Sheriff puts Bank of Scotland to proof on bank charges

[JonCris]

Sorry Sue but the learned lady is I believe wrong We use the courts all time to challenge both business practice AND government doctrine & sometimes we win

[Falkirk1298]

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'?

 

This is the bit I can't get my head round. The banks changed their tune at the last minute and in doing so conceded that they had been lying to their customers for years. However no-one, least of all the institutions who are supposed to protect the rights of the customer, have called them on it. Presumably it's OK to be dishonest in your dealings with your customers, so long as you're not caught telling porkies to the Supreme Court.

[rebel11]

When the Chief Executives of banks have visited the Treasury Committee over many years to give evidence, theres probably a lot of info thats been transcripted, that can be used.

 

http://www.publications.parliament.uk/pa/cm200304/cmselect/cmtreasy/uc1177-ii/1177m02.htm - 1) transaction/penalty fees

 

From November 2004.

[Aequitas]

The way I see it is this:

 

1. If you have a contract that says you will pay for certain services then you have to pay for those services so long as how the charges will be calculated are set out in plain intelligible language. This will be the case even if the charges are for a service you may only use occasionally or you do not have to pay for the service in certain circumstances, e.g in the case of a current account so long as your account remains in credit.

 

2. If the contract says that if you fail to comply with an obligation you have to pay a charge that is different; the term is capable being assessed under the UTCCR.

 

This why on the whole bank charges are going to be difficult to challenge under the UTCCR. It is also why the OFT was able to get credit card companies to cut the charges they levied for failing to make a minimum payment within the time limit specified.

[seriously fed up]

But in running a current account is there not an obligation to maintain the account funds (or live within the overdraft agreed)?

So for instance, your first category might be that I decide to use the service that i have contracted with the bank for - an agreed overdraft of (lets say) £1000. That will attract a cost (probably some rate of daily interest). I dont think anyone is complaining about that. Nor is this sort of thing the target of the the type of case being brought by GLC.

Your first category though is where, for whatever reason - lets say absent mindedness/ cant count - I go over my overdraft of £1000. I dont have a set of bank T&Cs around so I stand to be corrected, but isnt there an obligation on me not to go beyond this. I can still remember my "first" bank manager telling me "no mun no fun". I am obliged not to go beyond my spending limit, and when/if I do then I have to pay a charge.

So following your own logic Aequitas, the type of case being brought by GLC is amenable to UTCCR.

Indeed to go a little bit further, one is obliged to make a payment to a cc company by a date they specify in the statement. One is obliged to live within the positive balance of one's bank account, or, failing that, one's agreed overdraft limit. If you dont do either of these things you are in breach of an obligation. What's the difference?

Edited September 21, 2010 by seriously fed up
eleborate point

[rdm2006]

The way I see it is this:

 

1. If you have a contract that says you will pay for certain services then you have to pay for those services so long as how the charges will be calculated are set out in plain intelligible language. This will be the case even if the charges are for a service you may only use occasionally or you do not have to pay for the service in certain circumstances, e.g in the case of a current account so long as your account remains in credit.

 

2. If the contract says that if you fail to comply with an obligation you have to pay a charge that is different; the term is capable being assessed under the UTCCR.

 

This why on the whole bank charges are going to be difficult to challenge under the UTCCR. It is also why the OFT was able to get credit card companies to cut the charges they levied for failing to make a minimum payment within the time limit specified.

 

What about agreements with loan sharks ? - Are you saying tuff you signed up for it ?

[Aequitas]

But in running a current account...What's the difference?

 

Your argument is not unreasonable, but has been knocked on the head by the court. I quote from the SC decision:

 

When the relevant facts are viewed as a whole, it seems clear that the Relevant Charges are not concealed default charges designed to discourage customers from overdrawing on their accounts without prior arrangement.

 

and

 

I have formed the conclusion that the Relevant Charges are, as the Banks submit, charges that they require their customers to agree to pay as part of the price or remuneration for the package of services that they agree to supply in exchange.

[Aequitas]

What about agreements with loan sharks ? - Are you saying tuff you signed up for it ?

 

No.

[seriously fed up]

Your argument is not unreasonable, but has been knocked on the head by the court. I quote from the SC decision:

 

When the relevant facts are viewed as a whole, it seems clear that the Relevant Charges are not concealed default charges designed to discourage customers from overdrawing on their accounts without prior arrangement.

 

and

 

I have formed the conclusion that the Relevant Charges are, as the Banks submit, charges that they require their customers to agree to pay as part of the price or remuneration for the package of services that they agree to supply in exchange.

 

Of course, this wouldnt be the first time that even a SC decision would be overturned (or better still by-passed). But in any event, it does seem to me that neither quote rules out an action based on UTCCR on the basis of there being a fundamental obligation on the customer to keep the account within a pre-agreed limit, OR you get charged.

Your first quote really only says that the charges are not concealed - and I suppose to be fair they are not concealed (though the possible consequences arent exactly sketched out in black and white). I do though find the idea that they arent there as a discouragement a bit hard to take - I mean, if you go overdrawn they will charge your £30 a day + charge for however many items they return unpaid - that does seem to me to be kind of discouraging (to put it mildly!)

And this is really the issue about your second quote - that the charges are the price or remuneration for a package of services. BUT £30 a day is reserved for if you go overdrawn (or excessively so). Its a charge if you dont meet your obligations to the bank. Indeed the item that takes you overdrawn might not be paid. For instance you are within, lets say, £20 of your limit and a SO for £25 is due, so they dont pay it and charge you for the privilege, so that puts you £10 over your limit, so if you dont suss it that day, the next day its another £30, so now you are £40 over ...... and so it goes. All of this stems from the obligation to stay within your limit.

Edited September 21, 2010 by seriously fed up

[rebel11]

Even the banks didn't think they were going to win the day in the Supreme Court, it came as a shock and a pleasant surprise to them. What came across from the

Supreme Court was that Bank Charges were part of their 'core' business. The banks didn't tell anyone of their customers that the charges were part of their 'core' business. In fact the banks lied to justify the charges - so yes the true nature of the charges was concealed from their customers. Thats 'good faith' blown out of the water. If a business is going to make money out of Joe Public, Joe Public generally has the heads up that it's happening, with the bank's we don't make a profit, it just covers our costs.

[means2anend]

quote Rebel

 

'The banks didn't tell anyone of their customers that the charges were part of their 'core' business. In fact the banks lied to justify the charges - so yes the true nature of the charges was concealed from their customers''

 

 

Good Point!!!

 

m2ae

[rdm2006]

If it is supposed to be "Good Intelligible English" can some one please explain how (a) "Our charges are a reasonable admin/maintenance fee" is translated into (b) "our charges are a cross subsidy for free if in credit banking system"

 

No one (even with the highest level of intelligence) would derive (b) from (a).

[enaid]

Plain intelligible language is a UTCCR requirement of contract terms only. A description of a bank’s business model or revenue breakdown is not a contractual term or a regulatory requirement I’m afraid.

__________________

[rebel11]

When the UK banks gave evidence to the House of Commons Treasury Committee on how

bank charges were calculated they said:

"[bank charges] are going to pay for all the people we have who pursue debt, collect

debt, speak to customers and chase payments. The way these charges are arrived

at is by taking these total costs and making some assumptions about the volume

that is going to come through to arrive at the individual charges" (House of

Commons, 2nd report, 25 January 2005, paragraph 50 – online here:

http://www.parliament.the-stationeryoffice.

co.uk/pa/cm200405/cmselect/cmtreasy/274/27405.htm).

[enaid]

I don't dispute that but looking at it objectively I believe that there is no legal case for historic misrepresentation and the Supreme Court made that clear in it's judgment:

 

http://www.supremecourt.gov.uk/decid...0_Judgment.pdf

 

''88. When the relevant facts are viewed as a whole, it seems clear that the Relevant Charges are not concealed default charges designed to discourage customers from overdrawing on their accounts without prior arrangement. Whatever may have been the position in the past, the Banks now rely on the Relevant Charges as an important part of the revenue that they generate from the current account services. If they did not receive the Relevant Charges they would not be able profitably to provide current account services to their customers in credit without making a charge to augment the value of the

use of their funds.

[rdm2006]

Plain intelligible language is a UTCCR requirement of contract terms only. A description of a bank’s business model or revenue breakdown is not a contractual term or a regulatory requirement I’m afraid.

__________________

 

Strange ........... it appears as a term in the terms and conditions ?????? (a) that is not (b)

[rdm2006]

When the UK banks gave evidence to the House of Commons Treasury Committee on how

bank charges were calculated they said:

"[bank charges] are going to pay for all the people we have who pursue debt, collect

debt, speak to customers and chase payments. The way these charges are arrived

at is by taking these total costs and making some assumptions about the volume

that is going to come through to arrive at the individual charges" (House of

Commons, 2nd report, 25 January 2005, paragraph 50 – online here:

http://www.parliament.the-stationeryoffice.

co.uk/pa/cm200405/cmselect/cmtreasy/274/27405.htm).

 

 

I'm sure that I have read on this site (debt collection forum probably) that the above is not the correct/lawful way to calculate such a cost as each and every customer is a potential bad payer at some time (ranging from bad finances to plain old forgetfulness)

Edited September 22, 2010 by rdm2006

[rdm2006]

I don't dispute that but looking at it objectively I believe that there is no legal case for historic misrepresentation and the Supreme Court made that clear in it's judgment:

 

http://www.supremecourt.gov.uk/decid...0_Judgment.pdf

 

''88. When the relevant facts are viewed as a whole, it seems clear that the Relevant Charges are not concealed default charges designed to discourage customers from overdrawing on their accounts without prior arrangement. Whatever may have been the position in the past, the Banks now rely on the Relevant Charges as an important part of the revenue that they generate from the current account services. If they did not receive the Relevant Charges they would not be able profitably to provide current account services to their customers in credit without making a charge to augment the value of the

use of their funds.

 

The charges may not have been concealed, however, their TRUE nature has!

[Aequitas]

In Monty Python and the Holy Grail the Black Knight is completely dismembered by King Arthur, but still challenges him, as he rides off, to come back and fight fight like a man. Many contributors to this and similar threads remind me of the Black Knight. Maybe bank customers have not been completely dismembered, but they are hobbling about on one leg.

 

Many comments made about banks are perfectly valid, but have no relevance to the question of how the UTCCR apply to bank charges. Anyone can quote from the SC decision and someone else can comment on it, but the only way to understand the full impact of the decision is to read the judgement in full. Anyone with a serious interest in the question of bank charges has to do that. The judgement is not an easy read, even for a lawyer, but really no one can justify expressing an opinion on the judgement if they have not read it. I have read the judgement and am satisfied that having regard to the law as it is the SC came to the right decision. I say that because I sincerely believe it and not just because it accords with with I was saying on this site in 2007.

 

I almost feel that the banks welcome the controversy about bank charges (and bonuses) scandalous as both are, because it is a distraction from the real scandal, which is that the actions of the banks have shredded the economy. An unholy alliance between the forces of reaction and the banks led many to believe that the financial crisis was caused by the previous government. The people of the UK are now faced with swingeing cuts in public services and large numbers of public sector workers being put on the dole because, instead of taking to the streets in protest, they have elected to power parties who are prepared to make the less well off pay for the mistakes of the banks.

[rdm2006]

In Monty Python and the Holy Grail the Black Knight is completely dismembered by King Arthur, but still challenges him, as he rides off, to come back and fight fight like a man. Many contributors to this and similar threads remind me of the Black Knight. Maybe bank customers have not been completely dismembered, but they are hobbling about on one leg.

 

Many comments made about banks are perfectly valid, but have no relevance to the question of how the UTCCR apply to bank charges. Anyone can quote from the SC decision and someone else can comment on it, but the only way to understand the full impact of the decision is to read the judgement in full. Anyone with a serious interest in the question of bank charges has to do that. The judgement is not an easy read, even for a lawyer, but really no one can justify expressing an opinion on the judgement if they have not read it. I have read the judgement and am satisfied that having regard to the law as it is the SC came to the right decision. I say that because I sincerely believe it and not just because it accords with with I was saying on this site in 2007.

 

I almost feel that the banks welcome the controversy about bank charges (and bonuses) scandalous as both are, because it is a distraction from the real scandal, which is that the actions of the banks have shredded the economy. An unholy alliance between the forces of reaction and the banks led many to believe that the financial crisis was caused by the previous government. The people of the UK are now faced with swingeing cuts in public services and large numbers of public sector workers being put on the dole because, instead of taking to the streets in protest, they have elected to power parties who are prepared to make the less well off pay for the mistakes of the banks.

 

I too have read it (although i wish i could find it to read it again) and in paragraph 80 lord whoever clearly stated that they could be challenged under UTCCR 5 (1) for other reasons......

Edited September 23, 2010 by rdm2006

[Bigdebtor]

Aequitas

 

I totally agree with your final paragraph. I don't understand how people can be duped so easily - or why we can't get a new publicly owned bank (even if only Post Office or NS&I?) which will treat customers fairly and then we could all vote with our feet and leave the current lot of bankers to stew in their own mess. I hope (but don't expect) Vince Cable can get his bed fellows to desert their city pals and give the people a chance to avoid further profiteering and exploitation by these parasites.

 

On the topic of bank charges I don't know enough to disagree with you but I do still hope the Scottish Sheriff Court can get us some justice - at least regarding the bank charges for the period when they were lying and saying the charges were "to cover our costs". I don't understand how that is compatible with their later arguments to the SC. At least one set of statements must have been lies! However I do realise that common sense and justice don't have much to do with "the law".

 

BD

[rdm2006]

Another 2 points are that my contract states that when certain events happen i am to pay a fee for services described as administrative costs.

 

Nowhere does it say i have to pay a fee for services described as a cross subsidy for free if in credit banking should those same circumstances arise therefore i am under no contractual obligation to pay such a fee (am I) ?

 

so - since i have no obligation to pay those fees and they have deducted them anyway is that not theft????

 

 

And under the sale of goods act 13 (1) Where there is a contract for the sale of goods by description, there is an implied term that the goods will correspond with the description.

 

Given that contract terms and conditions state that the charges for the service provided are for administrative costs but have now been declared as a cross subsidy then is that not also a breach of that act.

Edited September 23, 2010 by rdm2006

[Michael Browne]

Too have read it (although i wish i could find it to read it again) and in paragraph 80 lord whoever clearly stated that they could be challenged under UTCCR 5 (1) for other reasons......

 

http://lmgtfy.com/?q=oft+v+abbey+national+supreme+court

[seriously fed up]

When the UK banks gave evidence to the House of Commons Treasury Committee on how

bank charges were calculated they said:

"[bank charges] are going to pay for all the people we have who pursue debt, collect

debt, speak to customers and chase payments. The way these charges are arrived

at is by taking these total costs and making some assumptions about the volume

that is going to come through to arrive at the individual charges" (House of

Commons, 2nd report, 25 January 2005, paragraph 50 – online here:

http://www.parliament.the-stationeryoffice.

co.uk/pa/cm200405/cmselect/cmtreasy/274/27405.htm).

 

I would love to see them try to prove that.

[Carningli]

I would like to say a big thank you to all who have contributed to the last 20 posts or so. This is the first time I have seen an erudite discussion on the Supreme Court judgement other than the withdrawn learned Counsels Opinion. I have just read the full judgement for the first time and am certain that I will need to read it at least twice again before I am able to make full comment on it.

 

It is however clear in my mind that the Justices who sat on this matter were faced with having to decide whether the OFT had a legitimate case to investigate against the Banks which would permit members of the common public to bring on a singular and collective basis, actions against the Banks in respect of unfair charges on accounts overdrawn without prior agreement. This they decided rightly or wrongly was not the case and I think with a tinge of regret were forced to leave actions against the Banks in the hands of indivduals. Individuals are unable to challenge the actual terms or costs. But behind these issues I believe there are a host of unfair decisions made unilaterally without consulting their customers, which have left them disadvantaged. Surely it is these background decisions, that have to be challenged on an individual basis? In many cases one would think they could be pursued through small claims, hopefully reducing liability as to costs.

 

Carningli