Sheriff puts Bank of Scotland to proof on bank charges

[Aequitas]

the SC left the door open for claims under other sections of the regs

 

It is I fear the case that the SC declined to rule other parts of the regs out, rather than ruling them in. Appellate courts never like to rule things out.

[JonCris]

It is I fear the case that the SC declined to rule other parts of the regs out, rather than ruling them in. Appellate courts never like to rule things out.

 

Quite & the SC should have referred it to Europe

[rdm2006]

It is I fear the case that the SC declined to rule other parts of the regs out, rather than ruling them in. Appellate courts never like to rule things out.

 

Sorry did I miss something ?

 

Johnny Mitch did not claim that they had been ruled in - did he ???. If he did and it has been deleted - I apologise

 

The courts usually only cover what is put before them so why would they rule the rest in or out ??

 

This judge, however, went out of his way to state that his ruling did not mean that they could not be challenged for other reasons......

 

That is the way I understand it - unless of course I am wrong lol

 

No offence meant - just want to be clear

[JonCris]

IMHO the court erred in that they did not consider the Francovitch Principal. They should have ruled on ALL aspects of the matter including fairness & not just the narrow arguments used. In other words they should have scrutinized the WHOLE of the contract to see if it complied FULLY with the law

[Carningli]

Not only that cited by JonChris re Francovitch Principal, but the SC(Supreme Court) very much introduced an "in" argument by stating that "charges are core business of the Banks". In all the 56 years that I have held bank accounts that principal was never introduced to myself. So when did these punitive charges become core business?

 

Carningli

[JonCris]

We're all wondering that BUT then it does pay for all of the FREE banking if you want to believe the banks that is, the SC certainly did

[rdm2006]

Not only that cited by JonChris re Francovitch Principal, but the SC(Supreme Court) very much introduced an "in" argument by stating that "charges are core business of the Banks". In all the 56 years that I have held bank accounts that principal was never introduced to myself. So when did these punitive charges become core business?

 

Carningli

 

Whenever it suits the banks - of course

[Aequitas]

It still remains the fact that you need to get over Regulation 6(2) of the UTCCR which says that the assessment of fairness shall not relate to the subject matter of the contract or the price payable.

 

If (forgetting about bank charges if you can) you look at the UTCCR and ask: “What is their main thrust” I think the answer you will come up with is that they are to protect consumers against “the small print” and not to regulate prices. The SC got back to basics. It said that the idea that you could shunt bank charges into some “ancillary” slot to avoid Regulation 6(2) was overelaborate and misconceived having regard to the mischief that the UTCCR were intended to address. The SC found that bank charges were consideration for banking services and the fact that you only paid them if you went into the red and that most bank customers did not pay them was irrelevant. Having regard to what the UTCCR plainly say I think that was the correct conclusion and did not need to be referred to the ECJ.

[Dougal16T]

Good morning all,

 

At last someone has turned on the light in the darkness.

 

Many thanks Mike

 

Best wishes to all

 

Dougal

Edited September 14, 2010 by Dougal16T
Poor spelling....again....!!

[johnnymitch]

Not to be picky JM but the same section of the regs can still be used but the REASON/ARGUMENT can not be based on level/price.

 

sorry just to be clear ......

 

Hi rdm , Thanks for that , it's what I meant ,but it didn't come across like that (re-reading it ! )

 

as for your other comment , - no you didn't miss anything , that's exactly as I posted it .... nothing added , nothing deleted ...

[rdm2006]

It still remains the fact that you need to get over Regulation 6(2) of the UTCCR which says that the assessment of fairness shall not relate to the subject matter of the contract or the price payable.

 

Not quite

 

The fact is we need to get over regulation 6(2)(b) not the whole of 6(2) see below taken from http://www.supremecourt.gov.uk/docs/uksc_2009_0070_ps.pdf

 

The Court of Appeal was wrong to find that Regulation 6 (2) (b) did not apply to charges that

were ‘ancillary’ to the core contract between the bank and customer (Paras 38-41, 47, 78, 112).

Lord Walker commented that Regulation 6 (2) (b) contained no indication that only the

‘essential’ price or remuneration was relevant. In fact, any monetary price or remuneration

payable under the contract would naturally fall within the language of Regulation 6 (2) (b)

The charges are referred to as "ancillary" and not as "core" as banks would have us believe. The court is saying that there is nothing in 6(2)(b) which prevents it from being applied to ANY price or remuneration be they a main or ancillary part of the contract.......... Therefore, 6(2)(a) does not make them exempt as the main subject matter, because they are not.

Edited September 14, 2010 by rdm2006

[Aequitas]

The charges are referred to as "ancillary" and not as "core" as banks would have us believe. The court is saying that there is nothing in 6(2)(b) which prevents it from being applied to ANY price or remuneration be they a main or ancillary part of the contract.......... Therefore, 6(2)(a) does not make them exempt as the main subject matter, because they are not.

 

I think you are going to have to run that past me again as it seems that the quotation supports what I say. I refer you to paragraphs 38 et seq of the SC judgement. The court stressed that in a contract for goods or services no enquiry could be made to establish whether some goods or services were more essential than others. There is nothing about contracts for banking services that sets them apart from other contracts in this respect.

 

What is unusual about banking services is some customers incur charges and some do not. The correct analysis of a contract for a free-if-in-credit current account is this:

 

1. The bank imposes charges for providing services.

 

2. If the account is kept in credit charges for specified range of services are waived.

 

Viewed this way it can be seen that free banking is a concession and, more importantly, that charges are not payable in case of default.*

 

The fact that contracts for banking services operate in ways different from most other types of contract (and in particular that they produce the result that over all the cost of providing services is met by a minority of customers) does not alter the fact that in essence they are not significantly different from any other contract for services. There is therefore no argument for challenging charges on the grounds that they relate to ancillary services or are in the nature of penalties.

 

*Of course this is not how people view the position because if you go into the red you incur charges - in every day terms you are "penalised". The disappointment felt after the SC decision can in large measure be attributed to the fact that people's expectations were based on the assumption that every day terms and legal terms matched. People said that bank charges were" penal" (meaning "excessive") and concluded that they were contractual penalties. People said that bank charges were "unfair" and therefore the Unfair Terms in Consumer Contracts Regulations somehow confirmed the fact. Attempts to discuss the matter rationally were on the whole met by arguments such as "It stands to reason", "How come no one else thinks that way?" and "Who are you?"

[Bigdebtor]

Aequitas

 

That's a very clear explanation of something I just could not get to grips with. I just always went on the "stands to reason" route and was gobsmacked last November. However I think I'm beginning to understand the position of the Banks in this (OH DEAR!!!). I do stress that's "understand" - not "sympathise" or "agree with".

 

However what about the early letters from Bank of Scotland etc. which I still have? They said "you will understand this does cause the Bank additional work" and "to cover our costs we are...." .

 

Is it something like that (justifying their costs as actually being £39 to write a letter) that is the nub of the Sharp v BOS case here - or has it now moved on to other grounds?

 

BD

[rdm2006]

I think you are going to have to run that past me again as it seems that the quotation supports what I say. I refer you to paragraphs 38 et seq of the SC judgement. The court stressed that in a contract for goods or services no enquiry could be made to establish whether some goods or services were more essential than others. There is nothing about contracts for banking services that sets them apart from other contracts in this respect.

 

Your original statement was

 

It still remains the fact that you need to get over Regulation 6(2) of the UTCCR which says that the assessment of fairness shall not relate to the subject matter of the contract or the price payable.

 

This would mean that we have to overcome 6 (2) (a) and 6 (2) (b)

 

6. (2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate-

 

(a) to the definition of the main subject matter of the contract, or

 

(b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.

 

The SC did not proclaim that the charges were main subject matter ("Core") therefore they are NOT exempt by (a) and (b) they are only exempt by (b) and they can, therefore, be tested for fairness for any other reason than price/remuneration.

 

So for example they could be challenged for fairness as there is no provision for the consumer to charge the banks when they have failed to credit monies to the account (UTCCR Schedule 2 (1) (d))

 

(d) permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract;

 

 

i.e. I pay in £100 to my account to cover a D/D. This is then credited to a wrong account, the D/D is refused and a £38.00 charge is raised.

 

when all is sorted out - all i get is the removal of the charge and if i am very lucky an apology and perhaps £5 to shut me up

 

Therefore, I am at the mercy of the banks to decide if I get anything at all

 

A fair system would mean that I automatically get a refund of £38.00 to correct their charge plus a Further £38.00 as it was they, not I, who failed to credit the account to cover the D/D

Edited September 15, 2010 by rdm2006

[enaid]

http://www.supremecourt.gov.uk/docs/...09_0070_ps.pdf

 

''Regulation 6(2)(b) states that the assessment of the fairness of a term in a contract “shall not relate . . .to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”.''

 

''In other words, the “value for money” equation is excluded. The Court of Appeal held that this exclusion applied only to the “core terms” of the contract and not

to ancillary terms such as the charges for unauthorised overdrafts. The Supreme Court unanimously held that the charges for unauthorised overdrafts fell within this exclusion. They were part of the price paid by the customer for the banking services provided.''

__________________

[Bigdebtor]

RDM

 

I like (and agree with) your logic. I just wish we could get a court to do so!

 

What you say is also only fair - but logic and fairness don't seem to cut any ice with the establishment.

 

I do hope Glasgow Sheriff Court can show I'm being unfair to them by assuming they'll probably end up supporting the unfairness shown to us.

 

I also wish they would get on with it! It seems to be taking for every what with the Banks' delaying tactics.

 

Can anyone throw any light on how much longer we'll have to wait before we even get to the next step?

 

BD

[rdm2006]

The point I am making is that we do not have to overcome section 6 (2) as said by Aequitas. This implies that it is one item, it is not, it is split into two parts - (a) and (b) {(a) being subject matter and (b) being price/remuneration}.

 

The judge ruled that they were exempt due only to (b) not (a) and (b)

Edited September 17, 2010 by rdm2006

[enaid]

I think Aequitas is right. The Supreme Court found that both (a) and (b) apply. In particular exemption (a) applied by virtue of the cross subsidy argument which the court found as ''core'' to the bargain.

 

''Even if the Court of Appeal’s interpretation had been correct, I do not see how it could have come to the conclusion that charges amounting to over 30 per cent of the revenue stream were (para 111) “not part of the core or essential bargain.”

 

(SC judgment page 22) http://www.supremecourt.gov.uk/decid...0_Judgment.pdf

[rdm2006]

(SC judgment page 22) http://www.supremecourt.gov.uk/decid...0_Judgment.pdf

 

That link appears to lead to the judgement of allowing the appeal to proceed and not to the judgement of that appeal.

 

Does anyone have a link to (or a copy of) the judgement

Edited September 18, 2010 by rdm2006

[enaid]

Certainly

 

http://www.supremecourt.gov.uk/decided-cases/cases_9.html

[rebel11]

The surprising thing is that the banks moved from 'they didn't make any profit from the charges, they only cover their costs' to 'it's part of their core business', in the same context, why can't I change the terms and conditions they send to me from 'charges' to 'no charges'?

[rdm2006]

Certainly

 

http://www.supremecourt.gov.uk/decided-cases/cases_9.html

 

 

Thanks enaid, I have already tried that but for some reason it only gives the link you have already given.............strange

 

You can tell its not the one as lady hale compared the charges to a loaf of bread - that is not in the link you have given.

 

Which is why i think it is judgement for the appeal to proceed and not the judgement of the appeal itself..................

 

Rebel11 does the site still have a copy somewhere ??

Edited September 18, 2010 by rdm2006

[enaid]

Maybe you will find the one you want on here

http://www.oft.gov.uk/OFTwork/markets-work/completed/personal/personal-test-case/personal-documents

[rebel11]

Hi RDM2006

 

Must be somewhere on the site, I'll have a look and see what I can find.

 

Probably in enaid's link

 

 

 

Thanks enaid, I have already tried that but for some reason it only gives the link you have already given.............strange

 

You can tell its not the one as lady hale compared the charges to a loaf of bread - that is not in the link you have given.

 

Which is why i think it is judgement for the appeal to proceed and not the judgement of the appeal itself..................

 

Rebel11 does the site still have a copy somewhere ??

[Aequitas]

Lady Hale summed the whole problem up with these words:

 

Should financial services be treated differently from other goods and services? Or is the real problem that we do not have a real choice because the suppliers all offer much the same product and do not compete on some of their terms? This is the situation here. But it is not clear to me whether the proper solution is to find some way of forcing the suppliers to compete with one another in the terms they offer or whether the solution is to condemn one particular model of charging for those services. Fortunately, however, that is for Parliament and not for this Court.

 

In other words: "Don't look to the law as it is to challenge bank charges."