Oft Test Case - Next Important Date?

[Jamesx81x]

So what happens if you had an account after July 2003 like myself?

[barry_2008]

My ccount with Lloyds was opend in 2007

[Bookworm]

NatWest Claimants with charges pre July 2003 WIN

With a window of 6 months before the Limitations Act hits. Neat. That should ensure damage limitation for them then.

[Chromatix]

It's worth reading the judgement in detail. I don't think it's a loss as far as post-2003 claims are concerned at all.

 

Instead, it strongly implies that the T&Cs leaflets are *not*, in fact, the terms of the contract (in most cases). In which case we should be asking what the terms of the contract actually *are*.

 

I think a worthwhile tactic for existing and future claims would be to ask the banks to show the terms which they believe allow them to charge the fees. So far, they have been shoving leaflets under our noses...

 

BTW, jaxads, that 17th January birthday you were thinking of? That was mine. ;-)

[barry_2008]

This is an interesting couple of paragraphs.

 

It was argued that similarly here the Banks’ terms and conditions could not be penal because no breach on the part of a customer would be sufficiently closely connected with him incurring a Relevant Charge.

 

In particular, this argument was raised in relation to terms that the customer was not to use a cheque guarantee card without having adequate funds or a facility to cover payment of the cheque.

 

It was contended that a Guaranteed Paid Item Charge is payable upon

the overdraft being provided rather than upon the customer’s breach. It can immediately be seen that in these circumstances the bank is committed to paying the cheque and in this respect (at least) its position is different from that of the landlord in Jervis v Harris, who was under no obligation to carry out repairs to the leased property.

 

 

I have been assisted by further written submissions from Mr. Bankim Thanki QC on behalf of Lloyds TSB and from Mr. Jonathan Crow QC representing the OFT. They persuade me that, given the nature of this litigation and the purpose to provide guidance that might assist the disposal of claims made by individual customers against the Banks, I should make a declaration in terms that make it clear that it does not prejudice the position of any individual customer who wishes to raise an additional question as to the terms incorporated into his contract with Lloyds TSB. As Mr. Thanki recognised, the determination of a question of this kind would require what he called “a fact-sensitive and customer-specific enquiry”. This in itself is not a reason to refuse a declaration: see the judgment in the Foxtons Limited case (loc cit) at para 64. Indeed, the customers of other Banks who generally had written terms with their current account customers might properly raise a question of incorporation of terms in relation to the particular circumstances of their case. In the end it is a question of degree: Lloyds TSB customers might have more scope to raise a question of this kind. But I have concluded that I should nevertheless give Lloyds TSB declaratory relief.

It would apear given Lloyds Tsb's conditions that they have breached an agreement if a direct debit was not payed. am I reading this correctly?

[Chromatix]

Not exactly.

 

Mr. Smith pointed out very clearly that, for the specific terms considered at that point, the breach would occur when the overdraft was created, *not* due to the "attempt" to create the overdraft. He noted (with reference to Abbey) that the Unpaid Item Fee is what would create the overdraft if it were to be levied.

 

In fact he rejected Abbey's part of the decision simply because the terms he was asked to consider did not actually apply to the type of account the leaflet was supposedly printed for. The "Instant Plus" account didn't have cheques or cheque-guarantee cards, and the terms he was shown only applied to cheques and cheque guarantees.

 

6. Mr. Ali Malek QC, representing Abbey, submits that a customer with an Instant Plus

account might be said to have been in breach of condition 24.2 in these

circumstances: he might have given a direct debit instruction or a standing order,

payment might have been refused because he had insufficient funds in the account

and he might thereby have incurred an Unpaid Item Charge that led his account to be

overdrawn. However, in those circumstances no Relevant Charge would be incurred

because of breach of condition 24.2. Even if it could be said that the customer

overdrew his account (rather than that he allowed his account to become overdrawn),

the Unpaid Item Charge would not have been charged because of that. On the

contrary, the Unpaid Item Charge would have been the cause of the account becoming

overdrawn.

 

The last two sentences of that are worth noting in their own right. I noticed that Natwest tended to allow "paid referrals" as long as the account was initially in credit, but turned to "unpaid items" otherwise, and is may be part of the reasons why.

 

There are no other references to "direct debits" in the entire decision, except in a clause that Mr. Smith described as "of advisory or hortatory effect" and thus not a contractual term.

[barry_2008]

In my case the bank said they had used there own funds to pay my direct debit pmsl.

 

When I contacted the company the company laughed to and said I musnt have eough funds in my account.

 

I replied well the bank said they have paid it why are you chaseing me its there responsibility. The bank replied well sir weve a contractual right to charge you. Wheres the damb contract pardon my french. The charges arent incorperated in the contract the copy of the contract I have the unsigned aplication form says that they have the right under subsection somthing which states by signig this aplication form you agree to its terms and conditons or soemthing close to that affect.

 

The term its an indsutry standard sir pay up wouldnt be a lawful argument i guess.

[Chromatix]

Sounds like they confused a "Paid Referral" with an "Unpaid Item Fee".

 

But yes. The fundamental issue now seems to be precisely which terms apply to the contract between customers and banks. And it's probably incumbent on the bank to show this - if only somebody knows to ask.

[beachcomber60]

Is 'paid referral' reclaimable ?

 

Just getting our reclaim together as a hardship case - if it does like as if the consumer has lost then it might explain why Barclays have taken months to supply our statements.

[barry_2008]

no

 

Theres no contract to make a valid judgement from. If youre with lloyds before 2007 the judgement states there was none so county judge dose not need to judge on the matter.

[barry_2008]

Means at least lloyds are in breach of statute law

[millie cat]

Could you post a link please?

 

sorry it wont let me:)

Millie Cat

[millie cat]

With a window of 6 months before the Limitations Act hits. Neat. That should ensure damage limitation for them then.

Hi Bookworm

Does this mean that i can claim charges going back 10-12 years as natwest stiched us up when my husband was made redundent.

Thank you,

Millie cat. x

[millie cat]

Waiver extended

 

 

FSA extends waiver to firms on complaints handling

 

 

 

FSA/PN/014/2009

22 January 2009

The Financial Services Authority (FSA) today extended its waiver from complaints handling rules regarding unauthorised overdraft charges, for up to six months. This is because the test case is ongoing, and it is not yet clear how the banks should be responding to complaints about unauthorised overdraft charges so that customers are treated consistently and fairly.

The waiver was due to expire on January 26. The extension has been offered to those firms who signed up to the July 2008 waiver. This represents approximately 98% of the market.

Whilst the waiver is in place, signatories will not be required to handle complaints relating to unauthorised overdraft charges within the time limits set out in the Dispute Resolution manual.

Dan Waters, director of Retail Policy and Conduct Risk at the FSA, said:

"Our objectives continue to be certainty over this complex issue, and a fair and consistent resolution of consumer complaints about unauthorised overdraft charges.

"The FSA has reviewed the prevailing circumstances and has decided to offer firms an extension to the waiver, to run for up to six months."

The FSA can revoke the waiver at any time if it considers a waiver is no longer appropriate, for example, if it no longer provides adequate consumer protection, or material progress is not being made in the test case, or a firm fails to comply with the conditions set out in the waiver.

The FSA first granted a waiver for 12 months from its complaints handling rules regarding unauthorised overdraft charges in July 2007. This was followed by a new waiver with a duration of six months in July 2008.

The waiver means that while it is in operation, any bank or building society granted the waiver will not be required to handle this type of complaint within the time limits set out in the FSA rules. The county courts have 'stayed' cases referred to them and the Financial Ombudsman Service has adopted a similar approach.

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Notes to editors

 

1. The waivers are available on the FSA website.
   
2. The waiver has been extended for up to six months. This is because the test case is ongoing and it is not yet clear how the banks should be responding to complaints about unauthorised overdraft charges so that customers are treated consistently and fairly.
   
3. The test case began in July 2007. There are two stages. The first explores the preliminary issues of banks’ terms and conditions and whether they are subject to Unfair Terms in Consumer Contract Regulations 1999 and whether they are capable of being penalties at common law. Stage two will deal with whether the terms are actually unfair and are actually penalties at common law.
   
4. On current terms and conditions, the High Court decided that the current terms and conditions could be assessed for fairness under the Regulations; were not capable of being penalties at common law; and were in, or largely in, plain intelligible language.
   
5. The banks appealed the High Court’s decision that current terms and conditions can be assessed for fairness. The appeal was heard by the Court of Appeal from 28 October to 5 November 2008. The Court of Appeal’s judgment has yet to be handed down.
   
6. For more detail follow the link for Moneymadeclear.
   
7. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
   
8. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
   
9. Posted by Amethyst on LB site
   

[Fred_Funk]

Guys

 

I'm completely flummoxed now and, with that in mind, would be really grateful if someone with a better grasp than me of exactly what this latest judgement means in laymen's terms.

 

My understanding is that the judge has ruled most of the banks' terms and conditions - with the exception of NatWest's pre-2003 - preclude their charges from being looked upon as penalties. That being the case, this means most claims will now be reliant on the UTCCR argument, on which we await a further ruling, if they are to succeed.

 

Am I right so far... yes/no/to an extent?

 

Assuming I am, then where does that leave, for instance, a NatWest claim where all the charges are pre 2003 (assuming, that is, the Statute of Limitations doesn't apply because the claimant has only recently become aware that the charges were unlawful)? Does it mean that any such claim is now assured of success or is it, as I fear, a whole lot more complicated than that? And, if so, how?

 

And finally, for all those claims that are now, apparently, dependent on the UTCCR argument, what's the state of play, ie when can we expect a ruling from the judge, on this?!

 

Thanks in anticipation

Fred_Funk

[Bookworm]

Hi Bookworm

Does this mean that i can claim charges going back 10-12 years as NatWest stiched us up when my husband was made redundent.

Thank you,

Millie cat. x

Only if you are prepared to argue that the charges should not be statute-barred under the Limitation Act 1980 s. 32. (relief as a consequence of a mistake/fraud/concealment). This is fairly unknown territory with few people taking this on, and the general wisdom has been for most people to only go back 6 years. I'd love to see it explored further, tbh, and I think that Martin3030 has a case where the issue will be dealt with, look at his threads (Barclays, I think).

[Bookworm]

My understanding is that the judge has ruled most of the banks' terms and conditions - with the exception of NatWest's pre-2003 - preclude their charges from being looked upon as penalties. That being the case, this means most claims will now be reliant on the UTCCR argument, on which we await a further ruling, if they are to succeed.

 

Am I right so far... yes/no/to an extent?

Yes.

Assuming I am, then where does that leave, for instance, a NatWest claim where all the charges are pre 2003 (assuming, that is, the Statute of Limitations doesn't apply because the claimant has only recently become aware that the charges were unlawful)? Does it mean that any such claim is now assured of success or is it, as I fear, a whole lot more complicated than that? And, if so, how?

More complicated than that. First of all, Natwest will fight on the grounds of the LA 1980 so that the penalties issue won't even be able to come in front of the judge. They'll claim statute-barred and as I have just said in my previous post, it is very untested territory.

If you manage to get it past the judge on s.32, it will then depend under which T&Cs your account was at any one point and I suspect that the confusion is not going to work in favour of the consumer. Musing on this, however, I do wonder whether there couldn't be a further argument to be used in terms of unfairness and lack of clarity, but I haven't really thought about it in depth.

And finally, for all those claims that are now, apparently, dependent on the UTCCR argument, what's the state of play, ie when can we expect a ruling from the judge, on this?!

Waiting on the Appeals court, and the answer to that is "how long is a piece of string?". As of now, the stay is extended, so....

[Fred_Funk]

Thanks for your response, which, to a large extent, confirms what I thought.

 

If, however, you could elaborate on this...

 

More complicated than that. First of all, NatWest will fight on the grounds of the LA 1980 so that the penalties issue won't even be able to come in front of the judge. They'll claim statute-barred and as I have just said in my previous post, it is very untested territory.

 

... I'd be most grateful, as I have no idea whatsoever what the LA 1980 refers to.

 

Also, I'm sure BankFodder was encouraging people to go back beyond six years and, while I appreciate it's not entirely clear cut, I thought there was now a school of thought that it really didn't ought to be too much of a problem?!

 

Thanks again for your input

Fred_Funk

[Bookworm]

Sorry, LA 1980 = Limitations Act 1980, which lays the 6 yrs limit you're familiar with.

 

s.32 allows for statute barred not to apply if it is for the relief of the consequence of fraud, concealment or mistake.

 

Anyone wanting to argue the charges shouldn't be statute barred will have to convince a judge that the banks either deliberately defrauded us when they charged us (I wouldn't even want to try to make that one fly), deliberately concealed the nature of the charges (unlikely to succeed as Smith J has handed them the non-penalty on a platter) or the mistake argument, and I believe that the argument you would then use would be that you paid the charges mistakenly believing that the banks were in the right to levy them.

 

BF did indeed encourage people to go back beyond 6 yrs, and may still be doing it, but I am more cautious. Having said that, I wouldn't have started CAG and he did, so there's something to be said for his methods.

 

If there is a school that thinks it's not much of a problem, I'd love to read about it and what makes them think so, it certainly would be great if that were the case.

[Chromatix]

I might have a set of "old" charges to test, from an HSBC account that was already closed when I did battle with Natwest. The only trouble is that I'm no longer resident in Britain, which makes it more complicated to file things and turn up in court if necessary.

 

I do think the test case has been done completely the wrong way. Rather than "OFT vs. Banks", this should have been done with a selection of actual consumer cases. As it stands, nobody seems to have any sense of urgency, and everyone is pondering over technicalities rather than logistics.

[Captain Rex]

BW can you help. Defence received today from Abbey on breach of contract. Should I now withdraw after todays decision can you advise how to proceed. No stay arrived with the defence and I am a hardship case so perhaps none will arrive. Should I end the case and reclaim after the test case.

Can I ask for a stay myself.

Thanks

http://www.consumeractiongroup.co.uk/forum/abbey-bank/179380-abbey-defence-received-help.html#post1934756

Edited January 22, 2009 by Captain Rex

[ukaviator]

This is causing a lot of questions about claims currently in the Court system. I have copied this across from the FSA to help people understand what has happened.

 

Test Case

 

21 January 2009

 

In the High Court today, the judge gave his decision on whether certain historic terms and conditions (see below) are capable of being penalties at common law. This follows a hearing held on 9 December 2008 to consider further submissions from Abbey, Lloyds TSB and the Royal Bank of Scotland Group (RBSG).

 

What did the judgment cover?

 

 

Today’s judgment covered whether the following historic terms and conditions are capable of being penalties at common law:

• Abbey's May 2005 conditions relating to its Instant Plus account;
  
• Lloyds TSB's terms; and
  
• RBSG's terms.
  

What did the judgment say?

 

The judge found that the terms are generally not capable of being penalties at common law. However there is one exception to this – one of RBSG's NatWest 2001 terms has been found to be capable of being a penalty.

 

Background to the test case

 

In July 2007, the Office of Fair Trading (OFT), seven UK banks (Abbey, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB and RBSG) and the Nationwide Building Society began a test case about unauthorised overdraft charges for personal customer accounts.

 

We are not party to the test case, but we have an interest in it, and give support where needed.

 

What is the case about?

 

 

The test case process is in two stages:

• Stage one is known as the 'preliminary issues process'. This looks at whether the banks’ terms and conditions are subject to the Unfair Terms in Consumer Contract Regulations 1999 (the Regulations); and are capable of being 'penalties' at common law.
  
• Stage two will deal with whether the terms are actually unfair and are actually penalties at common law.
  

What has happened so far?

 

The court has so far made the following decisions in stage one of the test case.

 

 

The High Court decided that the current terms and conditions:

• could be assessed for fairness under the Regulations;
  
• were not capable of being penalties at common law; and
  
• were in, or largely in, plain intelligible language
  

The banks appealed the High Court’s decision that current terms and conditions can be assessed for fairness. The appeal was heard by the Court of Appeal from 28 October to 5 November. We are now waiting for the Court of Appeal’s judgment to be handed down.

 

 

The High Court decided that the historic terms and conditions:

• could be assessed for fairness under the Regulations;
  
• were generally not capable of being penalties at common law.
  

However, there is one exception to this – one of RBSG's NatWest 2001 terms has been found to be capable of being a penalty.

 

The banks have appealed the High Court’s decision that historic terms and conditions can be assessed for fairness. The appeal has been put on hold until the judgment on the appeal of the current terms is handed down.

 

Complaints and FSA’s waiver

 

What is the waiver?

 

We granted firms a waiver so that they do not have to deal with complaints about unauthorised overdraft charges in the time specified under FSA rules. In effect banks and building societies can put customer complaints on this issue 'on hold' until the test case process is resolved.

 

The 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.

 

Why did we grant the waiver?

 

Until July 2007, some customers were being refunded unauthorised overdraft charges when complaining whilst others were not. We didn't believe this inconsistent approach was in the interests of all consumers. So on 27 July 2007, we granted a number of banks and building societies a 'waiver' to support the test case process.

 

How long will the waiver last?

 

The first waiver expired on 26 July 2008. We decided to grant a second waiver and this expires on 26 January 2009. This has been extended by a further waiver for up to six months (until 26 July 2009). We will continue to assess whether the waiver remains appropriate.

 

What does this mean for you?

 

If you've already 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 with your bank or building society?
   

Your complaint will remain with the bank or building society but will not be dealt with until the test case process is resolved, apart from financial difficulty cases.

 

 

Have a case on hold at the county court

 

The judge has indicated that in his view these cases should continue to be put on hold for the time being.

 

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 process is resolved.

 

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.

 

Are in 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. This may involve – or not – the repayment of charges.

 

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 process is resolved.

 

Wish to complain from today

 

You can complain now or you can wait until the test case process has been resolved. Your complaint will be recorded and stored. Your bank or building society will still have to acknowledge your complaint promptly and keep you updated on developments in the test case process.

 

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 2007. For example, if you are applying to reclaim charges for the last six years and the waiver was in place for two years, those two years would not count.

 

Want to complain to the bank about other issues

 

You can still use the existing complaints process for other financial complaints, 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.

 

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, then 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.

 

What if I am a Barclays customer?

 

Barclays introduced replacement terms and conditions on 18 August 2008. Our waiver does not cover complaints and charges set by these terms.

 

What does this mean for Barclays' customers:

 

If you want to complain about charges incurred on your personal account on or after 18 August 2008?

 

If you make a complaint about the new personal current account charges – i.e. those that are incurred on or after 18 August 2008 – Barclays will deal with your complaint in line with our complaint handling rules.

 

Barclays does not think that its new charges are unauthorised overdraft charges. As such, it does not think the outcome of the test case process will be relevant to the new charges. This is the reason why Barclays has not sought a waiver to cover the new charges.

 

If you do not accept a decision taken by Barclays about a complaint

 

You can take your complaint to the Financial Ombudsman Service. However, if the complaint relates to a charge incurred before 18 August 2008 the Ombudsman is unlikely to progress the complaint until the test case process is resolved (apart from financial difficulty cases). If your complaint relates to personal current account charges incurred on or after 18 August 2008, the Ombudsman will consider the complaint.

 

Barclays must let customers know what it is doing about a complaint. This is a requirement under the terms of the waiver and our complaint handling rules.

 

Will the current market affect the status of my complaint?

 

Your complaint will remain on hold while the test case continues and as long as we keep the waiver in place.

 

There are some links on the main page under more information:

 

Unauthorised overdraft charges : FSA Money made clear – News

Edited January 22, 2009 by ukaviator

[sparks199]

i just wanna say that taking your complaint to the Ombudsman on the grounds of financial difficultywill do nothing

 

i made my claim at the end of june2007 just before the test case .

the banks took so long to get back to me that it then came under the waive on the 27th of july

 

in november of 2007 i sent my letter to lloyds back about my financial difficulty and hardship they didnt repond untill jan 2008 .

 

i wasnt happy with there reponce to my hardship claim

so i got in touch with the Ombudsman in march of 2008

 

and in dec 2008 the ombudsman adjudiactor wrote to me ..yes thats 9 months it took them to reach there findings

 

my hardship is im on income support i have rent arrears ,gas arrears, phonebill arrears credit cards arrears all 5 of them .. plus the bank have put on £2350 in charges

on my account since june 2007

£1790 in charges since my hardship claim .

the ombudsman wrote :

after 9 months

lloyds tsb has explanied to us that it has agreed to suspend future interest and charges from being applied to your account .this means that the outstanding debt you owe to the bank will not increase.however, this does not mean that the bank will suspend the pursuit the outstanding debt.if you would like to come to a repayment arrangement for the amount you owe, then it may be beneficial to contact lloyds tsb

as explained, the bank is under a duty to treat cases of financial difficulty positively and sympathetically.

but that does not mean that there is any kind of financial difficulties 'threshold' which,once reached,triggers a refund of charges

for these reasons i am persuaded that the bank is not under an obligation to do any more at this stage .

lloyds tsb appears to be treating your financial difficulties positively and sympathetically.Accordingly,i do not think that your complaint should proceed.

yours sincerely

sam wedderburn

adjudicator

what a joke they have acted positively, yeah by chargeing £1790 since put into hardship

[Guest CHEVRA]

i am applying to HMCS to have the stay on my case lifted. The FSA ruling was cases would eb put on hold on the basis the it caused no detriment to the claiment.

 

Financila hardship and still adding fees on every month is detriment to me. Its worth the £40 fee

[caro]

In case anyone's missed this. The Consumer Forums - NatWest historical terms are penalties - Official!!!