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

[patrickq1]

But if the amount of the charge exceeds the liquidated ascertained damage it surely then becomes a penalty, but then again there's no contractual breach. Confused.PW..

also means then that if they would like to show TRANSPARENCEY AS TO COSTS ? seems this part of the OFT case was missing in the judgment or not clarified in the truest sense so what happened to this part

[car2403]

I think its unfair the FSA allowed the banks to stay our claims but still allowed them to continue adding there charges.

 

its not fair to both parties

 

Until the charges are shown to be unlawful, they were hamstrung in that they couldn't stop them applying them while the stay was in process.

 

The Courts ultimately (in theory at least!) stay their own claims. The FSA can't stay Court claims.

 

Also, think what it would have done to the banks' profits (and probably still will, given the result) if they had stopped them applying charges.

[Bookworm]

Besides, what would have happened if the banks had been told to stop applying the charges and the OFT lost? The banks would have had then thousands and thousands of charges backdated to go into accounts, and who could pay these? You'd end up with thousands of people instantly made bankrupt!

 

Whilst I don't think the waiver was fair for consumers, stopping the banks from keeping on levying the charges on and on would not have been the wisest move either.

 

[2p]

[Struggling_Simon]

I agree with BW.

 

Until such time as the practice of levying penalties/charges/fees (or whatever you choose to call them - at the moment makes no difference) has been shown as unlawful, there was no way to stop it from happening as the FSA would have been interfering with lawful commerce. They are not allowed to do that.

 

If the OFT loses this case, nothing will happen except the Banks will try to recoup their legal costs.

 

If the OFT wins, free banking will end, the banks will offer us fees for service on each transaction - dependent on the type of 'service' rendered.

 

I don't see why the Banks would be prevented from charging a fee for a customer to deposit funds into the banks' vaults. That's where it all started from remember.

 

Of course,this would be offset with the interest made on said deposit, so long as the customer makes a net gain, there is no change to the current system.

 

It will be at the baks discretion to waive the fee depending on the amount deposited. (still no change to the current system, as the higher your balance is, the less you pay in fees).

 

Guess who gets screwed over again? That's right, us relatively poor people.

[adamc6671]

Hi All

 

I'd be very grateful for advice / opinions on the following thoughts -

 

If, on 22nd May, the OFT DO declare the current level of charges to be unfair, which seems very likely, and the banks don't launch into an appeal, then logic and commonsense (OK - that doesn't feature too much in what they have done so far!) seems to dictate that they are likely to repeat what they did with Credit Card companies, and state that they will regard anything over £12 unfair, and investigate.

 

In the early stages of my claims against Abbey and Lloyds I made them both a 'without prejudice' offer to settle on the basis that I would reduce both claims by accepting £12 to be fair. I then calculated the point in time when everything over £12 equated to the overdrawn balance on the a/c's. I then revised the claim to include the ammounts over £12 charged until that point in time, and from that point on claimed the whole ammount of each charge, and each ammount on interest charged, on the basis that there would have been NO charges from that point on as the a/c would not have been overdrawn. I believe that to be wholly defensible, in that the banks could not possibly argue that I was being unfair or unreasonable.

 

OK - I loose out to a small extent on interest, and £12 per charge, in the early stages, but that is more or less made up for by the 8% SI claimed, as both claims have been issued in Court.

 

I am now contemplating, in the light of the initial result in the OFT case, making further 'without prejudice' offers to the banks with these claims. and on that basis. I am quite prepared to accept the loss of one or two hundered in claims totalling over seven and a half thousand, in return for early settlement. What does anyone think?

 

All the best - Adam.

[Conniff]

If the OFT wins, free banking will end, the banks will offer us fees for service on each transaction - dependent on the type of 'service' rendered.

 

 

There is no such thing as 'free' banking. There are admin, staff wages, business rates etc to be paid, so that has to come from somewhere.

That somewhere unfortunately is the lower paid again. People with large balances do not attract charges and fees, so it is the lower paid being penalised to subsidise the rich, as in all the things in this life.

 

If they go onto a fee paying account management system, then we will all be charged which will be much fairer.

[photoman]

see my earlier post for my own opinion on this:

 

On one of the press sites regards this imminent announcement, it was once more cited that if matters eventually go against the Banks, it could perhaps lead to the end of "free" banking for customers in credit.

 

It is sickening to think that everything that has happened over the last few years could possibly herald in what the Banks have secretly wanted for years. And worst still, if so, they will then distort the truth, and try to justify it to its' customers by placing all the blame with those who stood up against them.

 

We're all used to paying for most services we use in life; say posting a letter or making a phone call, but such companies do not also benefit from receiving ALL our annual income, to simply do with as they please (often at great risk, which has been highlighted all too often), and to also demand a period of notice before they hand it back. They then have it at their pleasure to loan out to others at high rates of interest, to speculate with on currencies and markets, or to use to buy up other companies, all to vastly increase their own profits.

 

In return we receive nothing, or at best a very tiny proportion of all this.

 

So, if the Banks do eventually introduce fees, then:

Firstly, it should be on an itemised basis, and reflect the true spread out cost of each service. Not some arbitary blanket monthly rate. After all, I don't pay the post office each month on the off chance that I may or may not decide to post some letters that month.

And, secondly, those depositors whose accounts are in credit should simultaneously be treated as what they truly are, which is in effect investors, and receive proper rates of interest more reflective of the profits their entrusted investments have realised.

19% - 29% to borrow from them (on every single penny, calculated daily), but 0% - 6.5% to lend them OUR money (provided we give them at least say £1000 a month, don't withdraw over a certain amount of it, are often expected to commit to leave it in for a year or receive a penalty, and even then any % is capped and sharply falls at a certain level). An income to cost ratio, and terms unparalleled in any other business.

 

So, the whole current banking crisis and need for a £50billion bail out has come about because Banks are unwilling to lend to each other ?

 

Hell, I don't blame them, I'd prefer not to lend to them either !!

[Struggling_Simon]

I meant 'free to the customer'. No offence Conliff, but your arguement is moot. The operational cost of a bank should be covered by the profits that they vast make on OUR SAVINGS. I am not saying that the banks should lend money for nothing. That is a service.

 

Come on have the discussion that's bubbling under the surface here.

 

I propose the theory that the banking system is morally corrupt and has been since 1694.

 

I am wholly enjoying the credit-crunch,the recent runs on the banks, the sub-prime fiasco in the US and the weak attempts of the central reserves to help the irresponposible lenders to sustain liquidity. It's about time that the greedy were taken down a peg or two.

 

I know how to grow food from the ground, I can cook it aftewards so I wont starve. I am morally grounded enough to know that if I have an excess, I should help those that do not.

 

In no way am I advocating a return to susbsistence farming, but I can provide other services of value to cover the things that I do not know how to do.

 

I'm clever eenough to learn, fit enough to perform and adaptable to changing circumstances.

 

We already live in a system of barter. We go to work (whatever it is we do) and in exchange for our services we are given a token of value. This token at the moment is money. It doesn't have to be though, as long as both the parties in the exchange trust that the price is fair to both, and that the agreed price will be paid.

 

 

This is an example -

 

Anybody want to paint my shed? I'm useless at painting but I can cook and grow my own veggies. I know how to make wine from fruit and sugar.

 

It'll only take an hour or two, and in return I will provide a three-course meal with organic veggies, and with home made wine(its' nice) for your family.

 

The meal will be ready when you finish the painting.

 

Seem like a fair deal?

 

 

My point is that there are many monetary systems that have been around for centuries. They've been around for centuries because they work, they are based on equality and fair exchange.

 

I feel it's time for a change, as the monetary system we have today is not based on equality nor fair exchange, it is based on greed and status.

 

It's morally corrupt as it serves only the few.

 

My grannie used to say money is a great servant, but a terrible master.

 

Discuss?

[steven4064]

Free banking is currently free to the rich - it's those on low pay and benefits who subsidise it through bank charges. Whatever other arguments are advanced, that can't be right

[Struggling_Simon]

agreed.

 

in 1974 the ratio of wealth to populous was 7:84. Let me explain that

 

7% of the populous owned 84% of the wealth.

 

Who here thinks that the situation has improved?

[Aequitas]

I think the judge left the penalty charge aspect open to appeal on purpose.

 

He is so obviously out of step with centuries of convention that I can see only other reason.

 

It is, regrettably, many consumer champions who are out of step.

 

I think it is like this:

 

If there were ever any possibility that all or any bank charges were contractual penalties lawyers would have picked the point up years ago. Someone with an imperfect knowledge of the law of contract came up with the idea that bank charges were contractual penalties. I expect his argument went something like this: bank charges are excessive and cannot be justified and so are penal; customers have contracts with banks; bank charges are governed by those contracts; bank charges are contractual penalties. What he failed to realise is that a contractual penalty is something quite specific; just because something may be regarded as "penal" in the everyday sense of the word does not mean it has to be a contractual penalty.

 

The idea was naturally attractive to those seeking to recover bank charges. It spread like a contagion until it became an article of faith, rather like the idea that lemmings commit mass suicide. The belief became so widespread that the OFT was almost forced into arguing it.

 

The notion that bank charges can be challenged on the grounds that they are contractual penalties has proved (at least at this stage of the legal proceedings) to be the chimera I argued it was in the very first post I made on this forum. Consumer champions have made a huge mistake in trying to challenge bank charges on legal grounds instead of applying tactics more likely to succeed.

 

Note that he didnt describe the path of reasoning he used to come to his conclusion that penalty charges for a breach of contract, were not actually penalty charges for a breach of contract.

 

Au contraire! His arguments were closely reasoned and crystal clear. I respectfully suggest you fail to see it because you have convinced yourself that bank charges are contractual penalties. The very words you use reflect the category error (if that is the right phrase) on which the whole argument was constructed. Please read the relevant parts of the judgement again with an open mind.

 

In case there is any misunderstanding here, I repeat that I think that the level of bank charges is excessive. An approach other than a legal one is needed to make the banks change their ways.

[noomill060]

Good points, but you dont make any comment as to WHY they arent penalties.

 

The judge was only asked to comment on the bank's current T&Cs (the ones they changed to with indecent haste after the test case was announced) not the previous ones. (Which make reference to these charges as compensation for costs incurred due to our breaches of contract, as do most of the defences entered by the banks in response to a number of small claims over the last two years.)

[car2403]

If the OFT loses this case, nothing will happen except the Banks will try to recoup their legal costs.

 

If the OFT wins, free banking will end, the banks will offer us fees for service on each transaction - dependent on the type of 'service' rendered.

 

The parties have already agreed to pay their own costs, whatever the outcome.

 

The banks have already played with their T&C's to cover the situation where the OFT wins, as you've stated. Why is no one interested that this is against the FSA waiver, but yet here we all are with claims that are still stayed?

 

OK - I loose out to a small extent on interest, and £12 per charge, in the early stages, but that is more or less made up for by the 8% SI claimed, as both claims have been issued in Court.

 

I'm not sure why you'd agree to be partially penalised at all, never mind the extortionate amounts they have charged. I still think £12 is too high, which is still to be tested in Court where a true precedent, (not an opinion, which the OFT offers) can be set - we won't get there though, as they are too clever for all that.

 

The banks won't negotiate on this issue until the result is known and any appeal has been dealt with anyway, but you're welcome to try if you want. Personally, I'd rather not bother and continue to hold out - I've been waiting since day 1 of the waiver for over £4k (more now!) from NatWest. If it was as easy as offering to reduce the amount of my claim, in settlement, I would have taken the £1.5k they offered me after the waiver was announced.

 

It's your claim, so you have to manage it yourself, of course - this is just IMHO.

[Aequitas]

Good points, but you dont make any comment as to WHY they arent penalties.

 

A contractual penalty can only arise in a case where there is a breach of contract. The correct analysis of any banking contract, whatever words may be used, shows that the circumstances in which bank charges are payable never amount to a breach of contract.

[noomill060]

Thank you, though it begs the question why the Banks chose to pay out at least £1bn without a whimper, when they could have simply paid any solicitor in the phone book, half an hour's fee to point this out to a DJ.

[car2403]

A contractual penalty can only arise in a case where there is a breach of contract. The correct analysis of any banking contract, whatever words may be used, shows that the circumstances in which bank charges are payable never amount to a breach of contract.

 

In your opinion - I have a different opinion.

 

Lets wait until a Judge actually decides the issue and sets that precedent - in the meantime, continue reclaiming, IMHO.

[Bookworm]

Thank you, though it begs the question why the Banks chose to pay out at least £1bn without a whimper, when they could have simply paid any solicitor in the phone book, half an hour's fee to point this out to a DJ.

... Or why some judges up and down the country DID find that there was a breach of contract and therefore a penalty.

[credit allergy]

Again the utccr and penalty issue are overlapping. The banks were concerned that by applying utccr the oft could decide the fee etc this is what has happened. A case was lost last year because the claimant couldnt demonstrate a breach of contract. A bank can charge a fee if you go overdrawn whether you have breached a contract is another issue this entire case is based on utccr. If your t and c says we will honour your direct debit even if you go overdrawn but charge you this will not be a penalty. I was repossesed in 2005 and was charged ERC i am reclaiming as I breached the contract by not keeping up with payments so the erc was charged following a breach and therefore has to be shown as an actual loss. If i moved through choice then i would have to rely on utccr because no breach has occured.

[BigBudgie]

If you either bank with Lloyds or have a basic account with any bank the 1st of which clearly states their charges are a penalty & the 2nd of which states there is no overdraft facility then those charges may be recoverable without further ado

 

So, Joncris I have a stayed claim for a basic CARDCASH Halifax account. I also have another basic CARDCASH Halifax account at LBA stage. These accounts have NO overdraft facility as I am sure you are aware.

Do you therefore recommend an attempt at getting the stay lifted on the first claim and launching an immediate court claim on the second using arguments that the these claims should not be stayed or further stayed and should proceed normally. All charges being claimed on both accounts were incurred prior to the Test Case announcement.

Would of course be interested to hear anyone elses views as well.

[adamc6671]

I'm not sure why you'd agree to be partially penalised at all, never mind the extortionate amounts they have charged. I still think £12 is too high, which is still to be tested in Court where a true precedent, (not an opinion, which the OFT offers) can be set - we won't get there though, as they are too clever for all that.

 

The banks won't negotiate on this issue until the result is known and any appeal has been dealt with anyway, but you're welcome to try if you want. Personally, I'd rather not bother and continue to hold out - I've been waiting since day 1 of the waiver for over £4k (more now!) from NatWest. If it was as easy as offering to reduce the amount of my claim, in settlement, I would have taken the £1.5k they offered me after the waiver was announced.

 

It's your claim, so you have to manage it yourself, of course - this is just IMHO.

 

Many thanks, car - much appreciated.

 

£12 is of course much too high, but thats the level thats now become the norm with credit card a/c's, and any level ultimatelly set for personal bank a/c's is very unlikely to be higher that this, IMO.

 

Both my claims are structured around the UTCCRs, and not the law of penalties, so I feel I've accepted that a certain level of charge for defaults is reasonable. By offering to settle at the highest figure likely to be agreed, if indeed that ever happens, I feel I'm likely to be seen as being very fair in my claim.

 

Apart from 2 or 3 hundered quid in claims totalling over 7.5k, I can't see that I've anything to loose by trying, so I may well give it a go. I'll let you know how I get on..

 

All the best - Adam.

[Aequitas]

If a charge is a penalty you do not need the UTCCR as you have the protection of the common law. If a charge is not a penalty applying the UTCCR is tricky as they expressly exclude (except to the extent that the charging provision is not phrased in plain English) any consideration of whether the price paid is reasonable.

 

As to the breach of contract point, I think the judge took the only position that is tenable in law. However the terms and conditions may be phrased, any instruction by a customer which, if acted upon would result in the account going into an unauthorised overdraft, has to be treated as a request by the customer for an overdraft facility and not as a breach of contract.

 

I am not sure if people realise quite how the breach of contract argument looks. It is as if you are saying:

 

Hey! I'm not paying that - I'm in breach of contract!

 

Which has the implied corollary:

 

OK, I'm not in breach of contract - I'll pay up.

 

To put it another way, is there not something slightly odd about someone vehemently insisting that he is in breach of contract taking the moral high ground? (I do not say there necessarily is, I simply pose the question.)

[Bookworm]

To put it another way, is there not something slightly odd about someone vehemently insisting that he is in breach of contract taking the moral high ground? (I do not say there necessarily is, I simply pose the question.)

There certainly is something odd about that, and it was one of the hardest things to get my head round, here I was arguing that I was in breach of contract, surely that makes me in the wrong? Well, yes, but to coin a cliche, 2 wrongs don't do a right, and the fact that I done the bank a wrong didn't give them the right to do me an even bigger one.

 

I think if you start going into "moral high ground" territory, you are going to get into even more slippery grounds, tbh. ;-)

[Spiceskull]

I think if you start going into "moral high ground" territory, you are going to get into even more slippery grounds, tbh.

Moral high ground? LOL. The whole point of the consumer revolution is that morals do not enter into the equation. All arguments are based on points of law...was something legal or not. The banks would have us think that they are, we know differently...

 

Courts and judges do not want to be presented with moral dillemmas, they want to be presented with hard and fast facts, however convoluted, because these are things they can judge on, and sign their names against...

[credit allergy]

Once the utccr has been settled and we assume a fair amount or charge agreed then the penalty common law issue is not going to be a valid arguement. Purely because the banks will say it is a calculated loss amount. The main point is whether not complying with t and c is a breach of contract. If the t and c says if you go overdrawn we will charge you then this is not a breach surely but failing to comply with terms and condititons. What is needed is a legal explaniation of the term breach of contract. I would suggest as a lay person it will be something along the lines of the following. If the act causes the relationship not to function etc. for example going ten pounds overdrawn or not paying funds in or cancelling direct debits. This is my view for what its worth

[car2403]

Once the utccr has been settled and we assume a fair amount or charge agreed then the penalty common law issue is not going to be a valid arguement. Purely because the banks will say it is a calculated loss amount. The main point is whether not complying with t and c is a breach of contract. If the t and c says if you go overdrawn we will charge you then this is not a breach surely but failing to comply with terms and condititons. What is needed is a legal explaniation of the term breach of contract. I would suggest as a lay person it will be something along the lines of the following. If the act causes the relationship not to function etc. for example going ten pounds overdrawn or not paying funds in or cancelling direct debits. This is my view for what its worth

 

Won't happen - the law of contract, where the law of penalites resides, has developed over hundreds of years and leaves this as a question of fact for a Judge to decide on.

 

Yes there is precedent for examples of breach of contract, but these can be distinguished from most cases depending on which side of the argument you sit on.

 

As our legal system is based on adversarial means, you put your point across, the other side argues against it, then the Judge decides who is right based on the arguments.

 

The problem with bank charges is that Judges have their own opinions that sway them either way - which is incredibly unfair for claimants. If the decision isn't based on the arguments put forward, the Judges' bias has to play a part. Trying to find the ratio decidendi (the reason for the decision) and distinguishing that from the obiter argument (outside of the reason for the decision) can be difficult. (This is way lawyers make the money they do and why litigants in person will always struggle, if they come across this)