Sheriff puts Bank of Scotland to proof on bank charges

[Bigdebtor]

I quote from the first post on this thread (which is where I started with this thread some 13 months ago).

 

Mike Dailly, Principal Solicitor at Govan Law Centre said:

 

"Over the last few weeks, UK banks have been telling one million customers that there were now no grounds to reclaim bank charges, standing November's Supreme Court's decision. Of course, the Supreme Court itself had explained that charges could still be challenged under different legal grounds, and that is what Sheriff Baird has permitted our client to do today at Glasgow Sheriff Court".

 

"But besides a challenge under reg. 5 of the UTCCR, the Bank of Scotland now faces a fresh challenge that charges were excessive and unfair under the Consumer Credit Act. That is a potentially devastating case for them to answer, because under this new law the onus of proof is on the bank to show that charges were fair. Given that our banks have admitted they subsidise 'free-if-in-credit banking' by squeezing more money out their poorest customers through bank charges, they will now have to defend the indefensible. And, they will have the added problem that we are asking the court to prohibit them from imposing future charges under the CCA".

 

To my mind this does tend to suggest the Banks will now have to justify how they arrived at the level of charges they have imposed - i.e. It looks as if the Banks will have to prove their charges were NOT "excessive".

 

BTW although not really relevant to the case in point - I think you've made your point about the Sheriff Court - since this started as a "Small Claim" it's not too surprising it started "at the bottom" . However I don't think I said anything that was not true and everything I said about the power of Sheriffs is certainly true.

 

Hopefully we'll soon have a "junior" Sheriff wipe the floor with"senior" QC's representing the Banks where the highest court in the land failed?

 

BD

[rdm2006]

 

Hopefully we'll soon have a "junior" Sheriff wipe the floor with"senior" QC's representing the Banks where the highest court in the land failed?

 

BD

 

Having a dig at the English again BD lol.

 

I bet it was a Scottish bank that started these charges because, allegedly, (he said, tongue in cheek) the Scottish are very canny with cash.

[Bigdebtor]

RDM

 

You sussed us out! Well - given we seem to have either started up or bought over many of the English banks (including founding HSBC and Bank of England) I think we might have to take the blame for trying to "fleece the English".

 

I wonder what would happen if these charges were made illegal up here but not in England???? If that happens then I'm happy to set up "accomodation addresses" for a (relatively) small fee!

 

BD

 

PS - I am not going to mention the fact it was two Scottish Chancellors who set up the FSA and then let the Banks screw things up so completely!

[Bigdebtor]

Contador

 

I quote from post 2:

 

What this means is that the Bank of Scotland now has to prove its charges are fair in relation to price (under s.140A of the CCA). If you go back to pre-July 2007, that never happened. It always for claimants to prove charges were unfair, which historically was never easy given the banks failure to disclose their true business model etc.,

Have you read this thread from the beginning?

 

BD

[Bigdebtor]

That was quick! 54 pages read, understood and assimilated in minutes!

 

I'm not here to argue the finer points of law - or even which Scottish court is the most "junior".

 

I joined CAG to fight against unfair charges and help others do so.

 

I believe this case, if successful for GLC. will force the Banks to refund ALL the £28, £35 and £39 taken without our consent for "unauthorised overdraft charges" and also similarly high and unjustified charge simposed for "bounced" cheques, DD or SO's.

 

I reproduce post 2 in full - and as I said - i bleieve this will acheive my (only) two objcectives in CAG.

 

 

The reason we have said 'Sheriff puts Bank of Scotland to proof on bank charges' is twofold.

 

(1) Now that the court has accepted the new legal grounds, and appointed an evidential hearing on those grounds, the effect of this evidentially and tactically is very significant. Section 140B(9) of the Consumer Credit Act 1974 provides as follows:

 

 

(9) If, in any such proceedings, the debtor or a surety alleges that the relationship between the creditor and the debtor is unfair to the debtor, it is for the creditor to prove to the contrary.

 

What this means is that the Bank of Scotland now has to prove its charges are fair in relation to price (under s.140A of the CCA). If you go back to pre-July 2007, that never happened. It always for claimants to prove charges were unfair, which historically was never easy given the banks failure to disclose their true business model etc.,

 

Tactically, to place the bank under more pressure, we can enroll an application to ordain the bank 'to lead' at the evidential hearing i.e. we create a prima facie presumption that the charges are unlawful, which the bank can rebut, but the onus is on them, evidentially, to do so, and we can insist that they lead their witnesses and evidence first. We are entitled to do this, given the court has accepted the new grounds of claim.

 

Now, you wouldn't expect us to go into any more details - as our duty is to our client - but we believe we can show on the balance of probabilities that the charges were excessive, and if so, unfair under the CCA. We also have a pending claim to effectively ban the imposition of future charges - so this is considerably more powerful than a simple payment action (which is all we had pre-July 2007).

 

BD

[Bigdebtor]

Dup

BD

Edited March 22, 2011 by Bigdebtor
Duplicated in error

[Bigdebtor]

Mike Dailly mentions "excessive" and that's good enough for me.

 

I trust him to do what's best for his clients - and that will also help those of us similarly screwed by the banks over the years.

 

I don't really care about the semantics of whether he attacks "price" or "costs"- or both.

 

How else do you get to define (or prove) a charge as "excessive" - or not (which the Banks must now do) if it's not in relation to its "cost"?

 

High price doesn't necessarily mean "excessive" - e.g £200k for a new Rolls Royce is high but might not be excessive - for an old Trabant on the other hand.......

 

However I have LOADS of letters from HBOS saying "this causes extra work for the bank. To cover our costs..."

 

In my language if they do more than that -i.e cross subsidise free banking for those always in credit then they were being dishonest and fraudulent.

 

I'm fed up with HBOS and others supplying Trabant-style products and services (which we did not agree to in the first place) and charging Rolls Royce prices!

 

I look forward to a positive outcome from GLC in due course.

 

BD

Edited March 22, 2011 by Bigdebtor

[rdm2006]

I don't know how many ways I can say this.

 

The paragraph clearly references 'price' to the business model ie the fairness of the free-if-in-credit pricing structure which may constitute an unfair relationship. Why do you think he's putting the emphasis on the disclosure of the business model if you believe it is just down to price versus cost?

 

There is nothing in the amended CCA 140a that requires a lender to justify charges by reference to their cost, or anything that even mentions 'price', 'cost' or 'excessive'.

 

http://www.oft.gov.uk/about-the-oft/legal-powers/legal/cca/CCA2006/unfair/

 

Your link leads to another link on the same subject -

 

http://www.oft.gov.uk/shared_oft/business_leaflets/enterprise_act/oft854.pdf

 

click on that and look at 1.3 it mentions "extortionate credit bargains" there.

[rdm2006]

It does except that an extortionate credit bargain only applies to the interest rate and not to ancilliary charges associated with the consideration of the provision of credit.

 

http://www.law-glossary.com/definition/extortionate-credit-bargain.html

 

Didn't the banks fight to say that the charges were a core part of their contract/business ( a part of the overall charge) and therefore not as you say ancilliary.

[Bigdebtor]

I don't know how many ways I can say this.

 

The paragraph clearly references 'price' to the business model ie the fairness of the free-if-in-credit pricing structure which may constitute an unfair relationship. Why do you think he's putting the emphasis on the disclosure of the business model if you believe it is just down to price versus cost?

 

There is nothing in the amended CCA 140a that requires a lender to justify charges by reference to their cost, or anything that even mentions 'price', 'cost' or 'excessive'.

 

http://www.oft.gov.uk/about-the-oft/legal-powers/legal/cca/CCA2006/unfair/

 

And before they argued they were "core" as RDM rightly says the Banks claimed they were levied to "cover costs" associated with the "extra work" of authorising a DD or SO that took a client to £0.01 overdrawn as opposed to £0.01 left in credit.

 

Admittedly they didn't say "just cover costs" so I suppose they could have meant "cover costs 20 times over"?

 

BD

 

PS - have you warned Mike Dailly that he's on such shaky ground? After all, I'm sure he wouldn't want to be wasting SLAB's money (or his time) on a fruitless exercise!

 

I wonder why the Banks fought so hard to try to deny Ms Sharp this chance at Justice if they were as sure it would all end up egg on face for the punter (yet again?).

Edited March 22, 2011 by Bigdebtor

[rdm2006]

That is what i am saying it is part of the "overall" cost of banking and that can be assessed for extortionate cost

[Bigdebtor]

Yes they did say the charges were core but the Supreme Court ruled that they are also ancilliary (because they are contingent) but that it is irrelevant to the consideration of them being core.

 

The problem is that the Supreme Court ruled that although the charges are contingent on an event (ie going overdrawn) they are nonetheless in exchange for the overall package of banking services supplied and, crucially, not in exchange for the provision of credit. In other words your everyday banking is free except when you are in debit and thats when you pay.

 

So they are not a charge for credit - but are only levied when one needs credit from them?

 

I'm amazed the SC let that go - even a 5 year old can see the flaw in that logic.

 

It's like saying "I'm not going to charge you for buying booze from me - because it's illegal to sell booze without a liquor licence - but there is an entrance fee to my shebeen - but if you don't want any alcoholic booze then that's OK - you don't have to pay the entrance fee". I suspect Strathclyde's finest boys in blue would still arrest me if they came across this situation!

 

I also seem to recall (although not first hand) that Cynthia Payne was done for running a "disorderly house" when she charged an entrance fee for her "parties" - but no further money changed hands when any specific "service" was provided. At least in this case the punters WANTED the services on offer and were willing to pay the "associated fees".

 

BD

Edited March 22, 2011 by Bigdebtor

[rebel11]

You have to credit the banks, Houdini would be proud, you go to our elected members of parliament, Treasury Committee.

When asked straight forward questions by the Treasury Committee, the banks never ever said that the charges represented

a part of their 'Core' business. Amazing double standards, they were more then happy to tell the Supreme Court it was part

of their 'Core' business.

[rdm2006]

Yes but whether a court would agree to an assessment is the question.

 

Certainly as far as UTCCR 5.1 is concerned you'd have to get around the Supreme Court judgment first:

 

''This does not accurately describe the issue raised by this appeal, which is very much

more narrow. That issue is whether the Relevant Charges constitute “the price or

remuneration, as against the services supplied in exchange” within the meaning of the

Regulation. If they do not, the attack on the fairness of the terms that is open to the OFT

will not be circumscribed by Regulation 6(2)(b). If they do, they will still be open to

attack by the OFT on the ground that they are “unfair” as defined by Regulation 5(1), but

that attack cannot be founded on an allegation that the Relevant Charges are excessive by

comparison with the services which they purchase, for that is forbidden by Regulation

6(2)(b).''

 

the above is only relative to the UTCCR not the CCA it could still be an extortionate bargain under CCA (agreements pre 2006 i think that is the correct date lol)

[locutus]

I also seem to recall (although not first hand) that Cynthia Payne was done for running a "disorderly house" when she charged an entrance fee for her "parties" - but no further money changed hands when any specific "service" was provided. At least in this case the punters WANTED the services on offer and were willing to pay the "associated fees".

 

BD

Hmm... there are many similarities here.... both sets of customers were getting screwed, and Bankers have a similar reputation to a courtesan

[Bigdebtor]

Locutus

 

I think you'r ebeing very insulting to "courtesans"!

 

BD

[Bigdebtor]

No, because the charges aren't for the provision of credit - by virtue of the Supreme Court judgment - and as such can't be applied to an extortionate credit bargain test. They are not part of the credit bargain.

 

As I said - how can something which is ONLY charged to those wanting/needing credit - and not to those who don't want/need credit - not be a charge for credit?

I know that's what the SC were apparentlly fooled into thinking - but ..... words fail me! As I said even a 5 year old wouldn't buy that argument!

 

Also I don't think charging me £39 to tell me they've bounced a DD that would have taken me a few pounds into an unauthorised overdraft is any "bargain". (I know it's a different meaning of the word - funny how Bankers can make words mean something different whenever it suits them! - like a putting new onerous terms into an "agreement" which we never agreed to!).

 

I get back to earlier (still unanswered) questions -

1. Why is Mike Dailly till running with this if his case is so weak.

2. Why did SLAB agree to fund such "weak" cases?

3. Why did the Banks go apoplectic and their QC's try to get these cases kicked upstairs as "too complex for SCC" and thus try to price out the claimants from continuing if they felt the cases were so weak? Why not just let the Sheriff kick them into touch a year ago? Were they hoping to get as much publicity as possible so Mike Dailly's "inevitable humiliation" would be as high profile as possible? - Actually I could buy that last argument as Mike has been a thorn in their flesh for a long time now.

 

BD

[Aequitas]

the lopsided nature of the cross-subsidized free-if-in-credit model where the few pay for the banking services for all

 

I think there may be some difficulty there. If I remember correctly, and I am not reading the whole judgement just to find where it was said, the Supreme Court said that if the model for charging was wrong that was a matter for Parliament and not the Court to address. In any event, if challenging the model what you cannot get away from is that it arose out of consumer demand.

 

and also the multiplicity of charges where charges necessarily trigger further charges ie the frequency of their application

 

I suggested long ago that individual customers should base their case not on whether the charge was a contractual penalty or unfair under the UTCCR, but on whether any particular charge was unfairly applied or if the account had been manipulated in such a way as to incur repeat charges.

[Aequitas]

If you go back to pre-July 2007, that never happened. It always for claimants to prove charges were unfair, which historically was never easy given the banks failure to disclose their true business model etc.

 

With respect, that is to look at the question backwards.

 

Before the CCA was brought into it the two arguments were that bank charges were contractual penalties and/or unfair under the UTTCR.

 

When it came to the contractual penalty question you first needed to show that the charge was compensation for breach of contract. The argument failed to clear that hurdle.

 

When it came to the UTCCR question you first needed to show that the charge was not a charge for services supplied. The argument failed to clear that hurdle.

 

Since both arguments failed, the question of how the charges were arrived at is irrelevant. What you cannot do in either case is to argue that a charge is excessive and must therefore be a penalty or unfair.

 

Indeed, if either argument had succeeded, it would have been tantamount to saying that banks cannot charge for their services. That was really the flaw that lay at the heart of the arguments.

[Peterbard]

Yes they did say the charges were core but the Supreme Court ruled that they are also ancilliary (because they are contingent) but that it is irrelevant to the consideration of them being core.

 

The problem is that the Supreme Court ruled that although the charges are contingent on an event (ie going overdrawn) they are nonetheless in exchange for the overall package of banking services supplied and, crucially, not in exchange for the provision of credit. In other words your everyday banking is free except when you are in debit and thats when you pay. This is the basis of the Supreme Court judgment. I don't agree with it but this is now how it stands in law.

 

And this is why you can't apply the extortionate credit bargain test as the charges do not form part of the credit bargain but for the package of banking services.

 

So I suspect that Mike Dailly may argue that the charges are excessive but not by reference to the cost to the bank of going overdrawn but in relation to the package of services supplied.

 

Does that make sense?

 

 

Hi

Yes I agree.

If the Supreme Court ruling was that the Charges do not constitute a charge for credit, in my view this is correct, in terms of the definition of the “charge for credit” in the CCA this is certainly true, as it is not part of the individual credit bargain.

What could be argued is that the default charge is part of the package of the bargain just as the production of the paperwork and other expenses but that this particular charge is unfair because it is extortionate.

This has nothing to do with the individual credit bargain as such but more the unfairness of items within the credit product.

Peter

[bustthematrix]

As the legal aid for these cases is only about £300 I assume SLAB believes it's worth the gamble

...£300? ...err come again?

[Bigdebtor]

Aequitas

 

I was quoting what Mike Dailly had said at the very beginning of this thread. These were not my words but his.

 

However I don't think any one ever said Banks couldn't charge for their services. I think the issue all along is how massively they OVERCHARGED for them - by a factor 10 or 20 for the "services" of bouncing a cheque or DD or honouring it and allowing an unauthorised overdraft to exist.

 

As I said earlier I have loads of letters saying "this causes the bank extra work. To cover our costs......" It appears they were either lying when they sent these letters (as they weren't imposed just to cover costs) or they were lying in their SC submissions. One ex MSP is currently getting 3 years free board and lodgings for similar behaviour up here!

 

In my opinion what they should have said was "We know you are in a very vulnerable position having built up an unauthorised overdraft which now comprises entirely of unfair charges and associated interest. You are too weak to fight us - and can't take your overdraft elsewhere - so we'll continue to charge you whatever we like and give richer people free banking".

 

I can't comment with any authority on the legal arguments - but morally the banks are totally bankrupt!

 

BD

[Bigdebtor]

Hi

Yes I agree.

If the Supreme Court ruling was that the Charges do not constitute a charge for credit, in my view this is correct, in terms of the definition of the “charge for credit” in the CCA this is certainly true, as it is not part of the individual credit bargain.

What could be argued is that the default charge is part of the package of the bargain just as the production of the paperwork and other expenses but that this particular charge is unfair because it is extortionate.

This has nothing to do with the individual credit bargain as such but more the unfairness of items within the credit product.

Peter

 

Peter

 

I accept what the SC was duped into - but I cannot accept that any sane person would think a charge which is only levied on those who take out (unauthorised?) credit can be defined in any other way than a charge for credit - as shown by the analogies given earlier of illegal unlicensed shebeens or Cynthia Payne's house parties - where I recollect she charged a lot of money for a 15p Luncheon Voucher which could then be exchanged for "services". In both cases the legal outcome was clear - the Law quite rightly said the booze was sold and Cynthia was not selling Luncheon Vouchers at a huge mark up but was running a "disorderly house".

 

I think the Banks are in a similar situation to Cynthia. If it looks like it, smells like it and tastes like it........

 

However I do totally agree that £39 to send out a template letter is certainly extortionate!!!!

 

BD

[Aequitas]

People may not directly have said that banks cannot charge for their services, but that is what the arguments advanced were effectively saying.

 

I have no major problem with most of the observations people make about bank charges.

 

Bigdebtor says:

 

I can't comment with any authority on the legal arguments - but morally the banks are totally bankrupt!

 

In a way that really sums the whole thing up. The level of bank charges cannot be justified and is on any assessment other than a legal one unfair. Where the whole campaign went wrong was to base its case on a legal argument - or at least the wrong legal argument.

[Peterbard]

Hi

Don’t really know about Cynthia Payne.

To be honest I am dipping my toe in here a little, there are some knowledgeable contributors just joined this thread and I am interested to learn more. MY involvement with reclaiming charges ended in my successful attempts some years ago then I got side-tracked.

However I do understand the arguments raised in regards to contractual penalties and the UTTCs.

I also understand the Consumer credit act, and I can assure you that as far as the latter is concerned default charges are not included in the calculation of, nor do they form any part of the total charge for credit. So as far as any action that is brought within the act that states as its cause an infringement of the TCC cannot by definition include default charges.

Peter