OFT v Banks - Round One to OFT

[Aequitas]

Originally Posted by kev2b3

OFT Thinks charges are unfair.

We all know that. The question is whether they are (a) unlawful and/or (b) unfair within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999.

[greedfighter]

This is my proposed application for the stay to be lifted : Again please feel free to move it to the right place.

APPLICATION FOR REMOVAL OF STAY


1. The claimant submitted a claim for the return of charges that were unlawfully debited by the defendants to the claimants account as a result of the defendants employees negligence and failure to act reasonably and ‘in good faith’. The claimant also requested the court to consider damages resulting therefrom.
2. A stay was granted to the defendants on the 15th Nov 07 pending resolution of the OFT Test Case in which the defendants were a party and on the basis that it would determine the issues of this particular claim.
3. The claimant seeks that this stay should now be lifted and the matter proceed to hearing for the following reasons :
(a) The OFT Test case sought to determine whether or not charges made by those banks which were parties to the action and of which the defendant bank is a party, were unenforceable penalties and in the event that they were not, whether or not such charges fell within the scope of the Unfair Terms in Consumer Contract Regulations. Principally the continuance of the OFT test case concerns‘overdraft’, ‘unauthorised overdraft’ and ‘paid item’ charges. The claimant fully accepts that the Court has determined that such charges are not penalties and that the general issues regarding ‘overdraft’ and ‘paid item’ charges continues.
(b) The claimant submits that this particular claim does not concern the debiting of ‘overdraft, unauthorised overdraft or paid item’ charges nor does the claimant or this action seek to obtain the return of such charges.
(c) On that basis the claimant finds it difficult to see how or why the defendants are entitled to the continuance of a stay pending further resolution of the OFT test case and the ‘overdraft/paid item’ charges issue which are of no relevance to this claim..
(d) The claimant simply seeks the return of those charges unlawfully debited by the defendant, which are ‘unpaid item charges’, other losses suffered by the claimant as a result and general damages as a result of the defendants negligence, failure to act reasonably and ‘in good faith’. The claimant would assert that even though the OFT test case continues with regard to the ‘overdraft’, ‘unauthorised overdraft’ and ‘paid item’ charges the matters regarding ‘unpaid item’ charges i.e those within this particular claim have been firmly determined :
Extracts from Mr Justice Andrew Smith approved Judgement (OFT v Abbey National and 7 others dated 24th April 0

79. This does not mean that the Banks are under no contractual obligation to customers when they receive a Relevant Instruction. The terms of the seven Banks which make reference to a customer making a request in these circumstances, also refer to the Bank’s response to it, and it seems to me that the implication of their terms is that they are obliged to deal with Relevant Instructions in accordance with proper banking procedures. They have a discretion whether or not they should pay in accordance with a Relevant Instruction, but they would be in breach of contract if they rejected it arbitrarily or capriciously or in bad faith. This is because, as it was put by Leggatt LJ in Abu Dhabi National Tanker Co v Product Star Shipping Co Ltd, [1993] 1 Lloyd’s Rep 397 at p. 404: “Where A and B contract with each other to confer a discretion on A, that does not render B subject to A’s uninhibited whim. In my judgment, the authorities show that not only must the discretion be exercised honestly and in good faith, but, having regard to the provision of the contract by which it is conferred, it must not be exercised arbitrarily, capriciously or unreasonably.”

(The limits of this principle have been discussed in subsequent authorities: see Paragon v Nash Finance, [2001] EWCA Civ 1466, [2002] 1 WLR 685 at para 38 per Dyson LJ, Lymington v MacNamara, [2007] EWCA Civ 151, [2007] 2 All ER (Comm) 825 at paras 44-45 per Arden LJ, Socimer International Bank Ltd v Standard Bank London Ltd, [2008] EWCA Civ 116 at para 66 per Rix LJ. The precise ambit of any obligation of this kind is not important, nor is it necessary to explore in this judgment what is required in order for a bank to deal

370. There can be no fixed rule as to whether or not distinct and preliminary acts done by a seller or supplier with a view to supplying or deciding whether to supply the benefit which the consumer ultimately seeks are “services” within the meaning of the 1999 Regulations. Sometimes where the customer requests the preliminary or preparatory act (for example, an architect is engaged to produce preliminary drawings), that clearly will be a service in its own right. Equally clearly, the provision of a service might not necessarily provide the consumer with the benefit that he seeks: a doctor might fail to cure but he still provides medical services. But in these cases it is at least easy to see that something is “supplied” to the consumer. In the case of the customer giving a Relevant Instruction, the customer is seeking payment in accordance with it, not that the Bank simply considers making payment, and that is reflected in the terms of the seven Banks (other than Nationwide) whose terms are drafted by reference to a request (or deemed request) on the part of the customer for an overdraft. In view of this and given that the customer receives no actual benefit from his Bank considering his instruction or request for payment and declining to accede to it, I am unable to accept that what the Bank does when it deals with a Relevant Instruction upon which it does not make payment is properly described as “services” and unable to accept that anything can properly be said to be “supplied” to the customer. Moreover, even if the Banks’ processes of considering and processing Relevant Instructions short of paying them, or with a view to deciding whether to pay, could, in any sense, be described as services supplied to the customer, the real and essential service supplied by the Banks under their contracts with customers is that of paying upon the customer’s instruction, and the Banks’ procedures whereby they deal with Relevant Instructions before making payments or when they decide not to pay are ancillary to and incidental to the service of paying in accordance with the mandate.

371. I should add that it was argued by some of the Banks that when a Bank decides not to pay upon a Relevant Instruction, it provides a service, at least in some cases, by way of informing the customer of the position. The decision might involve the Bank in other procedures: for example, returning a cheque through the clearing system in accordance with the rules of the clearing house. These activities, in my view, are no more than the incidental consequences of the Bank’s decision, and I am unable to regard them as services supplied to the customer. Further, on any view they are, again, ancillary or incidental activities.

372. I therefore accept the OFT’s submission that if a Bank declines to pay upon a Relevant Instruction, it supplies no, or no relevant, services by way of considering, processing or otherwise dealing with it.

The specific services argument

402. The Banks’ specific services argument is that each of the Relevant Charges is the price or remuneration in exchange for the services or a service supplied in connection with a Relevant Instruction given by the customer or by way of the Bank’s response to it. Here it is necessary to consider each category of Relevant Charges separately: despite Mr Doctor’s submission to the contrary, I see no reason that either all four of the OFT’s categories of Relevant Charges are assessable for fairness or none is: after all, the OFT does not suggest that the adequacy of all charges or remuneration that the Banks make of their current account customers are to be, or should be, assessed for fairness.

403. For the reasons that I have already explained, I am unable to accept that the Banks supply customers with any services within the meaning of the 1999 Regulations when they refuse to pay upon Relevant Instructions, and it follows that I reject the specific services argument as far as Unpaid Item Charges are concerned. However, when payment is made, the Bank supplies payment services by way of paying in accordance with the customer’s mandate and supplies lending services. The Banks submit that Paid Item Charges and Guaranteed Paid Item Charges are paid in exchange for both payment services by way of making payment in accordance with a Relevant Instruction and lending services by way of an allowing an unarranged overdraft. (They would add that they are also paid in exchange for processing the customer’s Relevant Instruction, but I have rejected their argument that that in itself constitutes the supply of services.)

4. Accordingly it is respectfully requested that the stay granted on 15 Nov 07 be removed.

I certify that the particulars contained in this application are true to the best of my knowledge and belief.

[yourbank]

The banks appealed Justice Smith's findings and that appeal is pending which means that whether the charges are unfair or whether they can be assessed for fairness under the UTCCR has yet to be determined.

[noomill060]

BBC NEWS | Business | OFT says bank charges are unfair

[noomill060]

"The main UK banks have been told by the Office of Fair Trading (OFT) that their overdraft charges are probably unfair."

[noomill060]

A fairly unequivical assessment, I think and not one that would be made unless they were willing to bet the farm on it.

It would be quite unacceptable to pre-empt or second guess Andrew Smith's judgement.

(unless that is, he has already made his judgement and that this is evidence of a leak.)

[TheyrCriminals]

Hi Guys,

I have read the FSA revised guidelines on financial hardship criteria, but does anyone know how successful this is in practice, are claims of genuine financial hardship being allowed to progress and not having to wait for the outcome of the test case?

Thanks

TheyrCriminals

[andrewman]

A case of financial hardship is being allowed, I have used this, due to unemployment, against the Halifax, with a satisfactory outcome.

[african_igbo]

ummh still confused, quote by noomill060 "The main UK banks have been told by the Office of Fair Trading (OFT) that their overdraft charges are probably unfair." Thus have we won the appeal (is that the judgment) or not and if so when I can we or do the Courts sort out court dates which I had one and thus stayed!... This has gone on and one and I for one will have to re read and digest all the court stuff again.. and print out etc etc..

Regards

[JOSH_IOU]

Whats the point of following proceedings if the bank is going to apeal evry one of them?

Take your own advice and dont play into there hands.

[african_igbo]

Urrrgh 99% of the claimaints have or our having financial hardship its called the credit crunch and getting no where paying the credit cards and I am missing a few bills here or there but never mind I just like the test case to prove yeah or nah..

Thus move on once the outcome is sorted, apeal on the appeal is getting ridicolous.

[JOSH_IOU]

My point exactly we need to stop playing the banks game.

We need to get the stays lifted we no they (the banks) arent gona show up. Or if they do in my opinion we'd have strong grounds to question them as to why they havent shown up before.

If they had the CCA agreements then they would enforce them. They never think twice about takeing us on so why should we?

After all if there simply playing the rules of the law which i seriouls doubt they are then thid would have been sorted by now.

Questions I have for the Banks.

1. How much do they make from the account being in default?
2. How much do they make from selling my account?
3 . After the account has been sold how much do the debt collection companys make from the account.
4. Are the debt collectioncompanys in house comapnys or are the banks contracted to get the money from the DCA's or debt purchasers (whom ever they may be).
5. At what point were they aware there was a problem with the CCA agreements?
6. At what point did they attempt to contact the consumer to inform them they were wipeing the debt off to comply with regulations instead of wasteing court time?
7. Why do they look on every case individually and why arent they accepting all hardship cases that apear before them.

[Buby x]

My claim got stayed and has been going on for about 18 months. What can I do. What do i do to get the stay lifted as I am a singke parent with two kids and with christmas on its way I could sure use the money. I dont claim benifit so i dont think i'll have a financial hardship case.. Any suggestions
Buby x

[InformedSearcher]

Personally I'm still somewhat confused....
If I claim 'hardship' and I get all the cash back vs. 'wait for the outcome'.
So what actually happens? Like if the banks win (using our money for their defence) do the 'hardship' cases have to pay it back? Do the classed as not hardship lose? Do we all win? Seems to be a bit of a confused state of affairs with the whole thing and the clocks ticking.
Michael

[greedfighter]

Like everyone else I am getting totally fed up with this now. But it seems that in reality nothing will be moving anywhere fast. Where is the judgement on historic terms ? Mr Justice Smith said this would not take as long as the original case ! This judgement seems no where in sight.

I am also not convinced that the government is not intervening behind closed doors for a delay on this. Given the credit crunch and alleged financial instability that banks are apparently suffering (a load of old tosh - they can still increase shareholder dividends) I cannot see the government wanting them to suddenly have to refund millions of pounds.

It is a bit worrying that the secretray of State can issue an intervention notice as evidenced by the HBOS/LLoyds Merger to stop the OFT pursuing any particular lines of investigation ? how do we know he hasn't interfered in the bank charges refunds issue.

I for one am not happy with the idea of a 'superbank' its like feeding a fifteen stone bully meat pies !

My claim has been running now for nearly two years and I really need this money. I was eventually forced into an IVA and my life has been totally ruined by these greedy banks.

Rant over. Not a particularly helpful post but I feel better.

[determindator]

All these charges contributed to the exorbitant coffers the banks 'had' 'have' and so we have all contributed to the economic rise in this country. Another stealth tax? We want a clear answer as to the delay because there is a reason. Who is going to stop the appealing by Banks? They refunded charges not for good will as they try to bend the law in their favour, that being the case the share holders could have said 'what's all this good will charity you're giving away without our consent' but because the case against them is true. Now heed the foundation of our laws in this country,ignore them and you turn your back on your people and democracy.