H.O.L Test case appeal. Judgement Declared. ***See Announcements***

[rob7b]

so in a nutshell whats the latest on this bank charges test case?

 

i have a claim but i dont want to submit it the small claims because i'd rather keep the £30 quid for the time being...

[patrickq1]

through political persuasion is about the only way the banks could win imho

but again this will go to the law lords as it would be too simple for the judge to make a right decision

patrickq1

[JOSH_IOU]

The waiver only applies to Current account's.

If the waiver applied to all overdraft charges the waiver would not be so specific.

[JOSH_IOU]

Unauthorised overdraft charges

 

17 January 2008 – OFT's test case began today.

In July 2007, the Office of Fair Trading (OFT), seven UK banks and one UK building society brought a test case to the High Court about unauthorised overdraft charges. See What should you do now? for what this means for you.

Unauthorised overdraft charges

These charges are made by banks and building societies when you go overdrawn (if you do not have an arranged overdraft facility), when you go over any agreed overdraft limit or when your bank or building society refuses to pay an item if you do not have sufficient funds in your account. For example, a charge may be made if a cheque is bounced because there is not enough money in your current account to cover the payment.

Over the last few years, more and more consumers have complained to their banks and building societies about the fairness of these charges.

High Court 'test case'

This court case is being called a 'test case' because the decision will clarify whether these charges are fair and lawful. The court's decision is likely to apply to all existing and future claims against these charges. We believe this will deliver a fair outcome for consumers because, once the test case has established a clear basis for resolving these complaints, firms can deal with them in a fair and consistent way.

The test case started on 17 January 2008. See Personal current accounts in the UK on the OFT website for more information.

The FSA's involvement

 

The 'waiver'

Until July 2007, some customers were being refunded these charges when complaining, others were not. We didn't believe this inconsistent approach was in the interests of all consumers. So we granted a number of banks and building societies a 'waiver' to help progress this test case. This means that firms who were granted this waiver do not have to deal with complaints about unauthorised overdraft charges in the time specified under FSA rules. In effect, from 27 July 2007, banks and building societies put customer complaints on this issue 'on hold' until the test case is resolved.

However, we set out a number of conditions that firms must meet in dealing with their customers while the waiver is in place. In particular, firms must continue dealing with any cases of genuine financial difficulty during the waiver period – see the Banking Code for how firms can help in these circumstances. Firms must also ensure that their customers are updated on developments of the test case.

This waiver applies only to complaints about unauthorised overdraft charges. Firms must continue to deal with complaints about other financial matters, such as insurance, mortgages or other complaints regarding their current accounts, in the usual way.

We reviewed the waiver after two months and published the results of this review on 21 November 2007. We concluded that it was still appropriate for the waiver to remain in place.

• More information about our waiver review

What should you do now?

 

If you've made a complaint or are thinking of making a complaint about unauthorised overdraft charges here are some general questions and answers to help you – for information about your individual circumstances speak to your bank or building society.

1. What this will mean for you, if
   • you have an outstanding complaint
     Your complaint will remain with the bank or building society but will not be dealt with until the test case is resolved.
     
   • you were made an offer of settlement by the bank or building society before the waiver was granted
     You had two months to decide if you wanted to accept or reject the offer. If you have not accepted an offer from your bank or building society, it is likely that you will now have to wait for the outcome of the test case.
     
   • you received a final response from the bank or building society which did not include an offer
     If you are not happy with the firm's response, you can still take your complaint to the Financial Ombudsman Service. However, the Ombudsman is unlikely to progress complaints about unauthorised overdraft charges – other than in financial difficulty cases (see below) – until the test case is resolved.
     
   • you have already had a settlement and want it reviewed
     A full and final settlement is just that – it is final. In some exceptional circumstances a complaint can be reviewed – for example, if there is evidence of coercion or bullying. However, you can still complain about any new charges incurred since that settlement.
     
   • you are in very difficult financial circumstances – 'financial difficulty cases'
     If you have a case of genuine financial difficulty, your bank or building society must still deal with your complaint – see the Banking Code for how they can help. If you're not happy with the firm's response to your complaint, you can take it to the Ombudsman, who will consider whether your complaint can be dealt with before the test case is resolved.
     
   • you wish to complain from today
     You can complain now or you can wait until the test case has been resolved – you won't lose out. Your complaint will be recorded and stored, then dealt with as quickly as possible once the test case is resolved. Your bank or building society will still have to acknowledge your complaint within five days.
     
   • you are worried about your complaint being time-barred
     We have protected your rights by making it a condition of the waiver that complaints will not be time-barred. In effect, the clock stopped on 27 July. For example, if you are applying to reclaim charges for the last six years and the court case took one year, that year would not count. (Please see below about making a complaint in Scotland.)
     
   • you want to complain to the bank about other issues
     You can still use the existing complaints process for other financial complaints – see Making a complaint. But, if your complaint relates to the fairness of unauthorised bank charges, that part of your complaint won't be dealt with until the test case is resolved.
     
   • you want to make a complaint in Scotland
     You can take your complaint to the Ombudsman or the courts. If you want to take your complaint to court in Scotland, the timing is important. You may want to get independent advice and file a claim now to protect your rights (although you will have to pay a court fee).

[*] Will banks and building societies still charge customers for unauthorised overdraft charges during this time?

Yes, it is likely that they will do so. But this will not prevent you asking for repayment of any future charges if the test case finds they are unlawful.

[*] What about banks and building societies who haven't signed up to the waiver?

We expect all banks and building societies to sign up, but we will monitor the complaints handling process of those who don't very closely.

• List of banks and building societies who have signed up (PDF)

[*] How will the FSA know if the waiver conditions are being met?

The FSA will review compliance with the conditions in the waiver regularly to make sure consumer interests are protected. We can revoke the waiver at any time if we are no longer satisfied that the waiver is appropriate.

[*] How long will the test case last?

The test case started on 17 January 2008 but we cannot predict how long it will last. However, we have granted the waiver for one year and it will be reviewed regularly. For example, we published a review of the waiver on 21 November 2007. We can revoke the waiver at any time if progress on the test case is not being made or if a delay is likely to cause undue risk to consumers.

[*] If the banks and building societies win, what does this mean for customers who have received money in the past?

Previous settlements will not be affected by a court decision in favour of the banks and building societies.

[*] What happens if the OFT wins? Will this mean that customers who've had unauthorised bank charges get money from the bank?

It will depend on the precise outcome of the case, but many customers are likely to be entitled to refunds if this happens.

[JOSH_IOU]

Which firms does this apply to?

 

We are making this waiver by consent available only to providers of current accounts with overdraft facilities ('the firms').

Background

 

The waiver is part of a package of measures designed to support a test case through the courts. The test case aims to establish legal certainty on the lawfulness and fairness of charges levied by current account providers for unauthorised overdrafts.

The Office of Fair Trading and several major UK current account providers announced the test case on 27 July 2007. Alongside this, these providers are looking to stay county court cases on unauthorised overdraft charges and will also ask the Financial Ombudsman Service (the FOS) to stay its determination of related complaints while the test case is carried out. The firms have agreed to conduct the test case in an efficient, prompt and orderly manner.

The purpose of the waiver is to allow current account providers to stop resolving complaints about unauthorised overdrafts charges while the test case continues through the courts. Until the test case is completed, participating firms will put unresolved and new complaints on hold. Complainants who already have an offer from a firm (but not yet accepted or rejected it) will be given the option to accept the offer or to wait for the result of the test case. If they choose to wait, the offer will lapse. It will then be dealt with under the principles established in the test case.

We are supporting this approach as we hope it will give customers consistent and fair outcomes.

What does this mean for firms?

 

The main practical effect of this waiver is to allow the firms to stop resolving complaints about unauthorised overdraft charges. We have reserved the right to revoke the waiver after two months if the county court and the FOS stays sought by the firms do not happen, or if we believe continuing with the waiver is inappropriate. We will renew it after 12 months if we are satisfied the criteria for granting the waiver are still being met and we think continuing it is not inappropriate (see Section 7 of the modification direction).

What does this mean for consumers?

 

The waiver contains several detailed conditions intended to ensure complainants are not materially damaged by the delay in dealing with their complaints. We set out these conditions in the modification direction. To take advantage of the waiver, the firms must comply with these conditions.

At suitable stages we, and the firms, will update consumers on the progress of the test case. Consumers can find out more on the Moneymadeclear product news page. The firms we grant a waiver to will also write to any customers who already have a relevant complaint or who complain about this issue during the waiver, to give them more details.

How do firms take this forward?

 

If your firm wishes to take advantage of this waiver please write to:

The Waivers Team

The Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

Or email [email protected].

For us to grant the waiver, you must state you will comply with all the conditions attached to it and give us the full legal names of all the entities within your group that the waiver should apply to. We will write to tell you whether we will grant your firm a waiver and we will publish each waiver we grant on our website.

[JOSH_IOU]

This waiver clearly outlines in itself that it relates to current accounts.

 

And all other complaints will continue as normal.

 

Basic accounts

savings accounts

mortgages

Loans

etc etc etc

[JonCris]

The trouble with basic current accounts, on which you can't request an overdraft, suddenly become overdrafts if you incur penalty charges thereby causing them to fall within the waiver

[sillygirl1]

If you have a basic account where YOU are NOT allowed to go overdrawn and you get a charge on the basic account which overdraws you - point out to the bank that this is in their terms and conditions that YOU CANNONT go overdrawn so THEY cannot overdraw your account otherwise it is an unfair contract term and you will be closing your account (make sure you have another 'spare' account just in case).

 

I did this with Natwest and they caved in, attempted to charge me £38 for not having an additional 1p in the account for a £5 standing order... money went in that day £5 from myself before lunchtime and my wages at midnight, so they DID have sufficient funds, their system 'anticipated' the debt to them.... got my charge back the same day instead of 'five days to return it....'

[andrewman]

afternoon. I contacted the OFT due to my bank chasing me for bank charges which i have a claim in for, the OFT says that as the test case is still ongoing, the banks can still pursue you for the debt.I do not agree with it, but who am i to argue. Their reason for this is the court has not finalised the case. This seems to be one sided,banks can persue you for bank charges,But we have to wait for the out come of the court case.:o

[JonCris]

Tell the bank that if they issue proceedings you will immediately inform the court that their claim includes bank charges which you intend to reclaim once the OFT v banks is resolved. Consequently you will ask the court to Stay their claim until this happens.

 

Suggest that them being made aware of this will if they continue to harass you may be guilty of criminal conduct & will almost certainly be in breach of the OFT guidelines on debt recovery.

[andrewman]

Thanks. i will tell them. it went to a debt collection agency Wescot, i disputed the fact and it was sent back to the bank, i will now wait for the abnk to reply.

[InformedSearcher]

So now we've got to the 10th March 2008 does anyone have the latest on this abysmal state of affairs? I personally am starting to hold up my views that the whole performance is grossly unfair.

I recall I think 6 months ago hearing of 200 people appearing (yes they turned up) for a hearing for this. Amazingly the hearing was delayed as people representing the respective financial organisations appeared and started handing out full refunds to all concerned. Does anyone know of this as I heard it as driving and the story was both vague and short.

My other view is that the banks (in my case HSBC) have changed how they are representing (which I advised the OFT about) unauthorised overdrafts. They call them a different name to sound like they are accepted fees. When I questioned this with the bank they denied this.

Michael

[JOSH_IOU]

in one of the banks defence they claim personal account's are commercial contracts.

[andrewman]

martin lewis from moneysaving expert was on the write stuff, monday morning, The test case is over judge has decided and will publish results anytime from april to october, i believe he said. lets hope it goes in our favour ,otherwise i can see banks going back to charging what they want and start chasing us for any outstanding debts owed to them. If already been paid, then there is no way for the bank to recover what has been paid out.

[JonCris]

Of course they can't. In those cases were it's a done deal they will have to live with it

 

As for taking claimants to court for settled penalty charge claims I would remind everyone that they had plenty of opportunity to argue their case with individual claimants but chose not to until finally agreeing this test case

[Gez]

So now we've got to the 10th March 2008 does anyone have the latest on this abysmal state of affairs? I personally am starting to hold up my views that the whole performance is grossly unfair.

I recall I think 6 months ago hearing of 200 people appearing (yes they turned up) for a hearing for this. Amazingly the hearing was delayed as people representing the respective financial organisations appeared and started handing out full refunds to all concerned. Does anyone know of this as I heard it as driving and the story was both vague and short.

We're just waiting for judgment now. Quite a lot of hearings shortly prior to the start of the test case were mass hearings like this. Banks would send their representatives & just pay out when they got there.

 

My other view is that the banks (in my case HSBC) have changed how they are representing (which I advised the OFT about) unauthorised overdrafts. They call them a different name to sound like they are accepted fees. When I questioned this with the bank they denied this.

Michael

All banks changed their T&Cs from "charges to cover our costs" to "fees for a service" for the purpose of this test case. It was their only hope of putting up any kind of defence, even if it is laughable a crystal clear attempt to circumnavigate the law (to us anyway).

Unfortunately though, as expected, the OFT hasn't even bothered to have them examined & compared with their previous T&Cs let alone investigate how all banks managed to come up with exactly the same structures in such a short space of time.

Just my opinion, but the OFT haven't even done half a job with this test case & it looks like we're just sitting here waiting for judgment on a case that was not argued anywhere near strongly enough..

[JOSH_IOU]

I understand that Gez but its the fact that we the people raised the complaint and we are being denied an input.

 

How do we no the oft are not protecting there own interests above our own.

It is clear thats what they are out to do.

 

I mean why can't we have a stay lifted on a basic account claim when the waiver clearly states this claim is for current account providers.

 

If the FSA meant banks then why has there been so little publicity over this fact?

[Gez]

Agreed entirely Josh. I posted about this also here..

http://www.consumeractiongroup.co.uk/forum/oft-test-case-updates/133821-official-voice.html

 

Why did the OFT ignore pleas to get involved 3 years ago?

Why have not a single one of the cases and the principles of those cases that supposedly brought about this "test case" been examined?

Why are we, the public being shut out of the whole thing?

 

The main focus of the campaign IMO should now be to somehow try to get our voice heard & our questions answered before we have to accept a final judgment on a case that was a complete farce.

 

Just my opinion again, but I for one do not feel that I (being one of those represented by the OFT) have been represented properly, but what can anyone do about it?

[JOSH_IOU]

Then The idea would be to lift the stay?

[Gez]

I can't see stays being lifted before Judge Smith passes judgment.

 

Could you imagine a few claims being heard in court where the defence was "to cover our costs"? There are plenty of these still in the system and a well prepared claimant would win hands down, the bank would not be able to claim that they are a fee for a service because these "services" did not exist at the time of the claim.

How easy & how quick would it be to get a judgment in court, in favour of the claimant for one of these cases?

What if lots of these cases were heard & these principles were properly examined? I can't see that being allowed to happen, it would show a bunch of ordinary people making much lighter work, using far stronger arguments than the "best effort" from the OFT..

[JOSH_IOU]

well I'm applying for a stay being lifted after making a member of the court staff shout at me over the phone.

 

My claim is for a basic account i don't earn enough to open a current account. And the charges are pushing me further and further into debt.

 

The defendant issued a request for a stay and they should no this. Now the judge seems to have made the stay for proceedings unlawfully. As he was simply relying on the case being a penalty charge case and a claim against a bank. What is interesting is that the waiver was mentioned so I may have grounds for a removal.

 

Believe me if this request is turned down then I am going to move higher up the ladder and claim more damages. If the defendant wishes to settle before then i have won.

[Stoked]

Just my opinion again, but I for one do not feel that I (being one of those represented by the OFT) have been represented properly, but what can anyone do about it?

 

Err, you could try talking to them?

 

''Please feel free to flag the Q&As and our website generally to others and we would be pleased to receive feedback on these.'' OFT 10 March 2008

[JOSH_IOU]

You no Lloyds TSB have changed the name of the account to a cash account. Which apparently is a current account. I still can not see how this waiver applies to direct debit charges. Are any banks actually calling a basic account what it actually is?

 

How can an account with a visa debit card be a cash account? (sorry for taking over this thread but i'm told evryone dose it.)

[InformedSearcher]

I have to say I personally am seeing 'cracks' in all this. You can imagine the banks smiling and the OFT quite aloof to the consumers they are supposed to be fighting for.

There again we must remember that courts operate on budgets. I'm probably correct that the OFT started to have pressure put on it, not by the banks but the courts themselves. The process of handling small claims is geared to a specific ad hoc market and certainly not for the masses to be claiming exactly the same thing.

Having said the above the problem is quite frightening that if the judge were to err on the side of the banks one could still swamp the courts with claims. On the other hand if the judge sways to the consumer the banks merely appeal and the viscious circle of events repeats itself. Then the FSA hangs in the middle of deciding the time spam of the 'stay' and taking on the fact of those same courts being swamped with claims.

This should be classed as one of the proverbial 'opening the can of worms' fiasco's. This is also one of the times that the banks wish there was no internet or media. All in all thay've done well though regarding the little media coverage on it all. Even the OFT web site says little. However they should all be aware that this is not going to go away. I would think the regular meetings of the FSA, OFT and the banks is a little less cordial as of late. This sounds very much a reflection of politicians at work (or not!).

 

Gez: I did get an email from the OFT at the time saying they would take the change of wording into account and reflect on it.

 

Michael

[Gez]

Gez: I did get an email from the OFT at the time saying they would take the change of wording into account and reflect on it.

I wouldn't read anything at all into that I'm afraid Michael. That just sounds like the typical "we'll look into" it response you get which means "here's a carrot, now go away".

 

The cracks were there before the case even started. The OFTs actions have been pretty much like this.. Due to the huge avalanche of claims against banks for the return of charges that consumers claim to be penalties, we're going to do a "test case". We won't actually test any of the cases in question, what we'll do is give all the banks a month or so to come up with something creative for their T&Cs and we'll test them on that. If consumers are not happy with that, sod them we're not interested & we won't listen to them.

 

Sounds ridiculous doesn't it? But that is what we have..