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

[Chromatix]

As I understand it, Mr. Justice Smith was not asked to rule whether the charges were illegal or unfair - only whether the present T&Cs could be assessed for unfairness under the UTCCRs *or* the common-law rules about liquidated damages.

 

I agree that it would have been better to consider the historical T&Cs as well, and especially the delta between the versions. However, this is my prediction of the course of events:

 

- The banks already realise that the common-law rules on breach of contract remedies don't support their position, and that consumers are getting remarkably savvy of this fact.

 

- The OFT will almost certainly find that the replacement clauses, describing the charges as "fees for services", are also unfair under the UTCCRs, whether they take the history into account or not. The judgement just handed down confirms unambiguously that they can do this, which is what they asked for.

 

- They will thus unilaterally strike these clauses from the present T&Cs as applied to consumers, and banks will not be allowed to enter into new consumer contracts that contain them. The banks will probably be required to return the past charges wholesale.

 

- The banks will then have to come up with a new charging structure that is fair(er), and they will probably apply it to ordinary business accounts as well for consistency. They almost certainly won't go directly back to the old system. They might stick to the new system, but with smaller fees that they can demonstrate reflect their actual costs.

 

Personally, I would welcome a free-banking system that allowed anyone to use an account in credit only, with no overdraft, no interest given on balances but no charges applied on unpaid items. Even better is if it had a proper debit card, not a cash card as on "basic" accounts, but with the cheque-guarantee facility removed. The bank would get enough investment interest on credit balances to operate the account, and retailers already fund the debit card system.

[JonCris]

I see the logic of your argument & do hope your right but for the banks as a whole there's a great deal of money at stake which I don't see them giving up without a tremendous fight..........they are already refusing (at least AK is but that's her default position) to accept the the court has made a decision which is in the consumers favour

 

Also I'm not against free banking for some I just don't want the poorest to pay for it

[TideTurner]

Both sides in this case agreed to pay their own costs from the off. The banks have a legal duty to their shareholders to make the correct decisions with respect to company expense. If they continue to defend a hopeless position when faced with this ruling, they would be breaching that duty.

 

They are already under extreme pressure over their extensive legal bills from the day to day cases (employing firms to simply send out letters stating "any claim you may have is stayed until the outcome of the OFT test case".

 

Agreed, they will not give up their corner without a fight, but a rational decision must now be made as to the potential success of any appeal, and the affect this will have on the bank in terms of publicity / public opinion, which will have a direct affect on the brand.

 

BTW, I note that HBOS are the only players who have not divulged their borrowings from the Bank of England after the recent 'crisis'.

[Bookworm]

As I understand it, Mr. Justice Smith was not asked to rule whether the charges were illegal or unfair - only whether the present T&Cs could be assessed for unfairness under the UTCCRs *or* the common-law rules about liquidated damages.

Not true. The OFT's case asks for a ruling about whether the UTCCR, but the banks' defence and counterclaim included the request for a declaration that the charges are not penalties. :-|

[JonCris]

HBOS must be going bust.......anyone got any shares they want rid of

[JonCris]

BW which is why this Judgment is refusing to accept the blindingly obvious as I say If it walks like an elephant, sounds like an elephant, looks like an elephant then chances are that it is an elephant.........in much the same way penalty fees are penalty fees cos they look like penalty fees & they have the same purpose as penalty fees...........so by all sensible definitions they must be penalty fees & changing some words on a document to mask the fact isn't going to change that

[Spiceskull]

Nice extract from the summary on today's BBC website about what constitutes a service, and what constitutes a charge for that service:

Keeping to his common sense approach, the judge said that this question had to be answered from the position of the typical consumer.

 

 

The service provided - at least in the eyes of the typical consumer - is the provision of an overdraft or loan, and the "price" for a loan is usually the interest incurred.

 

 

All the banks charge their customers interest on an overdraft, and the interest reflects the amount borrowed and the duration of the overdraft.

 

 

So the judge accepted the OFT's arguments that it was interest, and not the PIC, that would be seen as the "price paid in exchange for the service".

[Bookworm]

JC, you and I may disagree on many a thing, but not on this one... But you're not Justice Smith, and neither am I, and we can agree all we like, he doesn't...

[patrickq1]

is not the judgement flawed as the judge has not answered some of the charges put forward to him ,unless he is thinking of entering politics cause his judgement is like a politician answer to any questions asked

patrickq1

[patrickq1]

What happens now?

The OFT and the banks will need to review the judgment and decide if they want to appeal. Also, the court has so far only looked at the preliminary legal issues. It has not begun to consider more substantive issues around whether the charges are actually fair and/or lawful. For now, firms can continue to keep cases on hold under the terms of the FSA waiver (PDF).

[photoman]

Very funny,

 

I actually spotted a charge on one of my accounts today;

 

No advance letter, no phone call, and actually I only spotted it because I chose to look at one of my accounts online.

 

It was Abbey.

They had applied a charge upon an account I keep just for paying household bills by DD.

The charge related to a returned DD (an incident which had actually occurred about a month ago and had been dealt with at the time), the mandate had then also been cancelled, so the reference was in relation to a DD mandate that didn't even exist anymore !

(Maybe they were just trying it on, and decided to reverse an earlier decision, who knows )?

 

Anyway, I rang up and decided that rather than get irate, I would be pleasant and ask what this related to. I then explained what had happened, and before my very eyes the money was refunded online with no trouble.

 

Two funny things about this:

Firstly next to the charge it was now being described as:

"Informal overdraft request" ...... WTF

(a first for me, and it also did not relate to any changes of description or T&C's that I had actually been informed of) !

 

Secondly, the person I spoke to then confided that he too was really frustrated about current events, and was himself awaiting progress regards a stayed claim of his own he had against another bank !

[TideTurner]

Obviously they still have the money making mechanism in place. What bothers me is that they have the gore to continue trying to claim money they are clearly not entitled to from people who are simply expecting a service. The departments they have in place who monitor charges made have not been dispanded, and continue to bring an income into the banks regardless of any decision.

 

It's like paying for swimming and coming out covered in leeches.

[steven4064]

It's like paying for swimming and coming out covered in leeches.

In some places that might be thoughht of as a service

[TideTurner]

In some places that might be thoughht of as a service

 

There are leeches and there are leeches. Oxford: a person who clings to another for personal gain, esp. without giving anything in return, and usually with the implication or effect of exhausting the other's resources; parasite.

 

But I see your point, given you are a travelled man (have they ever sucked any poison out of you)?

 

Good to see ya big guy

 

Tide

[photoman]

I've never been subject to a leech, but I did once get attached to by a tic.

Nasty little buggers that feed on you, and swell up to quite a size.

 

It was after being in a field whilst abroad. The person I was with told me to thoroughly check myself over afterwards for tics.

 

I did so, and thought I was all clear.

 

Then, after a long flight, upon arriving home I then found one still on me.

 

 

....... lets just say.... I thought I had grown a third one !!!!

[TideTurner]

You crack me up sometimes PM

[saintly_1]

Obviously they still have the money making mechanism in place. What bothers me is that they have the gore to continue trying to claim money they are clearly not entitled to from people who are simply expecting a service. The departments they have in place who monitor charges made have not been dispanded, and continue to bring an income into the banks regardless of any decision.

 

It's like paying for swimming and coming out covered in leeches.

just how much can be seen here Banking and credit | Bank charges | Bank charges just press the start

[kennythecelt]

Good find Saint!

That counter climbs so quickly- frightening though and makes me feel

[citizenB]

Does make you wonder, why, they need to borrow money from the tax payer. x

[star_scream]

Please correct me if I am wrong but...............

 

The test case was concerned with current T&C's ( is that right?) or at least the judgment was for current ones.

 

Now, as most claims are based on historical T&C's, why are all the claims on hold?

 

Unless the test case starts to look at historical, then the outcome is totally irrelevant

[Spiceskull]

Please correct me if I am wrong but...............

 

The test case was concerned with current T&C's ( is that right?) or at least the judgment was for current ones.

 

Now, as most claims are based on historical T&C's, why are all the claims on hold?

 

Unless the test case starts to look at historical, then the outcome is totally irrelevant

Couldn't agree more...if historical Ts&Cs are not part of the evidence in the test case, then the claims relying on them should not form part of the stays and exclusions...

[credit allergy]

It is quite straightforward. If the bank charge fine or fee you they are doing it because you for instance had a dd returned which might be contrary to the t an c s. They are charging you because the t an c s says they can. If not and they are doing it for a service because it has cost them money surely they must describe what was involved ie a human or automated letter or phone call and offer some explaniation about the charge imposed. If the first scenario occurs then this is a penalty and is unlawful. The only fly in the ointment is that the judge appears to state that a failure to comply with the terms and condititons is not a breach of contract. This as we know is fundamental to arguing that a charge is a penalty.

[star_scream]

So surely there must be a way to have stays lifted now.

 

I still maintain that more pressure on MP's now should have an effect.

[car2403]

Couldn't agree more...if historical Ts&Cs are not part of the evidence in the test case, then the claims relying on them should not form part of the stays and exclusions...

 

So surely there must be a way to have stays lifted now.

 

I still maintain that more pressure on MP's now should have an effect.

 

If the issues raised in the judgment weren't part of the case, they will still be seen as obiter and persuasive argument, although they aren't binding.

[star_scream]

If the issues raised in the judgment weren't part of the case, they will still be seen as obiter and persuasive argument, although they aren't binding.

 

What does that mean?