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State of play - facts and myths

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There is a lot of confusion regarding this, especially given the reporting that's been going on. Here's a brief rundown of where things stand (probably). Fact-check this against the real thing: http://www.supremecourt.gov.uk/docs/uksc_2009_0070_judgmentV2.pdf


TL;DR version: DON'T PANIC


1. "The banks have won the case." FACT, though this probably doesn't mean what you think it means.


51. For these reasons I would allow the appeal.

90. My conclusions accord with those of Lord Walker and, for the reasons that he gives as well as my own, I would allow this appeal.

92. For the reasons given by Lord Walker and Lord Mance, I too would allow this appeal and make the declaration proposed by Lord Walker.

118. I would therefore allow the appeal and grant the relief proposed by Lord Walker in paragraph 51.

119. I also would allow this appeal for the reasons given by Lord Walker and Lord Mance, and would grant the relief proposed by Lord Walker in paragraph 51.


However, note the nature of the case:


19. ... the OFT on 27 July 2007 issued proceedings in the Commercial Court seeking a declaration that Regulation 6(2) did not apply to the banks’ Relevant Terms then current.


For those not aware, 6(2) puts that the price of something is not in and of itself subject to the test of fairness.




51. ... The declaration sought by the banks in their counterclaims is inappropriate for the reasons explained by Lord Phillips at the beginning of his judgment.


The banks have won their defence, but not their counterclaim. In other words, "this far, and no farther".


2. "It's all over." MYTH


1. ... It is therefore appropriate to spell out at the outset that the Court does not have the task of deciding whether the system ... is fair.


It means the OFT cannot pursue their action on the basis that the term is unfair, which makes sense, because they're not - it has been the way in which the banks have applied the terms which is objectionable. In a roundabout way, the Court has said that the issue is in the amounts, which is something they can't directly regulate in this way.


59. ... In that event, while it would not be open to the OFT to assess the fairness of the price by reference to the adequacy of the goods or services supplied in exchange, it would be open to the OFT to assess the fairness of the price according to other criteria.


3. "That's put an end to that." MYTH


47. ... Charges for unauthorised overdrafts are monetary consideration for the package of banking services supplied to personal current account customers. They are an important part of the banks’ charging structure, amounting to over 30 per cent of their revenue stream from all personal current account customers. The facts that the charges are contingent, and that the majority of customers do not incur them, are irrelevant.


51. ... I would declare that the bank charges levied on personal current account customers in respect of unauthorised overdrafts (including unpaid item charges and other related charges) constitute part of the price or remuneration for the banking services provided ...


This rules some things out, and brings other things in. This case has not (as I understand it, and I could still be wrong) explicitly ruled out the argument that the fees are a remedy for a breach of contract, so the penalty line is potentially still open. Regulation 5(1), the "significant imbalance" test, is still very much live. There may also be a point to be made under the Supply of Goods and Services Act, which requires that a price is "fair and reasonable", though I'll leave it to someone else to sort out the details.


4. "There's a general stay." FACT (sort of)

5. "This has only set things back further." MYTH


Most stays have been on the basis of waiting until the matter has come to court and been decided, which it now has. The general stay in most local courts likely hasn't been lifted and won't be for a while, but an application to lift it should be allowed (cost reclaimable?). New claims should be able to proceed unhinidered. As I understand it, the Waiver has mattered not in court.


Had the OFT won, this would have dragged on with the investigation itself, and the potential legal challenges to the findings, before anything is done. As a result of this decision, we can all get back to work now.




A reminder that this is a brief lay analysis, and any part of this post may be wrong, including this sentence. If it is entirely wrong, a moderator should kill it with fire at the earliest convenience.

HSBCLloyds TSBcontractual interestNew Tax Creditscoming for you?NTL/Virgin Media


Never give in ... Never yield to force; never yield to the apparently overwhelming might of the enemy. Churchill, 1941

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after reading the judgement more i agree, i believe now that the SC has actually made it easier and quicker to move forward, its a false victory for the banks, i also think that all stays may be lifted automatiacally, we are now in the same position as we were before the test case started. if the oft had won like was said before it would have dragged this out even longer, this way i believe we can move forward

TOTALLY debt free as of 2007, Fantastic,

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my reading the judgement is an ongoing thing, i am not a solisitor so in my limited brain capacity (according to my daughter lol) it may take a while to finnish

TOTALLY debt free as of 2007, Fantastic,

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