Apologies for yet another marathon post.

Paragraph 64 of the Supreme Court judgement seems to be the key to the possible ‘get out’ in the last sentence of the statement read out in court this morning.

‘64. Mr Crow did not submit before us that if the Relevant Charges formed part of the price paid in exchange for the package of services, they could not be included within the meaning of the word “price” in Regulation 6(2). I consider that Regulation 6(2) could apply to a complaint that the Banks’ charges overall, of which the Relevant Charges are an important element, are unfair because those who pay them pay an excessive amount in exchange for the package of services in respect of which they constitute part of the payment. Thus the issue of whether or not the Relevant Charges form part of the “price or remuneration, as against the goods or services supplied in exchange” within Regulation 6(2) is not necessarily academic. No attack has yet been made, however, on the level of the Banks’ charges overall.’ (my emphasis)

From the figures in the judgement, about 28% of current accounts get these charges, so 72% do not. This means that 28% of current account holders are paying for most of the services for all 100% of current account holders, which is patently unfair.

Just suppose that some other service for which we have little or no choice but to accept the standard terms operated in a similar way, say your electricity supplier. 72% of their customers are charged next to nothing for electricity, but 28% pay the bills for everyone. House 1 pays £20 a year, house 2 pays £2000. Would anyone stand for that? How about if the 28% were only in areas of low income, which is effectively the people most likely to get bank charges? Let’s get even more extreme. I need to buy blinds for my son’s bedroom. Suppose I’m a favoured customer so though the blinds retail at £500, I’m only charged £50. You need blinds too, but you’re not a favoured customer so you get charged £950 to make up the difference. You simply wouldn’t pay it, but with banks we have no choice. It is almost impossible to live today without a bank account but there’s very little to choose between them so far as charges are concerned.

Someone else has already raised the issue of using regulation 5 – sorry, I can’t remember who or where. Regulation 5 is:-

‘Unfair Terms

5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer. Banks can charge what they like and we have no choice but to pay. Seems a significant imbalance to me.

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term. Goes without saying that the terms are not individually negotiated.

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.

(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.’

Relevant bits of schedule 2 seem to be :-

‘© making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realisation depends on his own will alone;’ the bank decide whether or not to pay that DD or whatever

‘(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;’ haven’t the banks maintained that if you keep within your overdraft limit, i.e. fulfil your part of the bargain, no charges?

‘(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;’

‘(k) enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided;’ Not sure how, but these might be relevant.

However, using regulation 5 is still subject to the clauses about core terms and price so I think that to use it we would have to find a way of arguing that charges are not part of the price for the services, and how could they be if most people do not have to pay them? The package of services is provided for a charge. Let the banks justify that charge being so much higher for a relatively small proportion of their customers. Debate on this one, please, hopefully leading to amended particulars of claim.

One final point, and if you’ve got this far I promise I’ll shut up in a minute. There is quite a lot of fuss at the moment over responsible lending, mostly in relation to loans and mortgages, but why should overdrafts be different? The bank chose to pay the direct debit or whatever took you into the overdraft, therefore they chose to lend you the money. How many stories are on these forums where just one stupid charge plus interest spirals totally out of control? The bank eventually ‘persuade’ their customer to take a loan to pay it off. Customer can’t afford to both make the loan payments and eat, so overdraft spirals out of control again leading to another loan and on and on and on. Justify that as responsible lending! Paying an unauthorised overdraft charge or a returned item charge is supposed to be paying for someone to make a decision as to whether to lend you the money, in which case they should be responsible decisions based on ability to pay, which they patently are not.

Would the customer have got into that never ending spiral if the bank had spelled out the effects of not clearing the overdraft every month as they now have to spell out the effects of only making minimum payments on the credit card? Possibly – most of us do after all only have so much money each month to go around – but possibly not. Allegations of irresponsible lending might only be another string to the bow, but how and where could we use these?

I’m shutting up now.

Thinking entirely 'out of the box', how about a challenge based on indirect discrimination, i.e. a practice that will tend to put a whole group of people at a disadvantage?

It is an accepted fact that people on low incomes are more likely to have charges applied to their bank accounts.

Disabled people are more likely to be on a low income, so are single parents, who are also more likely to be female.

Bank charges are therefore likely to discriminate against disabled people and women.

sound pretty reasonable to me

human rights?

Though wonder I received a tacky Birthday card from HSBC, had my account for 23 years, they owe me a lot of money.

'From the figures in the judgement, about 28% of current accounts get these charges, so 72% do not. This means that 28% of current account holders are paying for most of the services for all 100% of current account holders, which is patently unfair.'

The bottom line is that if, as the banks have argued right up to the Supreme Court, unauthorised overdraft charges and the like are part of a 'package of services' then they have to justify why 78% of their customers are charged nothing or next to nothing for this package whilst the other 28% foot the whole bill.

It may not have been intended to be but it is Robin Hood in reverse. No other 'service provider' would get away with this.

Incidentally, I'm likely to be one of the people adversely affected if the banks decide to make their charges fair for everyone since my current account hasn't been overdrawn for nearly five years now. Even so, I'd much rather pay my fair share of charges than let someone else subsidise me.

originally posted by rmw

they have to justify

The bottom line is that if, as the banks have argued right up to the Supreme Court, unauthorised overdraft charges and the like are part of a 'package of services' then they have to justify why 78% of their customers are charged nothing or next to nothing for this package whilst the other 28% foot the whole bill.

The rest of the bill is made up of interest forgone on credit balances ie they offer low interest rate whilst making money on credit balances, packaged accounts-for example Lloyds Select, Barclays Additions, NatWest Advantage Gold, and auxilliary fees ie safe custody, copy statements, stopping cheques etc,etc,

It may not have been intended to be but it is Robin Hood in reverse. No other 'service provider' would get away with this.

 

Incidentally, I'm likely to be one of the people adversely affected if the banks decide to make their charges fair for everyone since my current account hasn't been overdrawn for nearly five years now. Even so, I'd much rather pay my fair share of charges than let someone else subsidise me.

The balance was given as 50% interest forgone, 30% unauthorised fees and the rest was packaged accounts and auxilliary fees. OFT1005c has a bit more precise figures.

Would it be fair to say that (on the face of it) the Barclays Reserve 'scheme' lends itself to be dealt with under UTCCR 5?