The OFT Case

[phatram]

We all pay for banking in one form or another through pathetic interest rates on savings, extorionate interest rates on overdrafts, mortgages (banks not reducing rates in line with BOE rate cuts), loans etc.

 

I have no objection to paying them for a banking service which they provide, but they can start by giving me back the £0000's they owe me in unfair charges. After I've go those back, I'm going after them for the interest paid on the loan they made me take out to pay off the charges (at Base rate + 10%).

 

It's looking promising

 

Let me know when you start the loan claim please. I shall also be going after a bank for selling me a loan to pay off an o/d made up completely of charges.

[peter534]

Well, the chap repersenting RBS Group disagreed, of course

 

Mailman

 

How do you know whats being said in the case. Is there somewher i can go to get updated on the proceedings?

[photoman]

You can look at news sites such as the BBC.

 

The link is in RGS1 post No. 162 near top of this page.

 

Other good news sites are The Times, The Guardian, The Telegraph, The Mail, and the FT.

 

There is a CAG forum for news and discussions on the case here.

 

http://www.consumeractiongroup.co.uk/forum/oft-test-case-updates/

 

PM

[brown1950]

Appeals Day Two

(just quick notes for the moment - live from the courtroom)

 

 

The OFT v Banks Appeals hearing has begun at the High Court in London. Presiding over the hearing is Sir Anthony Clarke, Justice Waller and Justice Lloyd.

 

It is a very formal affair with everyone in silks and gowns. The Courtroom is packed to the rafters.

 

Rabinowitz started proceedings on behalf of the banks - he is expected to take a day and a half.

 

He will be followed by Vos, Milligan, Snowdon, Dicker, Thanki (for Lloyds), Salter and Mallick (for Abbey)

 

Presumably after that the Mr Crow for the OFT willl have his say.

 

The only issues at the moment are the appeal of the Judgement regarding current terms and conditions. In July Justice Smith deemed current terms and conditions were capable of being assessed under the Unfair Terms in Consumer Contract Regulations.

 

On the last day the banks will enter an application to appeal the judgement regarding Plain Intelligible Lanuage aspects of their current terms.

 

Justice smith has already given leave to appeal on historics but the banks havent actually applied so they wont be dealt with at this hearing.

 

 

Rabinowitz been dealing mainly with the interpretation of reg 6.2.a & b

 

He is arguing EU directive has two aims regarding UTCCR.

 

1st is the promotion of internal markets

2nd is Protection for Consumers

 

 

Rabinowitz is arguing the internal market bit is more important as it comes first in the directive, the judge has been putting more emphasis on consumer protection.

 

 

He has stated the Banks have two main sources income from Personal Current Accounts.

 

The first is from NII net interest income

 

The second is charges .

 

Interestng quote from one of the Judges "thats almost bound to be unfair isnt it, Peters paying Paul"

 

Most significant is Rabinowitz has said that the OFT have written to banks to say charges are unfair. We had previous inforation from RBS saying the OFT had ''raised serious concerns'' as to the fairness of the terms, but this is a definate the OFT definately deem many terms to be unfair.

[adamc6671]

Appeals Day Two

Justice smith has already given leave to appeal on historics but the banks havent actually applied so they wont be dealt with at this hearing.

 

Presumably a deliberate ploy by the banks in order to spin out the appeals process for as long as possible, with total disregard for their customers as usual. One hopes they are doing this as they fear there is a significant chance that they will, ultimately, loose, especially bearing in mind the Judge's 'Peter paying Paul' comment!

 

Adam.

[The Phantom]

'Peter paying Paul'!

 

 

Sorry (English is not my first language) what does this actually mean ?

[african_igbo]

Ummh so whats the conclusion is it or isn't it in our favor..

[peter534]

You can look at news sites such as the BBC.

 

The link is in RGS1 post No. 162 near top of this page.

 

Other good news sites are The Times, The Guardian, The Telegraph, The Mail, and the FT.

 

There is a CAG forum for news and discussions on the case here.

 

http://www.consumeractiongroup.co.uk/forum/oft-test-case-updates/

 

PM

 

Sorry Photoman, I didn't word my question correctly. What i meant to ask was is there a web site that is giving a blow by blow account of the activities happening in the appeal over the next six days? Some people seem to be able to quote what is being said, so i wondered wehere they are getting their information from.

[elsinore]

Sorry (English is not my first language) what does this actually mean ?

 

Robbing Peter to pay Paul - Wikipedia, the free encyclopedia

 

Els:)

[The Phantom]

Robbing Peter to pay Paul - Wikipedia, the free encyclopedia

 

Els:)

Great - it even had the phrase in my native language there. I get it now !!

[Bigmac versus]

Well they aint mixing their words thats for sure, lets just hope it goes our way.

[Bookworm]

Woke up this morning thinking about this part (sad, I know!)

Rabinowitz been dealing mainly with the interpretation of reg 6.2.a & b

 

He is arguing EU directive has two aims regarding UTCCR.

 

1st is the promotion of internal markets

2nd is Protection for Consumers

 

Rabinowitz is arguing the internal market bit is more important as it comes first in the directive, the judge has been putting more emphasis on consumer protection.

and thinking what a sophism that argument is... and how ignorant it is of the name of the regulations themselves: "The Unfair Terms in Consumer Contract Regulations"... NOT the "Unfair Terms in Contract (including Consumer) Regulations". The emphasis is on "consumer". The UTCCR were created to protect the consumer against unfair terms. The "promotion of internal markets" as an argument is a smokescreen and one which I sincerely hope the appeals judges will see right through.

[photoman]

Must admit Bookie that this has been playing on my mind too.

 

IMHO he has a bit of a non argument in that:

a/ The EU directive surely gives equal precedence to both aims, not one at the expense of the other, or in any preferential order.

b/ So what if it is aiming to promote internal markets? How does allowing financial institutions to have carte blanche (more french) to do as they please (at the expense of consumers) and be a law unto themselves promote internal markets?

 

Do you have the relevant quoted section of EU directive that you can post up?

 

PM

[Bookworm]

Do you have the relevant quoted section of EU directive that you can post up?

 

PM

Not knowing which EU directive is being referred to specifically, no.

 

It could be this one: Council Directive 93/13/EEC, but I'm really not sure, especially as that Directive precedes the UTCCR 99 (in fact, it is the Directive which led to the creation of the UTCCR 99)... Interesting that it does mention this which to me has always been a cornerstone: "Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail", something it would have been nice to see Smith J remember in the past decision...

 

I'll keep on digging, but unless we know which Directive is being referred to precisely, it's a bit of a blind fishing expedition. :-|

[MARTIN3030]

quote

 

I'll keep on digging, but unless we know which Directive is being referred to precisely, it's a bit of a blind fishing expedition.

 

 

In which case you probably need to go to Specsavers;)

[brown1950]

The first main argument Rabinowitz presented to the court was against Justice smiths comments that it 'is not natural use of language' to say an account is a bundle package for a particular price.

 

Rabinowitx disagrees and says Justice smith is looking at two snapshots in time (one where account is in credit and one where in debit) Rabinoitz argued he should look at the account at the time the contract is signed. Waller said the the 'free if in credit' model is not a snapshot at the time the contract is signed as the contract is variable.

 

Justice Smith stated when a customer is in credit there is no charge, but when in debit he is charged. Rabinowitz is saying smiths cherry picking and should be concentrating on contract at time it was signed and the judgement should have been made solely on the terms of contract when signed.

 

 

Rabinowitz and Waller had a chat, Rabinowitz saying no obligation on customer to keep contract, he could just move or close account, but less easy for bank to do that. Waller said is that realistic re moving overdrafts / switching (ref the PCA report)

 

Rabinowitz went on to compare not paying charges if in credit, only if in debit, to using no win no fee services of solicitors, and estate agents.

the Judges agreed and one gave a further example of a builders quote - where they charge to give the quote but you dont necessarily get a new house. So make a charge for a service without the customer having a benefit.

 

Waller then asked why the different types of charges, why have seperate charge for unauthorised overdrafts, unpaid items etc why not just add to interest.

 

Rabinowitz stated there are regualtions governing the rateof interest they can charge, but then changed his mind after a whisper from a colleague and stated it is just a choice the bank can make.

 

So why have a seperate charge?

 

Rabinowitz said because there are different processes involved then laid into the OFT a bit saying it was their way of controlling prices in the market.

 

He disputed Justice Smiths Judgement (para 403) that no service was supplied when an item was returned unpaid.

 

Rabinowitz said it was like private doctors consultation - in that they would charge £50 for a consultation but wouldnt necessarily cure you.

 

all the Judges agreed.

 

Paras 406 to 409 of Judgement Justice Smith said charges only made in particular circumstances and not in exchange for services.

Rab said still is a service the bank has the right to charge or not charge for a service so the service is deciding whether to pay or not and bank has complete discretion so long as its in terms and conditions.

__________________

[african_igbo]

Thanks nice summary... my head is still hurting though brown1950... any aspirin.

[Bigmac versus]

Nice one brown1950, this Rabinowitz is a clown.

 

Rab said still is a service the bank has the right to charge or not charge for a service so the service is deciding whether to pay or not and bank has complete discretion so long as its in terms and conditions.

 

Yes but this suppossed decision is a farce, there is no decision or consideration to pay or not, just an automated letter sent out so there is no service or manual intervention. As per the Banking Code they must consider a request for a loan, overdraft etc and are not allowed to refuse without due consideration so by requesting unplanned borrowing (no funds available) they should consider and dont so where is the bloody service.

 

PAY UP, GRRRRRR.

[Bookworm]

PAY UP, GRRRRRR.

Losing your cool, Big G?

 

I have to say, maybe I'm having a really woolly day, but I can't understand why they're revisiting the service argument, they have won on the penalty one (thanks, OFT for not appealing on that ), and I thought this appeal was on whether the OFT has jurisdiction? I am getting a tad confused. :-|

[Bigmac versus]

Well it is my opinion that the banks will be slow in doing anything to speed this up and it will go on and on and on, (ariston advert comes to mind here) back in June 2006 i started my claim and have been in and out of court and been dealing with the FOS in all that time (blame the scottish court system for that) its so much more than money now its about right and wrong so by proving they were in the wrong all this time it will be worth the wait, i have that day planned already most of which will be spent inside my local branch, question is which year will it be.

[peterlucas]

I'm increasingly thinking this test case is one big farce. A three stage case, three separate hearings months apart, and from the look of it appeals at each stage. It will go on for years. The judges who have been staying cases have really shown what side they are on (the filthy banks) and are a disgrace to the concept of justice, allowing the banks to stall for years and try to wriggle out of paying up when the Regulations clearly intended the charges to be unlawful. For my part, the more the banks have screwed me around, the more I have endeavored to have less to do with them. I have already cut up all the credit cards.

[rory32]

I'm increasingly thinking this test case is one big farce.

I think most of us thought it would be from the off. Unfortunately it seems to be more and more the case that it is.

[matreb]

Quote " Waller then asked why the different types of charges, why have seperate charge for unauthorised overdrafts, unpaid items etc why not just add to interest.

 

Rabinowitz stated there are regualtions governing the rateof interest they can charge, but then changed his mind after a whisper from a colleague and stated it is just a choice the bank can make. "

 

Waller might have seen the light, and Rabinowitz nearly confirmed it - there are rules on how interest is calculated for APR's. The banks made an active decision to charge penalty charges, not higher APR's. The penalty charges are designed to fall outside those definitions so they do not have to quote APR's in the 00's or 000's of %. It also means the overdraft interest rates can't be challenged under the CCA as unfair/extortionate.

[african_igbo]

Nice summary mind!... and we apparently (UK) got a justice system!.. only the rich and mighty are protected by the laws they put in place...

[photoman]

Quote " Waller then asked why the different types of charges, why have seperate charge for unauthorised overdrafts, unpaid items etc why not just add to interest.

 

Rabinowitz stated there are regualtions governing the rateof interest they can charge, but then changed his mind after a whisper from a colleague and stated it is just a choice the bank can make. "

 

Waller might have seen the light, and Rabinowitz nearly confirmed it - there are rules on how interest is calculated for APR's. The banks made an active decision to charge penalty charges, not higher APR's. The penalty charges are designed to fall outside those definitions so they do not have to quote APR's in the 00's or 000's of %. It also means the overdraft interest rates can't be challenged under the CCA as unfair/extortionate.

 

Well done for reminding us of this (and duly clicked).

 

I can see were Waller was going with this line of questioning, possibly leading R into tripping himself up and revealing that such methods of calculation are simply tactics at cloaking the penalties.

 

R nearly fell into the trap too. By starting to admit that there are strict rules governing the rates of interest, this was tantamount to admitting that the banks aims are to make profits from such events, and he could then have ended up having to justify the charges in comparable terms to simply charging interest, which would equate to astronomical rates.

Such rates would also have to appear on all contracts, advertising and literature, which would at the very least cause a mass loss of customers, and most likely also have been very quickly capped by the OFT, BoE etc,

 

 

Incidentally, what really hacks me off about this whole affair, is that the financial well being and fate of millions of customers now comes down to some decisions made by a small handful of men.

The banks have well seasoned, experienced and very determined lawyers, who specialise in such areas, whilst we are reliant upon the OFT to comprehend and relay the case for consumers.

Why have the OFT not involved, consulted or considered representations from consumer groups and specialists (who have been analyzing and fighting this for years) in compiling their case?

Instead, all we can do is watch from the sidelines and hope that the OFT comprehend, analyze and relay such matters in similar ways.

 

PM