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      OT APPROVED, 365MC637, FAROOQ, EVRi, 12.07.23 (BRENT) - J v4.pdf
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Urgent-views wanted,Consumer Rights Directive -Unfairness in Consumer Contracts


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bis-headerLogo.ashx

 

 

 

Open date: 08 Jul 2010

Closing date: 24 Aug 2010

BIS is seeking views to inform its negotiating position on the Consumer Rights Directive as to whether contingent or ancillary charges should be assessed for unfairness under the unfair contract terms provisions.

 

 

Background to Call for Evidence

 

The Supreme Court judgement in the OFT v Abbey National plc case has led to uncertainty as to how UK legislation on unfair terms in consumer contracts applies to charges that are “contingent”, or “ancillary” to the core of the contract. The EU Consumer Rights Directive is currently being negotiated, and will replace four existing Directives including the Unfair Contract Terms Directive, which forms the basis of the UK law on unfair contract terms. The Commission or Members of the European Parliament may seek to address the issue when the proposal comes up for debate in the Autumn. The UK Government therefore needs a negotiating line to take for subsequent discussions in the Council of Ministers as to whether contingent or ancillary charges should be assessed for unfairness.

Purpose of Call for Evidence

 

This Call for Evidence invites views on a number of specific issues to help inform the development of the UK Government’s negotiating position in advance of discussions in the EU’s Council of Ministers later this year.

 

Download the consultation

 

 

 

 

 

 

Please feel free to discuss below-remember,the deadline is fast approaching.

Edited by MARTIN3030

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

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Here are the questions;

 

 

1 Do you agree with the Government premise that because charges are contingent, ancillary or not transparent, or otherwise not part of what a typical consumer would understand as “the essential bargain”, competition may not drive down the level of such charges as it ordinarily would?

 

 

 

2 Should any exclusion from the price exemption provision in the UTCCRs (Paragraph 6(2)) focus on:

 

§ contingent charges - made only on the occurrence or non-occurrence of a particular event – and/or;

 

§ ancillary charges which require the consumer to pay additional sums for matters outside the ordinary and expected performance of the contract – and/or;

 

§ charges that are not transparent to the consumer for reasons going beyond the clarity of the language used, for instance in terms of presentation; or all three of the above?

 

 

 

3 Are there matters the Government should consider in terms of the interpretation of concepts such a contingent, ancillary, non-transparent terms or “essential bargain” or other terms which are relevant?

 

 

 

4 Should all contingent price terms be assessable even where they are likely to be in the forefront of consumer’s minds when contracting, e.g. estate agency sale fees? If not, what other criteria should be involved?

 

 

 

5 Would you support a provision which would simply allow charges to be assessed for unfairness if they were not, from the consumer’s perspective, part of the “essential bargain” between the consumer and the trader? Would further conditions need to be applied?

 

 

6 Do you have any evidence of contingent, ancillary or non-transparent charges arising in other sectors beyond personal current accounts which, in your view, would be assessable for unfairness in relation to the level of the charge if the law was changed?

 

 

 

7 If so, do you think any of these charges are unfair and if so, why?

 

 

 

8 What would be the impact on your sector or your business in terms of its pricing policy if the law was changed to allow the level of all contingent, ancillary or non-transparent charges to be assessed by the Courts for fairness?

 

 

 

9 Are there other potential consequences or wider impacts of allowing the assessment of contingent, ancillary or non-transparent charges for fairness?

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

Advice offered by Martin3030 is not supported by any legal training or qualification.Members are advised to use the services of fully insured legal professionals when needed.

 

 

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Thanks for posting this thread Martin!

 

So, could this be a way to get bank charges back on the agenda after the Supreme Court decision, how do we do that?? Thoughts everyone, this could be very important.

 

From paras 45 on (from the call for evidence)

 

Evidence of Contingent, Ancillary and Non-transparent Charges

 

45. Informal discussions with the OFT and the Financial Services Authority (FSA) would indicate that a range of potential contingent/ancillary/non-transparent charges may arise in both financial, and non-financial sectors.

 

46. An illustrative list can be found below.

 

(BUT- my words)

 

Please note that only a court can decide whether terms fall within or outside the test of fairness under the Regulations, and whether, if the test applies, a term is fair, having regard to all the circumstances of the case.

 

15

Financial Sectors

Insurance Sector – Exit Charges; Compulsory secondary expenses; Unexpected revision charges (mid-term).

Investment Sector – Inactivity Fees (fees payable by customer if they do not carry out any transactions on an account during a 12 month period); Cash account charge.

Banking Sector – Unauthorised overdraft charges; Transaction charges (e.g. bounced cheque); Copy of Statement fee.

Mortgage Sector – Post completion administration fees (e.g. deeds production fee), mortgage exit administration fee, breakdown of account fee.

Non Financial Sectors

Gym Contracts (termination charges) – overly long termination notice periods and large termination charges.

Book Clubs/Film Clubs – Buying less than minimum purchase commitments, returning items late.

Car Clubs – Charges for dropping cars off in locations other than agreed.

Car Hire - Penalty charges incurred for punctures, hire, theft of car, but not clearly defined in rental agreement where consumer’s liability starts.

Service Contracts – Charges for fixing unexpected problems in home improvements, or charging extra for cases that are hard to fix, e.g. cars.

Retirement Homes – Transfer fees or "exit fees" paid by consumers when they sell or rent their purpose built retirement apartment.

 

47. It is unlikely that this is an exhaustive list. The Government would welcome evidence on the type of charges - across all sectors – the level of which could be assessed for fairness if the price exemption provision was restricted in the manner described above.

16

6

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Apologies, but I am currently typing through day 2 of a migraine attack, and so my brain is not working at full capacity.

 

So for me, and possibly other people who would be confused by the language used, could someone be kind enough to translate the negatives and double negatives used in the questions and re-ask them in clear and plain English? At the moment, I have read them 3 times and I still don't know whether I am for or against!!! :-(

 

Thank you. :-)

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Hmn ok.

Kenny-are you volunteering ?

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

Advice offered by Martin3030 is not supported by any legal training or qualification.Members are advised to use the services of fully insured legal professionals when needed.

 

 

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Taken from the Executive summary, (my comments in bold):

 

"November 2009 held that charges in relation to unauthorised overdrafts were part of the price for the provision of the whole package of banking services received by a personal current account customer, and thus excluded from assessment under legislation on unfair terms in standard form contracts.

Yes, agreed, based on SC decision, which almost everyone thinks was wrong.

As a result there is uncertainty as to how UK legislation on unfair terms in consumer contracts applies to charges that are "contingent", or "ancillary" to the core of the contract. The decision of the Supreme Court has led to calls for the Government to bring forward legislative change, especially to address perceived unfairness in certain bank charges. The Coalition Agreement includes a commitment to "introduce stronger consumer protections, including measures to end unfair bank and financial transaction charges."

They acknowledge the uncertainty re unfair terms in consumer contracts as it relates to bank charges.

They seem to be implying that bank charges are contingent/ ancillary- is that correct?

Coalition agreement- who could/ should we influence??

2. The EU Consumer Rights Directive is currently being negotiated, and will replace four existing Directives including the Unfair Contract Terms Directive, which forms the basis for the relevant UK law on unfair contract terms, the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). The 2008 Commission proposal does not specifically address the point of ancillary or contingent charges in a way that clearly engages with the Supreme Court ruling (which came afterwards), but the Commission is aware of the ruling and may seek to address its outcome in any revised proposal. Members of the European Parliament may also seek to address the issue when the proposal comes up for debate in the Autumn. The UK Government therefore needs a negotiating line to take for subsequent discussions in the Council of Ministers. Either way, it will be highly desirable to tighten the drafting of the proposed Directive to make the policy intention clearer.

So, EU legislation- The EU Consumer Rights Directive, is the mechanism, but it "does not engage with the SC ruling".

Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) will be no more, to be replaced by EU Consumer Rights Directive .

That seems like excellent news initially. Could proposed EU law see a positive outcome on charges??

EU parliament discussing issue soon- in Autumn.

3. However, increasing the scope for applying regulatory control to prices, even ancillary or contingent charges, raises issues of economic policy. Successive Governments have taken the view that prices are best set by the market without interference, relying on competition to ensure that prices are driven down and that consumers are not exploited by firms charging excessively. Any exceptions to this policy need to be based on clear economic rationale and the impact on business pricing policies needs to be understood, as far as is possible, in advance.

Reference to economic rationale, which some would argue was behind the legal view taken by SC, lol. We suspect there was informal price fixing in past re bank charges given they were so similar and its only relatively recently that charges were reduced. Has competition worked in banking in the past, or present. Arguably, there is far less competition now- in various respects.

4. This call for evidence is not about how to deal with charges that are straightforwardly concealed from the consumer at the time the contract is concluded, or with charges that are in unintelligible jargon. The former are not enforceable under ordinary English contract law in any event, and charging terms which are not in plain language are specifically said by the UTCCRs to fall within the scope of the test of fairness. The CRD’s transparency provision also already

3

provides that express consent must be given for additional charges that the consumer might not notice, and the UK Government does not at this stage plan to oppose this proposal.

Re historic charges- no doubt in my limited opinion that historic charges were concealed, but this is not about that. People had terms and conditions which were uninteligible and the charges were not explicit. Things have improved however.

5. This call for evidence is instead about charges which are – because of the way they are presented, or the way the contract works – objectively difficult for an ordinary person in practice to assess effectively when reaching their decision as to whether to enter a contract.

Surely this does apply, even now. Many people don't have an option as they need an account and shopping around is impossible, plus most people never change their account and the banks know that and play on it.

6. The Government believes in principle that an economic case may exist to regulate charges which, from the consumer’s perspective, do not form part of the "essential bargain" between the trader and the consumer. If such charges are not actively considered by the consumer when electing to enter into a contract, they will not be subject to normal competitive pressures, even if they are formally referred to in the contract. It could be argued, therefore, that the level of these charges should be able to be assessed for unfairness under the relevant law.

"The Government believes in principle that an economic case may exist to regulate charges"- that sounds positive!

 

"If such charges are not actively considered by the consumer when electing to enter into a contract, they will not be subject to normal competitive pressures, even if they are formally referred to in the contract." Surely this is true, is it not??

 

If the above is true then they are saying "It could be argued, therefore, that the level of these charges should be able to be assessed for unfairness under the relevant law." That looks good, does it??

 

7. But the Government needs a more informed position before taking up its negotiating position. This Call for Evidence therefore invites views on a number of specific issues on which we would particularly welcome information and views. Your views will be used to help inform the development of the UK Government’s negotiating position in advance of discussions in the EU’s Council of Ministers later this year. "

 

 

Thoughts people please. I think its important that as many people as possible contribute to this thread, it may be the last throw of the dice re bank charges.

Don't be influenced by what I've said, as I may be on the wrong track, thats why your contributions are vital and essential.

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Hmn ok.

Kenny-are you volunteering ?

 

Hello Martin hope you are well and nice to see you again.

 

I have limited skills but will try and encourage input and contributions and pleased to do what I can for claimants.

 

I am going to try and contact Mike Dailey to get his views, if that is OK with site team and admin.

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Sure.

Once we have some thoughts and defining response here,we can look towards a submission on behalf of the CAG.

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

Advice offered by Martin3030 is not supported by any legal training or qualification.Members are advised to use the services of fully insured legal professionals when needed.

 

 

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Vince Cable is responsible for Banking Reform on behalf of the coalition.

 

I will check what references have been carried forward from their pre election "promises" lol, into their reform proposals. However, from what I know already he appears to have let the issue drop from the agenda.

 

However, I do know that he is keen to open up competition which he does not believe is happening.

 

Link to his web site and speech "how to reform banking regulation", outlining his thoughts;

 

http://richmondlibdems.co.uk/news/002201/vince_cable_how_to_reform_banking_regulation.html

 

It mainly covers

 

The Tripartite System, Remuneration and Bonuses, Bank Lending, Public Ownership, Too Big To Fail,

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Just a thought, but I wonder if we could include ( as the consultation is about contracts that charge a fee on top of the standard price when buying a good or service) eg mobile charges, mortgage exit fees, gym termination charges.

 

What else is there, feel free to add to list of addiional charges people pay on top of contract. Could it include?:

 

bailiff fees (probably not, although there are contracts setting price between bailiff and Councils, banks etc which an ordinary person gets charged )

 

late payment/ returned DD for- credit cards/ mortgages/ loans/ log book loans etc/ catalogues, etc

 

early interest repayment/ redemption fees, etc

 

Thoughts everyone??

Edited by kennythecelt
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Think the Bailiff fees are under remit of the MOJ arent they ?

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

Advice offered by Martin3030 is not supported by any legal training or qualification.Members are advised to use the services of fully insured legal professionals when needed.

 

 

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  • 2 weeks later...

Thanks Michael useful info-was wondering how many reps and the likely parties etc had submitted.

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

Advice offered by Martin3030 is not supported by any legal training or qualification.Members are advised to use the services of fully insured legal professionals when needed.

 

 

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Yes you are correct Martin.

 

Wonder what impact of this new legislation is on historical charges. Would Vince Cable etc set something in motion?

 

 

I cant see that somehow.

Especially in consideration that the historical charges which were much higher than post 2007.

 

 

Interestingly those CC issuers that are stilll settling claims are limiting those to post 2007 where they are offering the difference to the £12 agreed by the OFT in 2007

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

Advice offered by Martin3030 is not supported by any legal training or qualification.Members are advised to use the services of fully insured legal professionals when needed.

 

 

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The problem with the UTCCR is that they apply in areas they were not really drafted to apply to notably, at least so far as I am concerned, financial services and residential lettings. We need new regulations that deal exclusively with those areas.

 

I happen to think that the SC decision was right. What the SC did and did brilliantly having regard to what the UTCCR actually say was to cut a swathe through the clouds of obfuscation created by the High Court and Court of Appeal.

 

The great failure in the campaign was for people to fail to get to grips with what they meant by "unfair". The real issue was that bank charges were unfair because they were excessive and not because it was intrinsically unfair for banks to charge for their services, even if some of those charges only applied when your account was in the red. That was an issue that the courts could never deal with head on because there are, as such, no legal restrictions on what banks, or anyone else, can charge for the services they provide. This necessitated trying to shunt most or all bank charges into the "ancillary" and "contractual penalty" boxes where they just would not fit.

 

The law goes quite a long way to controlling dealings between business and consumers, but still allows a man to drive a hard bargain so long as he is not involved in anything like price fixing or arranging cartels.

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Erm I'm pretty sure there was something said in evidence to the Treasury select committe where a senior banking figure admitted there was 'agreement' regarding the base level of such charges. That sounds very much like price fixing or a cartel to me. I wish I'd kept the link, I think it was on here, and it was someone from HBOS... Mcfall??? I forget his name. The one who said even his parents think he is paid too much.

The views I express here are mere speculation based on my experience. I am not qualified nor insured to give legal advice and any action you take will be at your own risk.

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Erm I'm pretty sure there was something said in evidence to the Treasury select committe where a senior banking figure admitted there was 'agreement' regarding the base level of such charges. That sounds very much like price fixing or a cartel to me. I wish I'd kept the link, I think it was on here, and it was someone from HBOS... Mcfall??? I forget his name. The one who said even his parents think he is paid too much.

 

You may well be right.

 

The problem is though that the UTCCR are not designed to deal with the aspects of competition law that control cartels.

 

When it comes to bank charges:

 

A. When a contract between an individual and a bank is considered simply as such, it was always going to be nigh on impossible to find any element of contractual penalties and difficult to see how the UTCCR had any significant impact.

 

but on the other hand:

 

B. When considering banks collectively on one side and consumers collectively on the other, there had to be a good argument that the banks were operating a cartel as the terms of all the banks and what they charged were similar and the consumer had no real choice.

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  • 1 month later...

The BIS response to the consultation is available on the BIS site - http://www.bis.gov.uk/Consultations/consumer-rights-directive-assessability-unfairness?cat=closedwithresponse

 

The Government will NOT put forward an amendment to the Consumer Rights Directive at this stage to enable charges outside of the “essential bargain” from the perspective of the consumer, to be assessed for unfairness.

(edit put in link as I have done over the right number of posts now)

Edited by manchesteruni
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The BIS response to the consultation is available on the BIS site - http: //www . bis.gov.uk/Consultations/consumer-rights-directive-assessability-unfairness?cat=closedwithresponse (apologies I can't post links yet so you will need to remove spaces or visit the CONSULTATIONS section of the bis.gov.UK website)

 

The Government will NOT put forward an amendment to the Consumer Rights Directive at this stage to enable charges outside of the “essential bargain” from the perspective of the consumer, to be assessed for unfairness.

 

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The BIS response to the consultation is available on the BIS site - http: //www . bis.gov.uk/Consultations/consumer-rights-directive-assessability-unfairness?cat=closedwithresponse

 

The Government will NOT put forward an amendment to the Consumer Rights Directive at this stage to enable charges outside of the “essential bargain” from the perspective of the consumer, to be assessed for unfairness.

 

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Thanks Michael useful info-was wondering how many reps and the likely parties etc had submitted.

 

ANNEX A

ABI

Owen Ashcroft

Association of Private Client Investment Managers and Stockbrokers

Barclays

Bar Council of England and Wales

British Bankers Association

British Vehicle Rental and Leasing

Building Societies Association

CBI

Citizens Advice Bureau

Chris Coles

Competition Commission

Consumer Focus

Bob Egerton

Dr Jesse Elvin

Anna Geddes

Institute of Legal Executives

Legal and General

Legal seagulls

Lloyds TSB

Local Government Regulation

Money Saving Expert

Nationwide

OFCOM

OFT

Sharon Quigley

Royal Bank of Scotland

Royal Institute of Chartered Surveyors

Santander (Alliance and Leicester)

Virgin Media

Vodafone

Which?

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Thanks Michael useful info-was wondering how many reps and the likely parties etc had submitted.

 

ANNEX A

ABI

Owen Ashcroft

Association of Private Client Investment Managers and Stockbrokers

Barclays

Bar Council of England and Wales

British Bankers Association

British Vehicle Rental and Leasing

Building Societies Association

CBI

Citizens Advice Bureau

Chris Coles

Competition Commission

Consumer Focus

Bob Egerton

Dr Jesse Elvin

Anna Geddes

Institute of Legal Executives

Legal and General

Legal seagulls

Lloyds TSB

Local Government Regulation

Money Saving Expert

Nationwide

OFCOM

OFT

Sharon Quigley

Royal Bank of Scotland

Royal Institute of Chartered Surveyors

Santander (Alliance and Leicester)

Virgin Media

Vodafone

Which?

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