UNFAIR TERMS

 

5-(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirements of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

(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 them,

(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.

 

ASSESSMENT OF UNFAIR TERMS.

 

6-(1) Without prejudice to Regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of the conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.

 

(2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate-

(a) to the definition of the main subject matter of the contract, or

(b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.

 

It appears that the way is still open not to challenge the unfairness of the LEVEL of the charges BUT for the mere fact that it was NOT INDIVIDUALLY NEGOTIATED And THE BURDEN IS ON THEM TO PROVE THAT IT WAS INDIVIDUALLY NEGOTIATED...a much less tiresome route for us all

 

Also the last decision on levels of charges not being fair may on individual basis be open to appeal for NOT BEING EXPLAINED IN A PLAIN INTELLIGIBLE MANNER.That avenue would depend on consumers' personal agreements and on individual circumstances.

 

However most standard pre-formulated agreements are 'generic' in nature so that.to use an example from the request for a 'copy for original agreements' situation ,the courts have said that the banks can reconstitute a copy from 'other agreements that existed at the time' so long it was 'an honest and accurate copy'.

 

Well then the converse can be applied in our situation within the context of bank charges whereby if one consumer's pre-formulated standard contract was not individually negotiated then by virtue of it's 'generic' nature there must be thousands the same 'out there' that were not individually negotiated.THIS IS THE MASSIVE PROBLEM THE BANKS WOULD HAVE IN PAYOUTS.Its elementary my dear WATSON!!!

 

Rgds

 

M2ae

Section 5(2) of the UTCCR's as stated above is very welcoming news to read and extremely important if the S5 argument is to succeed in court. I think we're on the way to determining that the contractual terms regarding charges was not individually negotiated which is critical to any successful claim based on this argument.

TheyrCriminals

Hi,

Ha ha ha 'Do They Loan This Christmas Time? - Bleed The World', what a great video and song Bankaid is take my hat of to those who contributed to that!!!

TheyrCriminals

Do we know which?

Hi Kenny,

This is the explanation Martin Lewis's website gives for claiming under the new legal argument under S.140 Consumer Credit Act 1974.

Section 140 a-d of the Consumer Credit Act (CCA) 1974

This is a piece of law that wasn't looked at in the test case, and in some ways it could be much easier to argue, though it applies to less people.

The specific piece of law is comes from an amendment made to a 1974 law made a few years ago...

Here are the key points:

• Fairness can be about price
   
  As well as looking at all the same fairness issues as above, this can also rely on the issue already discounted by the Supreme Court under the UTCCR regulations. That is whether the cost of charges are disproportionate to the service provided in other words the “they charge £35 for a letter, but it only costs them £2” argument.
  
• The banks must prove they're fair
   
  This is the brilliant bit about this argument, here the burden of proof is on the banks to prove that the relationship is fair and not the consumers to prove the charges were unfair.
  
• This doesn't apply to everyone
   
  This piece of law applies to new charges from 6 April 2007, but only applies to people who had charges before April 2007 if the borrowing was still outstanding on 6 April 2008.
  
• Provisions for redress
  
  The act also includes detail on what a consumer can be awarded if the charges are found to be unfair, which can include full or partial amounts – so the refund would depend heavily on a consumers particular circumstance.
   
  This means it is potentially a much more valuable route for those trapped in a charges spiral and have suffered other loses as a results eg, defaults on their account, bankruptcy and repossession caused heavily by charges.
  

The OFT's view on this

In our submission to the OFT when it was reviewing its decision whether or not to carry on with the bank charges fight - we explained these arguments.

In the end it decided that as the Consumer Credit Act is framed in such a way that the law specifically applies to the relationship between an individual and a lender - it wasn't suitable for it to carry out a collective action (see 3.16-3.18 of OFT explanation. However that in no way kiaboshes individual's ability to take action based on this legislation.

Hopefully this is of some help to some.

TheyrCriminals

I have a vague memory (haven't done one of them in years, lol) that it is in the ICO's guidelines/rule book that it has to be done by cheque or PO (probably something else which needs amending these days with BACS etc..., but not a biggie), and as far as I am aware, they ALL have always asked for a cheque/PO, even the credit cards. ;-)

 

Edit: There it is - Glossary of terms - ICO

"A subject access request must be made in writing and must be accompanied by the appropriate fee." A payment authorisation would introduce doubts as to when the clock starts ticking for the 40 days, especially if they delay taking the payment for example... Better to stick to paper even if they allowed you to pay by card, IMO. ;-)

Hi Bookworm,

Thanks for your reply. I have certainly done bank accounts with authorising them to debit the £10 SAR fee to which they complied but they don't seem to want to with my credit card account, just wanted to know if there was any distinction. I'm thinking perhaps maybe they are reluctant for me to authorise them to, in essence, use their own money (as it's a credit card account)to pay for the SAR fee.

TheyrCriminals

Hi Guys,

Is it acceptable for Natwest Credit Card Services to not comply with my SAR as they want a cheque for the fee despite the fact I have authorised them to debit it from my credit card account, and there is sufficient money in there. Are they being deliberately obstructive or as it is a credit card account are they allowed to do this?

TheyrCriminals

Hi Guys,

Ok this is what Martin Lewis's website is stating as the reason why there is a chance you may be able to reclaim charges as a result of the Supreme Court ruling last November.

Unfair Terms in Consumer Contract Regulations 1999 (UTCCR)

The chief judge of the Supreme Court thought it important enough to say this ruling didn't stop people challenging fairness under 'Regulation 5' of the Unfair terms in Consumer Contracts Regulations (which the Supreme Court cases did not cover) – we believe this was a deliberate hint to look at this option.

Here's what Regulation 5 actually says:

All the test case did was rule out that the price of bank charges could not be used to assess fairness under this regulation. So the old argument that charges are levied at £35 but it only costs the banks £2' has gone. Yet there are many other arguments other than price which can indicate unfairness – especially in combination...

• Customers can't opt out
   
  Bank accounts cannot be 'individually negotiated', you get what you're given. This also applies far more specifically to bank charges – there is no ability to opt out of having charges, eg, to have an account where there is no function to go beyond your overdraft limit. This is a significant imbalance between the parties.
  
• Unfair cross subsidy
   
  While it's accepted some cross subsidy is acceptable within business, here, the minority of customers are paying an excessive proportion of costs of the structure of banking. This creates a significant imbalance between the parties.
  
• Effect on vulnerable consumers
   
  It is arguable that banking is a public service or at least has a public service element, more people have bank accounts than telephones – and we are strongly encouraged by the Government to use banking services. The workings of the original UTCCR directive mention this pubic service remit.
   
  Yet this is a pubic service where there is a cross subsidy that has to be met by the most vulnerable, least affluent members of society.
  
• Charges snare and are designed to multiply
  
  The structure of £35 transaction bank charges are such that they effectively generate more charges – thereby trapping people in a charges spiral. In other words, you go beyond your limit, get a charge or charges, and then due to being unable to afford that charge, incur more.
   
  Many people who've had small numbers of charges initially have seen them multiply into the thousands and been unable to do anything to stop that process continuing.
  
• Lack of competition
   
  Until very recently, since the advent of the bank charges test case, no bank marketed its accounts based on the charges a customer could be expected to pay. There has never been any competition on this – there is no choice for consumers to go elsewhere for a different level of charges.
  
• Incomprehensible nature
   
  Consumers are not told clearly what the cost of their bank account will be in different situations and the interaction of those charges.
   
  Understanding when and how much you will be charged is not transparent, and while the terms and conditions lay it out, the practical impact of this is not explained – some banks often have difficulty interpreting these rules themselves.
   
  The name 'unauthorised' overdraft is a fallacy, banks do permit people to take money beyond their overdraft limit (and it is extremely profitable to them) and in fact have a second hidden ‘unpaid' limit beyond which they won't allow customers to take more money from – though they still levy more charges.
   
  Yet customers are not told when this will occur, or at what level their transactions will no longer be paid. Nor are they told the amount they can spend, nor given the ability to opt out of transactions once they know it will occur a charge – the information is only ever retrospective.
  
• Money Management
   
  The entire structure of charging people repeatedly when they have little money, runs counter to the ability to fairly manage a bank account.
   
  One true example of this unfairness is a woman who thought she had £50 left of her overdraft – yet unbeknown to her, and not indicated by the bank, that day a cheque from two months earlier had just been cashed putting her over the limit.
   
  She then spent £40 in six different transaction (including a sub-£2 bag of carrots) and incurred £35 charge for each a total of £210. Yet had she been told of the situation, she could've funded the account, or even chosen just to take out £40 in cash – leaving only one £35 charge.
  

The OFT's view on this

In its announcement on 22 December, the OFT said it had looked at these arguments and thought there was only a limited chance of success using them with the UTCCR, part of the reason it decided not to continue the fight.

It may or may not work but certainly worth a try. There is also the new legal argument under the Consumer Credit Act 1974 which goes into detail too but unfortunately will be limited to certain consumers only.

Hope this is of some help.

TheyrCriminals

Hi,

Am I allowed to post a link on here to Martin Lewis's money saving expert website?

TheyrCriminals

Hello again Car,

You say that the Court hasn't asked you for a £75 fee to amend the POC, so has the stay on your claim been lifted now?

TheyrCriminals

Hi Car,

Just re-read your post, I got it now thanks. And thanks for your reply.

TheyrCriminals

I'll dissect it for you, so you can see why it needs amending;

 

'The Claimant contends that the charges applied constitute an unfair penalty and as such are not enforceable under common law.

 

This was ruled in the Banks favour, they don't amount to contracural penalties.

 

 

 

This part is ok, but actually needs massively expanding on, IMHO. If we were to rely solely on the cost of the breach being disproportionate, we're effectively arguing that the charge itself is unfair. Unfair in this case would depend on the circumstances, as the SC has basically said that the charges aren't unfair, but the relationship bringing them about may be unfair, but that is a much bigger issue - this is where the CCA comes in to play, which isn't something we had prior to the test case.

 

 

 

This depends on the Court you're with, but mine hasn't asked for a fee to be paid.

 

I'd suggest waiting for more direction from above and from the QC's

Thanks for this Car but you state that the SC stated the charges weren't unfair, I have read and heard countless times that the SC did not say if the charges are fair or unfair, as I understand it has not been legally determined yet.

 

TheyrCriminals

Hi Guys,

Just a thought. If the following was used as a POC and nothing more, would in actual fact an amendment to the POC be required?

'The Claimant contends that the charges applied constitute an unfair penalty and as such are not enforceable under common law. In addition the charges applied are contrary to the Unfair Terms in Consumer Contracts Regulations which state: “A term is unfair if it requires any consumer who fails his obligation to pay a disproportionately high sum in compensation”. The amount charged does not reflect the cost of the breach'.

The reason I ask is that many of us have used this in our claim forms and the wording does not specifically limit the claim to S6 of the UTCCR's. Could we not continue with the claim and in a court bundle or at trial argue under S.5? Therefore taking away the need to pay £75 for an amendment to the POC. The OFT were obviously very specific in their terms, POC and arguments but if the above wording has only been used for individual claims perhaps the claim could still proceed and the stay be lifted without the need for an amendment?

TheyrCriminals

Hi Guys,

Spoke to the Torquay and Newton Abbot County Court today and was informed that either party can now apply to have the stay in their bank charges claim lifted. If neither party has requested the stay be lifted by 30th November 2010 the Court will strike out the claim. Apparently many County Courts will be adopting the same approach.

TheyrCriminals

Hi Hacksaw,

Many thanks for that.

TheyrCriminals

Hi Guys,

Can someone please confirm whether Mr. Justice Andrew Smith's January ruling on the penalty argument was just in relation to Natwest (charges incurred from 2001 - 2003) or whether it also extended to its owner Royal Bank of Scotland.

Thanks.

TheyrCriminals

Haven't they ?:?

To me personally it pretty much looks that way though.

With the help of the OFT they managed to stop any claims and pay-outs for over two years in which they could charge but didn't have to handle any claims or complaints.

After a staggering amount of time the OFT manages to loose their case, which to me sounds as if the banks won their argument.

Claimants are told they have to pay to have their POCs amended or to even lift the stay. More and more costs to people who can ill afford it in the first place with no guarantees to get anything back.

Just imagine someone shells all this out, it goes to a hearing, the bank defends and wins, makes an application for costs...

To me the banks have won, sorry but at the moment they sure have.

Even if I wanted I couldn't continue with my stayed claim due to the costs involved.

It is unbelievable that I have to pay almost £100.- to lift a stay the court put into place due to the ridiculous test case....

The stay was placed on all claims due to the OFT test case on unauthorised overdraft charges. The test case has concluded and the final outcome in the test case is now known, therefore the stay should be automatically lifted without application. However most County Courts appear not to be lifting these stays but that may well be to do with OFT anouncement being made on the 22nd December 2009 and us entering the Chrsitmas holiday period. In the New Year stays on all bank charges claims may be lifted generally. If the banks try to get claims dismissed the Court will have to inform you and a hearing should be set. However the concern arises where County Courts lift stays and make an Order of their own motion ordering the claim to be struck out as the OFT have 'lost'. I hope this wont be the case.

Stays should be allowed to be lifted and claims proceed to trial based on current POC's (if worded originally excluding specific section numbers of the UTCCR's) or be allowed to proceed based on amended POC'S incorporating Section 5 of the UTCCR's and, if applicable to your claim, the new argument found in S.40 of the Consumer Credit Act 1974. Very importantly for Natwest and RBS customers stays should be lifted and claims proceed to trial where part of the claim is made up of charges incurred between 2001-2003 using the original penalty argument. In a hearing earlier this year Mr. Justice Andrew Smith (in the High Court) was not convinced that one of Natwest/RBS terms was not capable of being penal.

TheyrCriminals

Hi Guys,

Sky news sources are reporting OFT will not pursue banks regarding unauthorised overdraft charges.

http://news.sky.com/skynews/Business

TheyrCriminals

Hi Guys,

Anyone seen this?

BBC News - Lloyds to ask local courts to dismiss overdraft cases

TheyrCriminals

Stewpot,

I accept it's looking good for consumers and I am pretty confident of the right result from the Lords in the test case. However it's not in the bag yet, don't automatically assume the Law Lords will return the verdict we want to see, there is still the possibility the Lords will return a ruling in favour of the banks. The House of Lords have returned many a judgement in the past that have been challenging and unfair.

TheyrCriminals

Hi Guys,

My friend wrote to Natwest making a request under the Consumer Credit Act 1974. He asked for a copy of the terms and conditions and agreement he signed for two accounts he has with them. He enclosed a cheque for £2 to cover the legal cost for the bank to produce the information. Natwest have written back stating that as they are two different accounts he has to supply them with two separate cheques for £1. Is this a joke? Can they do this? Surely two quid is two quid and covers the cost? Are they just being awkward?

TheyrCriminals

Hi Guys,

My mate has just had a PPI claim won against Lloyds TSB. It was on his loan he took out in 2004. They have decided to refund all of the monthly insurance instalments he paid which is great. However there is one bit that he doesnt understand and that is the bank has said in addition to the refund of instalments that:

'I have calcualted and paid the difference between what the settlement balance would have been on your loan account at the date of cancellation, had the insurance not been included on your loan. I have deducted this from the actual settlement figure net of your insurance rebate. This means that had you not purchased insurance you would have reduced your settlement figure of £675.80.'

That is the first point of the letter and that's what he doesn't uderstand. I have never done one of these and so I don't understand either. The letter then goes on to the second point which talks about the amount paid in premium instalments which obviously we understand. So is he also going to get £675.60 refunded as well as the premium instalments he paid. They are also giving him a few hundred quid statutory interest which is quite good.

Any help appreciated.

TheyrCriminals

Hi Guys,

Sorry to post this here. My mate has just had a PPI claim won against Lloyds TSB. It was on his loan he took out in 2004. They have decided to refund all of the monthly insurance instalments he paid which is great. However there is one bit that he doesnt understand and that is the bank has said in addition to the refund of instalments that:

'I have calcualted and paid the difference between what the settlement balance would have been on your loan account at the date of cancellation, had the insurance not been included on your loan. I have deducted this from the actual settlement figure net of your insurance rebate. This means that had you not purchased insurance you would have reduced your settlement figure of £675.80.'

That is the first point of the letter and that's what he doesn't uderstand. I have never done one of these and so I don't understand either. The letter then goes on to the second point which talks about the amount paid in premium instalments which obviously we understand. So is he also going to get £675.60 refunded as well as the premium instalments he paid. They are also giving him a few hundred quid statutory interest which is quite good.

Any help appreciated.

TheyrCriminals

Hi Martin,

Thanks for that.

TheyrCriminals

Hi Guys,

Could I just ask what are people's thoughts on the best means of enforcing non-compliance of a CCA request?

TheyrCriminals

Hi Martin,

Is that 12 days plus 2 from the date of the letter or date they receive the letter.

Thanks,

TheyrCriminals

Hi Martin,

Can you please tell me legally how long the bank has to supply the information from a request under the Consumer Credit Acr 1974 for the original agreement/terms and conditions, and if the bank doesn't supply the information within the requested time what you can do about it.

Thanks,

TheyrCriminals