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

[smutley]

If most of the claims which were stayed relied on the historical terms then should we not be writing to the courts to have the stay lifted as the test case did not assess the historical terms? Therefore on what grounds were our cases put on hold?

[podgydad]

This from the BBC story at the conclusion of the hearing.

 

"There is every indication that my findings will translate to the historic terms," he said.

 

"That could mean a decision on the historic terms in very short order - maybe within a month [of my decision]," he added.

[smutley]

so this could possibly coincide with the end/review of the waiver then

[credit allergy]

The Law report from this case is in todays times newspaper and online as well. In respect of breach of contract there are some interesting points. Mainly that none of the provisions amounted to a contractual agreement.

[TideTurner]

The Law report from this case is in todays times newspaper and online as well. In respect of breach of contract there are some interesting points. Mainly that none of the provisions amounted to a contractual agreement.

 

Do you have a link CA?

[Michael Browne]

Bank charges can be assessed for fairness - Times Online

[TideTurner]

Thanks Michael

[Sparklez30]

Well that whole article flew clean over my head! I think I don't know enough about the law to follow along with any of this.

 

Don't suppose anyone can translate the article into simple terms?

[saintly_1]

Well that whole article flew clean over my head! I think I don't know enough about the law to follow along with any of this.

 

Don't suppose anyone can translate the article into simple terms?

I didnt even need to duck as it flew over mine

[ANDENA]

I didnt even need to duck as it flew over mine

no i could not make any sense of it we will have to wait for the whiz kids to come a long

[TideTurner]

As far as I can see it's good news. There may be sceptics who will claim otherwise.

 

I can't see why it is not possible to bring a claim under common law. Also, the banks' claim that they were providing a service has been dismissed, and the OFT have been given the go ahead to rule with respect to the consumer where the banks have gone over the top with respect to charges.

 

Tide

[steven4064]

No doubt the OFT will come up with some amount (my bet is £12 ) that they will use as a trigger for taking action (like the supposedly do for credit cards) and say that is for a court to decide what actually is fair. As 'fairness' will depend on whatthe banks' costs are in real life and as there is no way they will want to divulge this information, we could end up back where we started (business as usual but with more emphasis on UTCCR1999 and less on contract penalties) - at least for personal accounts.

[breeze1996]

Going cross brained thinking about the items being a whole of the service package or part of. If anyone understands it I love to know what it really means.

 

All that comes across to me is that the banks have charged the wrong amount and the judge won't take it as a package and says it has to be considered as single transactions.

[patrickq1]

a bit of serious legal help on this thread would really be apreciated desperate help required from tide and others

patrickq1

http://www.consumeractiongroup.co.uk/forum/legalities/102075-un1boy-n1-issued-breach-21.html#post1500820

[credit allergy]

I agree that the jist of report is not bad news. What it is saying is that in this case the provisions put forward by the OFT did not amount to a contractual breach. Also if there is a doubt the regs always favour the consumer. Therefore it could still be argued that a breach could occur. What is being said is that there is no contractual requirement not to have funds to pay a dd for example. So accordingly no breach can occur and thus a charge is not a penalty. In respect of a service package what this means i think is ,it is unclear what service is being provided for the fee charged. So the issue of fairness has to be resolved. The amount is almost immaterial at this stage. To summarise the regs which protect the consumer do apply in respect of bank accounts. What needs to be decided is whether a charge and for what is justified. Then if decided yes is the amount reasonable and in proportion etc. The common law can still apply if your credit card t and c says payments must be on time and they charge you because it is late then this could be construed as a penalty possibly. This is all puerly my personal and unqualifeied opnion however i hope it helps.

[BigBudgie]

Summary from Bob Egerton..

http://www.bankbuster.co.uk/ofttestcaseresul.html

 

Interesting theory !

 

However he does overlook the fact that Historical terms and conditions for all personal accounts and both present and historical terms for basic accounts were actually included as part of the test case. It's just that the Judge hasn't yet handed down his judgment on these yet.

 

Judge stated at the end of the test case :-

 

"I have already said that the reason I felt it appropriate to deal with the current terms at this stage, and not deal with the historic terms, is because there is every indication that to some extent my findings will translate readily to a significant proportion of the historic terms, and

that, while nothing is certain, might well lead to decisions on the historic terms being made in very short order, within a month one would certainly hope. I can't go so far as to say that necessarily they will translate to all the historic terms, and one will have to take stock as to what the residue is, how significant they are, and the residue is in terms of number of accounts and customers involved, and the management of the residue can only be considered at that stage."

 

So the Judge was giving an indication that judgment wrt the historic terms and basic accounts should be handed down, he hoped, within one month of his initial judgement in respect of the present terms.

 

So bearing in mind that probably all of the claims that are stayed in the County Court were relating to charges based upon historic terms you can therefore consider that NO JUDGEMENT has yet been made that affects these claims.

 

We don't know what that judgement is likley to be.

 

Personally I suspect that the decision with regard to UTCCR 1999 will be the same as for the present terms. I suspect that the Banks may lose the PIL argument for some historic terms. I also think that we stand a good chance of winning the penalty argument for at least some of the standard bank accounts based on historical terms and probably winning it for all of the very basic bank accounts.

 

When will the Judge actually let us know his thoughts on the Historical terms, it all points to either just before or even at the case Management Conference scheduled for the 22nd May.

 

One important point. The OFT had already formed it's conclusions about the Banks terms and conditions prior to the Test Case being announced in July last year. After the test case was announced most of the Banks frantically modifed their terms and conditions to try to avoid both the penalty charge arguments and the test of fairness under UTCCR 1999.

OK, so the Banks won the penalty charge and PIL arguments for those modifed terms. But even after changing their terms they still lost the UTCRR 1999 argument.

The OFT and the Judge are not unwise to these events and I am sure that neither party will allow a deal to be done that allows the banks to avoid future regulation on their charging regimes.

 

Budgie

[steven4064]

The OFT and the Judge are not unwise to these events and I am sure that neither party will allow a deal to be done that allows the banks to avoid future regulation on their charging regimes.

I sincererly hope you are right

[JonCris]

It should also be rememberd that the OFT commented earlier last year, when it was mentioned the banks were changing their terms to avoid them being described as penalties, "changing the wording to avoid sanction won't be accepted by us".......Lets see if they meant it

[BigBudgie]

I found this elsewhere on the site.

Does anyone have any views on some of the things that Bankfodder is suggesting ?

I started to make an attempt at highlighting some sections that I thought might need a bit of work, however my higlighter pen ran out !!!

Thought it would be interesting to discuss on this thread.

 

Bank Charges at April 2008 - draft work in progress

Published by BankFodder

28th April 2008

What has happened with the OFT test case?

 

Until 24th April 2008, the argument against bank charges was that they were contractual penalties imposed by the bank for customer breaches. These breaches included exceeding overdraft limits or having insufficient money to support a direct debit or a cheque, etc. Where penalties exceed the actual losses suffered by the bank, they are unlawful.

 

A second basis for challenging bank charges was that they were subject to the Unfair terms in Consumer Contracts Regulations 1999 and therefore they must not be unfair.

 

Clearly the banks were concerned about both of these arguments as in the two years from January 2006, the Financial Times and the BBC each estimated that the banks had repaid tens of thousands of their customers well over a half a billion pounds in bank charges.

 

 

The pressure upon the banks and upon the courts became so great that finally in August 2007 the OFT announced that it would bring a case before the High Court to find out whether the charges were in fact subject to the 1999 regulations.

 

At the same time the FSA announced that it would suspend the duty of banks to investigate bank charges complaints until the test case had been decided. The Financial Ombudsman also announced that bank charges complaints would be suspended pending the test case. Finally the County Courts received a general advice that they should stay all claims for bank charges. With very few exceptions, the suspension of all cases has been complete.

 

This suspension of claims was entirely predictable and from a pragmatic point of view, quite understandable. However it has been deeply unfair that the banks were permitted to continue charging and even to raise their charges in some cases.

 

The OFT test case was heard in February 2008 and the judgment was finally handed down on 24th April 2008.

The judge held that:-

• the banks' 'delinquency' charges were subject to the test of fairness under the UTCCR and so therefore the OFT are free to investigate the charges and to decide a fair level.
  
• the charges were not penalties at Common Law as we had argued from the beginning of our campaign.
  
• the bank's current accounts contracts were couch in plain accessible language
  
• the banks were not providing any kind of service by bouncing cheques, dealing with exceeded overdrafts, direct debits and so forth.

Is that the end of the matter?

 

No. There are likely to be appeals by the banks on the issue of whether their delinquency charges are really subject to test of unfairness as decided by the High Court.

 

We expect that the High Court's decision will be confirmed by the Court of Appeal.

It is on that basis that we give the following advice.

Please don't forget that if the Court of Appeal decides differently then there will have to be a reappraisal of the entire situation.

So are my charges still unlawful?

 

We believe that your bank charges are still unlawful. The reason for this is that the High Court judge ruled that the charges must be fair. We have yet to understand exactly how "fairness" will be measured. However we are extremely confident that the OFT and maybe the courts will decide that the present very high level of charges is unfair.

 

We all know from the revelations of the CYNthesys costing system used by the Yorkshire and Clydesdale banks that it costs no more than £2.00 to deal with a bounced cheque or bounced direct debit even when the process is conducted entirely manually.

 

As it is clear that there is scarcely any manual intervention in these matters, we can be certain that the banks never spend more than a few pence (say, .50p) in dealing with each delinquency episode. As all of the banks charge at least £30 per episode ( sometimes as much as £38 ), it is obvious they are making several thousand percent profit. The normal mark-up of any High Street business is about 100%. We do not see any reason why High Street business - including the High Street banks - should be able to enjoy such a privileged level of profit, especially when it is clear from the High Court judgment that delinquency charges are not core business, that it is the poor and vulnerable who will be affected and when those charges are meant to be controlled by law.

 

We are unable to say at the moment what the correct level of charge should be or what will eventually be decided. However, the OFT capped the credit card companies at a very excessive £12 and it is likely that the banks will be capped similarly. So, yes. Your charges are still unlawful.

Can I claim my bank charges back?

 

Assuming that the OFT or the courts agree that the current level of charges is unfair, then yes, you can claim them back. The charges will be invalid under the UTCCR and therefore you should be able to recover them in full.

What is the procedure for recovering my unlawful bank charges?

 

This is not entirely clear at this point in time. What is certain is that the suspension of claims will continue until all of the issues raised by the OFT have been finally settled. This means that it is confirmed that the charges are subject to UTCCR, that the present level of charges is deemed to be unfair and that a new fairer level has been announced by the OFT. At that point, all of the suspensions will be lifted and the claims will be progressed.

 

Our own informal view is that once the matter of the status of bank charges is finally settled either on appeal or by agreement, that there will have to be put in place some special scheme of repayment.

The numbers are so huge in terms of the numbers of people affected and the amount of money involved, that neither the banks, the courts, the FOS nor the government will want the FOS or the Courts to be besieged with claims for repayment.

What form might an FSA repayment scheme take?

 

We envisage that the scheme will take the form of payment on demand within a time limit agreed between the FSA and the banks. Given the size of the problem (all created by the banks) the time limit is very likely to be much longer than the current FSA approved 8 weeks for settling customer complaints. It may be as long as 3 months and maybe even 6 months.

 

There is unlikely to be any provision for the payment of interest on your unlawfully seized charges.

Other possibilities include:-

• The FSA may agree that the banks refund merely the difference between the charges they have seized and the new capped limit.
  
• The FSA may agree that banks are only required to repay charges going back 6 years - in line with the contractual limitation period under the Limitation Act 1980

Does this mean that I shouldn't bother bringing my claim right now?

Our advice is that you should bring your claim immediately. Don't wait.

This is especially so if you have outstanding bank charges going as far back as about 6 years. It may well be that the banks will try to resist any charges claims beyond 6 years on the basis that they are subject to the 6 year limitation under the Limitation Act 1980.

If you start your County Court claim now then you will have laid down your marker and your claim will be heard - even if it takes another year for the suspensions to be lifted.

 

Alternatively you could choose to make a complaint to the Financial Ombudsman (FOS). This is a cheaper option as there are no court fees. However, it is not at all clear on what basis the Ombudsman might make decisions or whether the FOS might decide to accept a limitation period if this argument was put up by the banks. Very importantly, the FOS is unlikely to award interest on your unlawfully taken charges. The County Court will award you 8% from the day that the charges were seized from you. On the basis that the bank will be obliged to repay you your court fees as well, a County Court claim is likely to be much more profitable.

Suppose I bring a court claim now and later on I find that I have to use an FSA repayment scheme?

If you have started a claim in court, it is unlikely that you will be forced to abandon it and go a different route. Even if you were, the bank would be obliged to pay your court fees as your decision to bring a court claim would not have been unreasonable.

Now that it is clear that bank charges have been unlawful what can I do about my credit reputation?

 

] It is clear that anyone who has negative comments or a default entered against their names with the Credit Reference Agencies (CRAs) has a good basis for complaint.

We will be posting advice and templates to assist you with an effective course of action in respect of this.

Please watch out for announcements and also keep an eye on this FAQ document as it is likely to be amended from time to time as the situation changes or becomes clearer.

[jansus]

"Alternatively you could choose to make a complaint to the Financial Ombudsman (FOS). This is a cheaper option as there are no court fees. However, it is not at all clear on what basis the Ombudsman might make decisions or whether the FOS might decide to accept a limitation period if this argument was put up by the banks. Very importantly, the FOS is unlikely to award interest on your unlawfully taken charges. The County Court will award you 8% from the day that the charges were seized from you. On the basis that the bank will be obliged to repay you your court fees as well, a County Court claim is likely to be much more profitable"

 

 

As far as I understood the statutory 8% S69 interest is awarded purely at the discretion of the court ? it is not guaranteed? if you are talking about CI I thought that was very contencious ( according to the very long threads on here!)

How can you make a profit being awarded court fees that you have already paid?

[jansus]

also IMO surely it would at least be best to wait for the Case conference on 22nd May as a lot of the comments above have not been reflected by other reports that I have read.There should be some clarification then of the next steps

[star_scream]

So If we claim now, what do we put on the prelim claim form and the LBA?

[steven4064]

Jansus, I think 'profitable' is the wrong word here (post #545). What the paragraph means is simply that, because you may get interest in court but won't via the FOS, you will get more money if you claim in court.

 

CI has been contentious (I think less so since the Sempra case, as that gives authority for claiming it) but, again, it is not profit. It is awarded in restitution - ie to put things back as they wuold have been if charges had not been unlawfully applied.

[jansus]

Full of questions me? what does this mean? what is an FSA repayment scheme?

 

 

"Suppose I bring a court claim now and later on I find that I have to use an FSA repayment scheme?

If you have started a claim in court, it is unlikely that you will be forced to abandon it and go a different route. Even if you were, the bank would be obliged to pay your court fees as your decision to bring a court claim would not have been unreasonable"

 

 

 

Also the statement says the charges are still unlawful? I thought that still had not been ruled by the court? Just that they could be considered under the UTTCR as to whether they were fair or not?

 

Sorry if I am being thick?

[steven4064]

It's a presumption that they are unlawful - the case says they must pass te fairness test - we say there is not a cat in hell'#s chance - ergo, they are unlawfull.