your win, and for letting us know your story. It's always encouraging to hear of a win.

I'm not sure about stating foreign charges, as we rely on UK laws, but the results were great, and probably a result of all the other patience and research.

Well done.

[barcote]

If you can locate similar reports re: British banks this would of course be preferable but it is not a question of law here, only of establishing the likely cost to banks. I could not find any similar reports into British industry. The judge took these figures into consideration accepting that the banking industry in these countries was likely to be similar though of course not identical to our own.

[kateandpete]

Congratulations and thanks for posting!

[angry cat]

What an 'Excellent' result barcote !!!!

I knew that someone would obtain a judgement against Egg eventually

Take note other Egg Claimants...
we will ALL win but need to proceed cautiously.

Patience is a virtue.

Love AC

[Joa]

Barcote; well done and thanks for leeting us know. It is very uplifting. A question though; you recommend a caution for those of us who are in debt to Egg. I assume, naively maybe, that would be most of us as Egg's major product is a credit card. Is this what you mean by debt; having a balance on credit card? Or did you mean arears in repayments?
I have no arrears and have no default in Egg's case, but I do in Capital One's case; I have absolutely no option of transferring this debt/balance anywhere else. Can you expand on why does it make my position fragile? Surely having the balance on a card is not unlawful, unlike the penalty charges. Even if the card provider wants it all back at once, there is a scope for negotiation etc.
Would you mind also giving us the claim number, or the name of the judge or the court and date of the order?

[BankFodder]

Ping: Barcote

I have sent you a PM.

I would be very grateful if you would contact me about this.

This is extremely significant and it would be helpful to have a talk with you about it - in confidence if you wish.

Also, the press would like to speak with you.

[mcuth]

Eggcellent (sorry) result Barcote - thanks for posting that, gives fantastic encouragement to all of us that seem to be stuck in a great big quagmire of claims at the moment

Originally Posted by Joa

Would you mind also giving us the claim number, or the name of the judge or the court and date of the order?

Ditto - that would be extremely helpful to all of us taking on Egg!

Cheers

Michael

[bram stoker]

Yes, the claim details would be most useful.

I also hope you completed our survey for us.

[barcote]

I would really prefer to stay out of the limelight and accordingly keep details private. They would be of little assistance in any respect as you would not be able to rely on the decision as precedent and cannot of course choose your judge!

I will be happy to answer any other questions here for the next week or so though I am a little pressed with work commitments. I will check this board periodically though.

Re the query on debt. I am not suggesting you should not necessarily have any debt with the institution you are taking on. I have and use an Egg Money card because it is one of the best cards on the market for cashback. I pay off the balance in full each month. Providing you are within your the terms of your credit agreement - i.e. not in arrears - you should have no difficulty and Egg should have no basis to withdraw any facility from you.

Consider though your position should Egg withdraw a facility unilaterally albeit without legal justification. Yes you could challenge that decision, possibly even sue them for consequential financial loss. But would you (in time) and is it all worth it if the process throws you into even worse financial difficulty in the short term? The ideal position would yes or no have debt but not to base any reliance on that facility - this was my case. It would have been of little significant if Egg had withdrawn my credit card as I have the means to pay off any balance and could simply use another.

If you are in arrears without the means to get out, I suspect you will fail in your claim as Egg can easily counterclaim and in the short term petition for bankruptcy or anything in between. The fact that they can do this gives them a device with which to manipulate and influence you.

[Joa]

If you are in arrears without the means to get out, I suspect you will fail in your claim as Egg can easily counterclaim and in the short term petition for bankruptcy or anything in between.

This is very worrying; however there is a wealth of evidence on other subforums that banks settle despite arrears and even remove defaults if claimant requests it.
I suppose as long as there are repayment arrangments to which the claimant adheres, the court would see any action to demand an immediate repayment of the whole balance as unreasonable, or if the account is in dispute as the claimant claims that the arrears have been caused by the penalty charges?
Hm....

[mcuth]

Originally Posted by barcote

I would really prefer to stay out of the limelight and accordingly keep details private. They would be of little assistance in any respect as you would not be able to rely on the decision as precedent and cannot of course choose your judge!

I respect you wanting your privacy and realise that no precedent is set, as it can't be in the CC system.

However, when dealing with Egg (& indeed other banks), knowing that there's a judgement in the consumer's favour already out there lends so much more power to the rest of us - even if no precedent has been set (just a shame you weren't in the Mercantile Court really!) - shows Egg & everyone else that the cases are valid and their "we're above the law" response is going to come crashing down around their ears. That's why it'd be helpful to quote details at them.

Cheers

Michael

[caro]

Whilst I understand your wish for privacy, it would be useful to have details of your claim number, the amount and date of settlement. As you quite rightly say, no precedent has been set but these details are useful as evidence in other peoples cases that the banks and card companies are paying up, usually before even going to court. It's little more that statistical information.

I understand that it is within the remit of a judge in a small claims case to order standard disclosure, although the case would probably be put in the fast-track.

[BankFodder]

I am sorry to say that I think that people should be cautious about this victory against Egg.

We are not able to verify it.

I am sorry that we are unable to get more information. So far as creating a precedent, of course technically it could not. However, there have been several instances of district judges expressing interest at the decisions or approach taken by judges elsewhere in the country and there can be no doubt that a judge who knew of a decision such as the one claimed in this thread, would at least be very much more cautious about coming to a different decision in his own case.

Furthermore, the enormous public significance of this case would have placed further massive pressure upon all of the credit card companies as well as the authorities and would probably help to accelerate the reform of the default charge system.

I now understand that the Egg press office have said that they are unaware of any case which they have lost in this way.
Of course, they may have been instructed to say this but it seems strange that neither defendant nor claimant are prepared to talk about the case.

It is a great shame but I think that this case should be disregarded for the time being.
I understand anyone's desire for confidentiality but I do know full well that confidentiality does not need to be sacrificed in these kinds of things.
I am quite sure that we will get a result at some point which can be fully verified and which can then be exploited to great effect.

[MAGZY]

Indeed BF I smell a rat with this thread...

In around June of this year I decided to pursue 3 financial institutions that charged me penalty fees during my days at university. I discovered this site mid way through my action and read the section re: Egg with interest.

Please explain Barcote, how you joined in March? (At least three months before you claimed to have 'discovered' this site)

Also, you speak and transcribe like my brother (who's a barrister)

Magz