Memo from the Banks - "Thanks for saving us, but we will fight for the right to be unfair, and use your money to do it!"

Professor David Bailey of the University of Birmingham Business School and I (John Clancy), a longstanding member of CAG, have just posted a joint Blog on Professor Bailey's highly influential and widely read Blog (which often crosses over onto the hard copy of the paper) on the Birmingham Post Website Business Blog called: 'Memo from the Banks - "Thanks for saving us, but we will fight for the right to be unfair, and use your money to do it!"'

It's here.

It makes the point that as we as taxpayers have bailed out the banks we are effectively now paying for all sides of the OFT 'test' case: all the lawyers for all 8 banks, the OFT's lawyers, the judges, the court staff, the expenses etc. Just for the banks to pursue a case that they are allowed to be unfair!

It argues that the government through UKFI (the body set up to protect the taxpayers' investments in the banks) should order the Banks and their huges teams of lawyers now effectively subsidised by the taxpayer, to drop the appeal against the High Court decision that their charges should actually be subject to the test of fairness.

It also argues that the banks should similarly be ordered as a matter of policy now (not legal argument) to return all bank charges which would involve a much needed boost of liquidity into the economy. The money to be used for bankers' bonuses can be used for the great bank charge payout.

It would be great to have CAGers here also comment on the Birmingham Post website on this rather hard-hitting campaigning approach with a new angle on the debate. Obviously feel free to reply here too!

Professor Bailey is a very well respected commentator and academic, it's great to have him on board.

I have also started a separate thread here. Sorry if that's not protocol: if any site moderators would like to either reposition this thread or place it where it will be seen by more viewers that would be great. A good number of comments in response to the blog on the Birmingham Post website would also be a coup for our campaign here, I think and help push the agenda forward.

John Clancy

Memo from the Banks - "Thanks for saving us, but we will fight for the right to be unfair, and use your money to do it!"

Professor David Bailey of the University of Birmingham Business School and I (John Clancy), a longstanding member of CAG, have just posted a joint Blog on Professor Bailey's highly influential and widely read Blog (which often crosses over onto the hard copy of the paper) on the Birmingham Post Website Business Blog called: 'Memo from the Banks - "Thanks for saving us, but we will fight for the right to be unfair, and use your money to do it!"'

It's here.

It makes the point that as we as taxpayers have bailed out the banks we are effectively now paying for all sides of the OFT 'test' case: all the lawyers for all 8 banks, the OFT's lawyers, the judges, the court staff, the expenses etc. Just for the banks to pursue a case that they are allowed to be unfair!

It argues that the government through UKFI (the body set up to protect the taxpayers' investments in the banks) should order the Banks and their huges teams of lawyers now effectively subsidised by the taxpayer, to drop the appeal against the High Court decision that their charges should actually be subject to the test of fairness.

It also argues that the banks should similarly be ordered as a matter of policy now (not legal argument) to return all bank charges which would involve a much needed boost of liquidity into the economy. The money to be used for bankers' bonuses can be used for the great bank charge payout.

It would be great to have CAGers from here also comment on the Birmingham Post website on this rather hard-hitting campaigning approach with a new angle on the debate and help move it into the mainstream there. Obviously feel free to reply here, too!

Professor Bailey is a very well respected commentator and academic, it's great to have him on board.

If any site moderators would like to either reposition this thread or place it where it will be seen by more viewers that would be great. A good number of comments in response to the blog on the Birmingham Post website would also be a coup for our campaign here, I think and help push the agenda forward.

John Clancy

Memo from the Banks - "Thanks for saving us, but we will fight for the right to be unfair, and use your money to do it!"

Professor David Bailey of the University of Birmingham Business School and I (John Clancy), a longstanding member of CAG, have just posted a joint Blog on Professor Bailey's highly influential and widely read Blog (which often crosses over onto the hard copy of the paper) on the Birmingham Post Website Business Blog called: 'Memo from the Banks - "Thanks for saving us, but we will fight for the right to be unfair, and use your money to do it!"'

It's here.

It makes the point that as we as taxpayers have bailed out the banks we are effectively now paying for all sides of the OFT 'test' case: all the lawyers for all 8 banks, the OFT's lawyers, the judges, the court staff, the expenses etc. Just for the banks to pursue a case that they are allowed to be unfair!

It argues that the government through UKFI (the body set up to protect the taxpayers' investments in the banks) should order the Banks and their huges teams of lawyers now effectively subsidised by the taxpayer, to drop the appeal against the High Court decision that their charges should actually be subject to the test of fairness.

It also argues that the banks should similarly be ordered as a matter of policy now (not legal argument) to return all bank charges which would involve a much needed boost of liquidity into the economy. The money to be used for bankers' bonuses can be used for the great bank charge payout.

It would be great to have CAGers from here also comment on the Birmingham Post website on this rather hard-hitting campaigning approach with a new angle on the debate and help move it into the mainstream there. Obviously feel free to reply here, too!

Professor Bailey is a very well respected commentator and academic, it's great to have him on board.

If any site moderators would like to either reposition this thread or place it where it will be seen by more viewers that would be great. A good number of comments in response to the blog on the Birmingham Post website would also be a coup for our campaign here, I think and help push the agenda forward.

John Clancy

The judgment and case is clearly (as the bankers association says) about the banks' PRESENT terms and conditions.

Do you notice that they call them their 'current' terms. That is deliberately to spook customers into thinking that their 'current account' charges are in the clear. Typical.

With respect to stays - if cases are on old terms and conditions (which almost all are) then these outstanding cases have very little to do with the OFT Case and they should be decided on a case-by-case basis until a precedent is set for each set of terms. Which would put us back in the same position as before.

Lloyds are in trouble because they have called them penalty charges.

I say the OFT/FSA /HMRC arrange for a lift of all stays. If the banks didn't have the guts to put their historical terms and conditions before the court - another court should decide.

It's upto the OFT to have their investigation and then report on the fairness or not: that's not a court matter.

I say people should apply to the court to lift stays immediately.

Before we all get carried away, there are some nasties in this judgment - I've only skim read it, but while we might be happy that the UCTRR are to be applied to bank charges, at 323 he says:

'I therefore conclude that none of these provisions which the OFT has identified means that the customer is under a contractual commitment such that Relevant Charges could be a penalty for breach of the commitment, and so unenforceable at common law.' (emphasis mine)

Now that reads to me that anyone claiming that bank charges are penalties are stuffed by the judgement, and we can now only rely on the fact that the charges are unfair.

Have I got this wrong? Penalties, it would appear, they are not!? Now that's a huge reversal for us.

The devil's in the detail!

Michael Brown put up the link to the pdf file on the other thread:

http://www.judiciary.gov.uk/docs/judgments_guidance/oft_judgment_240408.pdf

Updated, lengthier, BBC report here:

BBC NEWS | Business | Banks lose overdraft charges case

I would suggest at least that it makes it a bit easier to at least argue/apply individually for stays to be lifted.

Sorry

BBC NEWS | Business | Banks lose overdraft charges case

http://news.bbc.co.uk/1/hi/business/7364422.stm

UTCCR DOES apply according to judgement

BBC reports ruling in favour of the OFT!

We have to make it unlawful to offer to accept payment ONLY by direct debit and unlawful to offer instalment payments only by direct debit. The alternatives must be offered of Standing Order (where you have total control over the amount) and post office (they could do with the business) BGC payments.

Before Direct Debits (permission for someone to take whatever they like, whenever they like from your bank account) standing orders were the norm. When a payment changed, the company sent you an amended SO form to send to your bank. Clearly that costs the banks in real 'manual intervention' money.

When we write to MPs we have to press for this change in the law/regulation.

I talk to my M.P. and other M.P.s regularly (having been the M.P.'s agent is handy) and will now be pushing this line.

There should be regulations preventing discounts for direct debits, as well.

Challenging the Status Quo is crucial. People assume there's no other way than the one that has developed up to now.

Ditch Dirty Direct Debit Deductions - now.

Tenterhooks, again. Good Luck, Tom!

Might it not be the case that the judge has now 'redrafted' his about-to-be-issued judgment in the light of the contemporaneous issuing of the OFT's Reply to the Banks' Defence and Counterclaim? The OFT Reply was issued just as he was about to hand down his judgment before going off on Hols? Perhaps he took the Reply on Hols?

It's just that the OFT Reply clearly now defines the issues at stake, especially this business of the act of depositing moneys in a current account as being a loanTO the bank by the customer. It also has a lot of new 'definitions' of the issues that anyone handing down a judgment in the area would find 'useful'.

Tenterhooks!

They are clearly trying to play one game on overdraft 'fees' and another on returned item charges.

If they return an item, they will charge you £20 per item, upto a maximum of £60 per day. So if you have 10 items returned on one day (because they haven't cleared, say, a salary cheque) you will pay £60 and if they return just 3 the next day you will also pay £60. They could return 21 items in one day and charge £60 or 21 items over 7 days and charge £420. It is pretty laughable from the point of view of reflecting the bank's actual charges. Either it costs £420 to return 21 items or it doesn't.

This is just finger in the air stuff and they are flailing about madly to attempt to sound reasonable.

The really serious amounts of money we all know is not around overdraft fees (the media just don't get this, do they?) it is aroung returned item fees. They still skirt round the issue of whether the fees they are charging are fair and representative of the actual costs incurred in each individual charge item.

The media have presented this as Lloyds TSB slashes charges. We know it's nothing of the kind. We could all apply the new rules to how our charges arose in the past and we will see we would be paying similar overall penalties, if not more.

They seem to be actually setting up 'things to do' when an account might go overdrawn or over a limit to create the impression that it is not automated. They may even have delberately employed more actual people to pretend to be 'doing something' whenever any individual customer/victim presents a Direct Debit or Cheque which would take them overdrawn/over a limit. This is the real game. Is it automated or not?

They may have started deliberately to stop automating it because they know they can still make a good margin on it when it's not. They already factored in they can't win the argument at all when it's actually automated and they could end up with zilch. At least the new way makes them make a bit of dosh. Look out for attempts to present the process as un-automated. De-automated, more like.

There is no change here from the basics - are the charges fair, do they represent the real loss to the bank? £20 a day, £420 a week?

I would love to do a job which earns me £420 per week for dealing with three events each day.

As a comprehensive school teacher, I'm afraid my job's a bit more complicated than that! Pays about the same!

My judgement of the position is this: the OFT is seeking a clear ruling by the courts as to one issue, and one issue only: do the unfairness rules of the UTCCR apply to cases of unauthorised overdraft charges (which includes returned item fees); not whether the charges are fair (more complicated).

The OFT believes the rules do apply and will by the end of this year decide itself on the issue of fairness, on the assumption that they do apply.

The court is not being asked as such to decide whether or not the charges are fair, just do the rules of fairness apply at all? I think that will be a speedier process than we might think.

I also think it's a really tough call for the banks to argue they don't apply. This is why they'll be so delighted by the new delay. It gives them breathing space to regroup.

I'm confident they'll lose and so is the OFT, I believe. The OFT will decide what's fair by the end of the year - even if there is no high court decision reached by then. This will put even more pressure on.

So, by Dec. 31st 2007 I believe there will be a statement by the OFT stating that the fairness rules apply, the charges breach those rules, the charges are way too high and should be £X. This statement will have huge influence, even on the courts themselves.

The OFT will expect immediate voluntary compliance by the banks and if the banks don't play ball will go to court to get a second or additional legal ruling on the fairness issue. The banks may actually voluntarily slash charges immediately to stop that second case proceeding which would impact on prior charges. Then we'd be back to where we were last week.

I think that if the OFT declares the charges unfair and sets a figure, the High Court will follow suit. The courts have themselves been very deferential to OFT decisions/statements so far.

It's definitely not over. The banks are still on the run, but may have less time than they think.

As to stays, well, the only issue in the high court as we speak is: do the fairness rules of the UTCCRs apply to unauthorised overdraft charges (including returned item fees)? You could say that only those parts of claims which rely on that issue should be stayed and the remaider of the case proceeds. Not really sure on partial stays, though.

If a case was pleaded in its statement of claim/poc without referring to the UTCCRs and it was not being relied upon in argument, then no stay should be granted.

This is why other cases are still important, especially Tom Brennan's.

The only thing that is a drawback is that had a normal plaintiff been taking a case, the ruling of the OFT later in the year would have been very persuasive. As they are actually a party to the proceedings, that may be now less so.

To finish - call me naive, but I think this could be over quicker than people think.

Courages, mes braves!

Quick Work, Josie8, really useful!

I know I keep banging on about this, but DJ Cooke, perhaps obiter (but nevertheless usefully) makes it clear that if Kevin Berwick had been before him with a credit card, not a bank account, he would have held as a matter of law against Lloyds TSB and in favour of Kevin:

'26. In this respect, it is worth observing, the position is potentially materially different between a case such as this which concerns charges applied to a current account and other cases, such as those dealt with in the OFT's position statement, which involve credit cards. In the operation of credit card accounts, the customer is typically under an obligation to make a minimum payment to his account each month and may also be under an express obligation to ensure that the total amount he charges to his account does not cause a limit to be exceeded. If he is in breach of either of these obligations, any charge provided for by the terms of the contract is potentially susceptible to the argument that it is a penalty. I express no views on the merits of that argument in such a case, or upon the OFT's stated position in relation to such charges.(emphasis mine)'

It appears that DJ Cookie-brain believes that there has to be an action (as opposed to inaction?) required of the bank customer which is identifiably a breach of contract (late or missed payment - definitely - or going over credit limit) for the penalty charges argument to come into play.

DJ Cookie-brain also believes that going over a credit limit on a credit card is a breach of contract, but going over an overdraft limit is not. He believes that a credit card customer is under an 'express obligation to ensure that the total amount he charges to his account does not cause a limit to be exceeded'.

Obviously, conceptually speaking there is no difference. DJ Cookie-breath strains and strains to make it clear that there are no express or necessarily implied terms in a bank account to ensure that 'the total amount charged to his account does not cause a limit to be exceeded.'

An overdraft is payable on demand. If you fail to pay that sum on said demand you have an immediate debt called in on you, you are apparently not in breach of contract, though!

I think we should start to argue that what DJ Cookie-mind says for Credit Cards is 100% correct, the rest isn't; that an overdraft is credit and should be subject to the same reasoning as that of a credit card. It could be said that it is better able to be argued as such when you breach an agreed overdraft limit, as opposed to going into an overdraft from credit.

http://www.consumeractiongroup.co.uk/forum/general/98370-berwick-lloyds-upside-see.html

You might want to look at my post on Lloyds TSB and the Birmingham Berwick judgement. In your Letter Before Action you should mention para 26 of the Judgment.

http://www.consumeractiongroup.co.uk/forum/general/98370-berwick-lloyds-upside-see.html

I've posted a piece on the General section about the Birmingham Case and the upside in it in relation to Credit Card Penalty Charges. DJ Cooke effectively says in para 26 of Judgement that charges for late payment and going over the credit limit by credit card companies are penalty charges for breach of contract. Berwick v Lloyds - The Upside- see para 26 of Judgement

http://www.consumeractiongroup.co.uk/forum/general/98370-berwick-lloyds-upside-see.html

I've posted a piece on the General section about the Birmingham Case and the upside in it in relation to Credit Card Penalty Charges. DJ Cooke effectively says in para 26 of Judgement that charges for late payment and going over the credit limit by credit card companies are penalty charges for breach of contract. Berwick v Lloyds - The Upside- see para 26 of Judgement

http://www.consumeractiongroup.co.uk/forum/general/98370-berwick-lloyds-upside-see.html

I've been looking through District Judge Cooke's Birmingham Judgment at length (usefully on bbc news website here http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/15_05_07_bank_charge.pdf).

It's obviously an odd one in that he formally holds (for the first time by a District Judge) that as far as he can see, going overdrawn is not a breach of contract (in this case specifically - and impliedly also not a breach of contract in other bank cases) and so penalty charge provisions can't apply.

But I'd been concentrating on the current account aspect of his judgement and missing his comments at para 26:

'26. In this respect, it is worth observing, the position is potentially materially different between a case such as this which concerns charges applied to a current account and other cases, such as those dealt with in the OFT's position statement, which involve credit cards. In the operation of credit card accounts, the customer is typically under an obligation to make a minimum payment to his account each month and may also be under an express obligation to ensure that the total amount he charges to his account does not cause a limit to be exceeded. If he is in breach of either of these obligations, any charge provided for by the terms of the contract is potentially susceptible to the argument that it is a penalty. I express no views on the merits of that argument in such a case, or upon the OFT's stated position in relation to such charges.(emphasis mine)'

Now, ignore that last sentence - because whether he likes it or not he has expressed a very clear opinion. It may be Obiter Dicta (in other words, his statement is in passing and does not form part of the judgement), but I think it is a deliberately hidden away piece of dynamite!

I think in reality it veers away from being Obiter and could be seen as forming part of what was held, because he is actually saying that if Mr. Berwick had been before him arguing the same case in respect of a credit card he would have formally held that charges for late payment and exceeding the credit limit were and are penalty charges and susceptible to challenge on all of Mr. Berwick's other pleaded points.

Now I know we all think it's a rubbish judgement and, yes, it has no precedent, but we might as well play them all at their own game and, especially if you are a LloydsTSB credit card customer, cite District Judge Cooke's judgment as being the first time a County Court has held that Credit Card account charges are effectively unlawful penalty charges. The problem in the past about judgements in our favour when the bank doesn't turn up is that they are effectively judgements in default with no point of law actually decided. DJ Cooke has actually offered an opinion.

I've managed to screw £8,000 out of Lloyds TSB on Bank charges through Birmingham County Court (two separate actions - paid up in full shortly after defence), but I've not sued on £1300 of Lloyds TSB Credit Card charges, yet. I was a bit cautious, because of the Berwick Case being in Birmingham. But now, I'm thinking of suing through Birmingham and specifically asking for DJ Cooke!!!

Are any of the Hull strike out orders for Credit Card charges?

I say we now include DJ Cooke's para 26 statement in all of our pleadings in relation to Credit Card charges and all of our Letters Before Action to Credit Card Companies. We then get them to prove that their penalty charges match their actual losses. We should mention it also to the various solicitors firms acting for the Credit Card companies.

I know that spinning the judgement in the media this way does not help bank account litigants in that it lends credence to DJ Cooke's judgement, but we can leave those issues to the QCs at Hull etc. and other actual court trials.