Oft Test Case - Next Important Date?

[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

[ukaviator]

Bank charges appeal is thrown out

 

 

An appeal by eight banks against a ruling that a regulator can investigate the fairness of overdraft charges has been thrown out.

 

The Appeal Court ruled that the Office of Fair Trading (OFT) has the power to look into the issue. Master of the Rolls Sir Anthony Clarke said the banks could not appeal against the decision in the House of Lords. Tens of thousands of claims currently on hold in the English and Scottish legal systems will stay frozen.

 

Sir Anthony dismissed the appeal and told the banks they should now allow the OFT to decide whether their charges were fair or not. However, cases will stay frozen until the OFT has concluded its investigation.

 

Unanimous decision

 

The banks had argued that their overdraft charges fell outside the scope of the 1999 Unfair Terms in Consumer Contracts regulations.

 

However, the three Appeal Court judges rejected this. "We have unanimously concluded that the application should be refused," said Sir Anthony.

 

"The issues should now be resolved by an OFT assessment of fairness." If the banks wish to appeal further they will have to appeal directly to the House of Lords for permission.

 

Bank charges campaigners were delighted with the Appeal Court ruling. Chris Warner, of the consumers' association Which?, said: "It is great to see the Court of Appeal being so unequivocal in their guidance to the banks that this is the end of the road.

 

"They should now let the OFT do its job. The banks have the right to appeal to the House of Lords but the Court of Appeal could not have been clearer that that is not the appropriate way to go forward."

 

The British Bankers' Association (BBA) said: "These are important points of law. The courts can now go on to clarify the fairness of charges. Before that can happen the Office of Fair Trading [OFT] has to provide the courts with its views on how charges should be assessed."

 

Next stage

 

This is the latest stage of litigation between the OFT and eight banks which started in July 2007.

 

Since then, tens of thousands of claims for the return of overdraft charges have been frozen in the English and Scottish legal systems waiting for a test case to eventually decide if bank overdraft charges are fair or not. If the OFT ultimately wins the case, several billion pounds could potentially be refunded to millions of bank customers.

 

The banks must now decide if they wish to argue over the OFT's jurisdiction to the House of Lords or whether they should now proceed to a second round of court hearings over the issue of fairness itself.

 

Alternatively, they could try to cut a deal with the OFT to short-circuit the whole process if they felt they were likely to lose. A spokesman for the British Bankers' Association said: "These are important points of law. The courts can now go on to clarify the fairness of charges. Before that can happen the Office of Fair Trading has to provide the courts with its views on how charges should be assessed."

 

BBC Link here:

 

BBC NEWS | Business | Bank charges appeal is thrown out

[ukaviator]

Statement on Bank Charges Test Case From The BBA.

 

""The court has not said fees are unfair just that they can be looked at to see if they are fair or not. The banks continue to believe that the Regulations do not apply to these type of charges. The banks will apply to the House of Lords for permission to appeal the Court of Appeal's decision. The banks will work with the OFT to ensure the next stages in the test case process are progressed as quickly as possible.""

 

 

BBA – British Bankers' Association - Statement on Bank Charges Test Case