Office Of Fair Trading Test Case

[muggyno1]

Originally poted by JULES1973

The following petition has been put on the government website

 

We the undersigned petition the Prime Minister to Ensure UK citizens have the right to recapture illegal bank charges up until the day a UK court find them legal. More details

 

Petition to: Ensure UK citizens have the right to recapture illegal bank charges up until the day a UK court find them legal.

 

I have just visited and added my signature. THERE ARE ONLY 96 SIGNATURES ON THIS PETITION.

 

Perhaps the CAG could do something to advertise it or is another one being prepared? The more action the bettter!

 

Cheers.

 

Muggy

[muggyno1]

From Martin Lewis' Moneysavingexpert site

Quote:

The Bank Charges Reclaiming Charter

MoneySavingExpert.com, ConsumerActionGroup.co.uk & PenaltyCharges.co.uk

 

The regulator, the FSA has suspended bank charges reclaiming awaiting a court decision based on the Office of Fair Trading’s agreed test case with the banks. This decision was taken without any consultation with the consumer groups who have been championing bank charges reclaiming.

 

The three campaigning groups behind this charter, have or are helping between them well over 1.5 million people reclaim and ask all politicians, decision makers, bank customers and shareholders to consider the following.

• Five pounds is a fair maximum amount for bank charges. Banks have been charging around £30 for penalty charges; this is totally disproportionate to their actual costs. Even generous estimates suggest £2.50 is an appropriate cost, so a five pound maximum is a more than generous limit.
  
• Penalty charge structures leave finances irrevocably damaged. Often penalty charges occur in batches, a simple shopping trip and miscalculation of how much is left in an account, can result in £100s in charges. This then snowballs, as people don’t have the resources to pay the charges and are thus charged more. The banks make over £1 billion a year from these charges, which often irrecoverably destroy peoples finances.
  
• Bank accounts are obligatory & there’s no competition. In the modern age, there is little choice but to have a bank account; both employer and social security offices rarely accept an alternative. Yet there is no competitive market for bank charges, all banks charge similar amounts.
  
• Bank should not be allowed to levy charges during the stay. Banks have already paid out over £500 million to reclaimers; a sum indicative of the fragility of their case. The consumer has not been served by putting a hold on reclaiming cases, meanwhile banks continue to levy these charges, which continues to debilitate people’s finances. The hold on bank charges reclaiming should be lifted, but if not the levying of charges by the banks should also be put on hold.
  
• Any agreed new charge levels must apply to past as well as current customers. The OFT credit card ruling in 2006 indicated a maximum £12 charge, yet omitted to infer that those who had previously been charged more should be allowed to reclaim it. When a new settlement figure (of no more than £5) is reached, customers must be allowed to reclaim all amounts above that for the prior 6 years.
  
• Payouts should be made automatically, without request. Banks have taken money from their customers without asking; when the Courts rule these charges are unlawful, they should be made to pay them back without the need for customers to request it. If this does not happen, there’s been little benefit to consumers of this test case and moratorium.
  
• Repayments should include 8% statutory interest. Repaid charges should include interest at 8% the rate applied to successful reclaimants in the Courts. Interest should also be compounded.
  
• All credit file defaults resulting from unfair penalty charges must be deleted. Banks must agree that all default records that have been placed on credit files due to unathorised overdraft charges/penalty charges should be wiped.
  
• There should be an immediate moratorium on all default entries. During the period of the OFT litigation we require there to be an immediate moratorium on the placing of defaults on the credit record of any customers in respect of any sum which is comprised either wholly or substantially of charges.

More info on bank charges reclaiming

This is supposedly the second draft after all of the feedback Martin Lewis has received. I hope that no one responsible on this site is going to endorse this. I think that it is highly damaging to both our campaigns and potentially the test case, particularly the first paragraph on a fair level of charges.

 

Is it just me or do others feel this way?

 

Muggy

[muggyno1]

Hi Destiny,

 

Is that a tongue I see wedged in your cheek?

 

Cheers.

 

Muggy

[muggyno1]

I also agree with some of what is said, but I have two major (and a lot of minor) objections.

 

1. That the highlighting of the level of charges in this way can easily be interpreted as conceding the point that charges are unlawful. Our first point is, surely, that the banks should not be making any profit out of these charges under law not that they are simply being greedy by asking too much.

 

2. As Margaret Thatcher once said about Geoffrey Howe - It's like being savaged by a dead sheep.

 

Muggy

[muggyno1]

Well spotted noomill! The trouble is Maggie was already in deep trouble. I don't see the banks sweating much at the moment!

 

Cheers.

 

Muggy

[muggyno1]

Edinburgh Lass going to tell teacher? Oh no! Spanked botty time. Boo hoo.

 

ML can do what he likes I guess, but I hope that CAG doesn't follow suit.

 

Me, I'll keep following some of the more intelligent campaigns that are beginning to build up here.

 

Cheers all.

 

Muggy

[muggyno1]

Looking forward to it Destiny. Oops, did I say that out loud?

 

Muggy

[muggyno1]

Also the £5 figure in point 1 of the charter is there for a very good reason and one I'm surprised that you can't see,

 

What reason is that then? To concede to the banks that this is a service charge and not a penalty charge?

 

If you can see something else then don't keep us guessing.

 

As to having no legal right to set a fair charge, you are absolutely right. That's why the first point to be settled is whether these are penalties for breach of contract. Then we look at whether the banks are abusing their dominant position over consumers.

 

By the way, writing to MPs is about creating political noise and putting pressure on the FSA - which a number are already starting to do - to rescind the waiver. I'm surprised you can't see that!

 

Muggy

[muggyno1]

No, can't see that nor can I hear any political noises. And why would the

FSA care what MP's think anyway? They're funded by the banks.

 

The reason for suggesting the £5 figure is the same reason why moaning

to MP's isn't a good idea.

 

The only people who the movement should be talking to and trying to

influence is the OFT & FSA. If you were either of these two, who would you

be more likely to sit down and talk to? An angry disorganised group of protesters or representitves of 3 established groups who have a clear

published agenda who appear not to be making unreasonable demands? -

the £5 figure being a case in point.

 

Crfx

 

I will try not to follow your lead and be insulting but this really does need a response.

 

1. The OFT and FSA have treated these three groups with contempt. There is no chance that they will sit down with us or anyone else directly representing consumers.

 

2. There is no published agenda that is consistent among the three groups.

 

3. If the charter is an attempt to create a unified agenda it is a misguided one and, in the case of Martin Lewis, arrogant.

 

4. The reason I say that it is misguided is that, in its proposal of a £5 max on charges it goes against all of the advice on challenging charges in court always given on the CAG, all of the thousands of court challenges that have already been successful (albeit untested in court), and the basis of the first legal point to be argued in the test case.

 

5. If those of us that wish to continue to challenge the lawfulness and not the commercial level of these charges are "An angry disorganised group" then what we should be is an angry organised group.

 

6. Most comments here and on many other threads are negative about the charter and current behaiour of many campaign leaders. Most are also, rightly, full of praise for their past leadership and success to date.

 

Let's not spoil it now by raising the white flag!

 

Muggy

[muggyno1]

The law on penalties is quite clear. A pre -determined charge levied for breach of contract will be held to be a penalty only if it is extravagant or acts in terrrorem ie as a deterrent for a breach (Dunlop v New Garage. There is nothing to say that a charge must exactly match the cost. Indeed where it is difficult to assess the actual cost the non breaching person can calim a reasonable charge ( Jobson v Jonson). The courts in McAlpine v Tilehurst, Phillips v AG forHong Kong and Murray v Leisure play have consistently stated the courts will not interfere with a charge which was agreed between two parties unless it is clearly excessive.

 

The most reliable figures we have for the costs to banks palce the costs between £2 -4.50. £5 is therefore likely to be held to be lawful as indeed is a sum over this figure. We have to be realistic if we are to be taken seriously.

 

Hi zoot,

 

I have been out of circulation for a few days and just now had the chance to pick up this thread. Thanks for the clarification of some of the thinking behind the charter. I am still convinced, however, that the charter is a bad idea.

 

First, just to pick up on the legal points you make above; the in terrorem test you mention, while relatively easy to evaluate in the cases you quote, will be far more difficult to handle in the test case. While, for example, a £5 charge is highly unlikely to act as a deterrent to someone on average UK earnings, what about a single parent on benefits with barely enough income to house, feed and clothe their family? As bank accounts are virtually indispensable to everyone, it would be almost impossible to use the average customer as a test.

 

As far as extravagance is concerned, this first requires the banks to disclose actual costs. This does not mean a notional average across banks and types of charge but actual costs per bank and per type of charge. In reality there are no reliable figures publicly available for actual costs, estimates vary enormously, not only across types of charge but also within each category. I do not believe that that the test of extravagance can be the same for an overdraft excess fee whose processing costs are likely to be a few pence, and a returned DD, which costs relatively much more.

 

 

The courts in McAlpine v Tilehurst, Phillips v AG forHong Kong and Murray v Leisure play have consistently stated the courts will not interfere with a charge which was agreed between two parties unless it is clearly excessive

 

Who is to say that it will be found that these charges are "agreed between two parties"? There are a number of tests of fairness and points of contract and consumer law to be argued before this is held to be true.

 

My point is that this entire discussion is an illustration of one of the reasons that I cannot support the charter.

 

The current proposed charter and my suggested re-writing (here) are both flawed in similar ways. They are both too journalistic, too generalised and both throw up hostages to fortune. The difference is that mine was purely designed to generate this type of discussion.

 

Please let us not pre-judge any of the issues, including fair levels of charges, actual costs and the 6-year time limit. Let's not be general when we have to be specific.

 

Most of all let us not allow hope to triumph over experience and expect the banks/OFT/FSA to engage with us because we believe that we are being 'realistic'.

 

I firmly expect that all three groups will treat this as the beginnings of a loss of resolve.

 

 

Muggy

[muggyno1]

Hi Nevos,

 

IMO, the best way forward at this point is:

 

1. To maintain public pressure on the FSA and OFT a) by signing petitions that have been running for some time such as this and this b) by writing to your MP as described here and any other appropriate means.

 

2. In maintaining this pressure to stick to our position as it has always been that charges must be both fair and lawful as tested against contract and consumer law.

 

3. To stress that there is no fair maximum level of charges and no limitation of 6 years until and if this has been thrashed out in court.

 

4. To encourage those that have some private influence on the OFT and FSA (mostly government ministers) that it is in their interest to bring this influence to bear. This will only happen if they believe that it is politically expedient to do so ie with maximum public pressure.

 

There is no point in trying to engage with the banks at this stage. Unless we can persuade one of them that it is in their commercial interest to practice ethical banking, that is. I am thinking about how this might be done.

 

We could do worse than remeber what happened with cash machine withdrawal charges ie. public campaign followed by groundswell of opinion followed by one bank removing charges, followed by all of them doing it.

 

Again IMO, the charter makes all of the above more difficult because it undermines the position as stated above and because it has begun to fragment the opposition to these charges where there was a large measure of agreement in the past.

 

Cheers.

 

Muggy.

[muggyno1]

Crfx250,

 

Lovely to see that you have such faith.

 

Muggy.

[muggyno1]

I have more faith in government ministers than you. Thats for sure.

 

Crfx250,

 

I'm not sure whether you are questioning my faith in Government ministers or saying that you have no faith in me. If it's the former then thanks, you're right and have a cigar. If it's the latter, I'm frankly puzzled as to why you think you would need any.

[muggyno1]

Now you've got me confused, can you rewind to this and elaborate?

 

Just rewind to post 927 and read consecutively from there. It should be self explanatory.

[muggyno1]

You're right Tide and there is a healthy debate going on on this and a number of other threads. Sometimes there are just some unfortunate distractions.

 

Muggy

[muggyno1]

Yes it's unfortunate those distractions seem get in the way of justifying your action

plan

 

Actually they sometimes help.

 

NMTBSOTS!!

[muggyno1]

Zootscoot is certainly open to reasoned debate, here and in other threads, and this is very welcome.

 

When you can add something to that debate other than personal abuse, that will be welcome too. Otherwise, as I said, NMTBSOTS.

 

Muggy

[muggyno1]

Some people seem to be of the opinion that they have greater knowledge of the issues than the three people who have been leaders of campaign for over 18 months and have spent quite some time looking very closely at these issues. In addition to consuting a principle solicitor of consumer law and a top QC in banking law.

 

Can we please please keep these discussions about issues and not reduce them to the personal. As you say zootscoot

 

Could all users please keep the thread on topic and refrain from personal attacks

 

I have tried, time and again, to clearly state my reasons for vehemently opposing the charter, all of them about issues and not personalities.

 

Yes, I am angry about the way this was done and yes I do believe that it is the charter, and not those opposing it, that is divisive. That does not stop me admiring much of what has been done for this campaign by its authors and I have said so a number of times.

 

By all means debate and refute our arguments, but we too have been thinking about this very carefully. I don't think that we have a monopoly on being right but neither does anyone else.

 

Muggy

[muggyno1]

Just thank everyone for empowering each other to make better decisions altogether. Then we all have a win-win and that's what it is all about.

 

I couldn't agree more Andrew1. All reasoned debate should be welcomed and nurtured.

 

I just hope that the maxim 'All members are equal but some are more equal than others' doesn't apply.

[muggyno1]

Until recently, my missus worked for a financial company and, apparently, every credit search made about you adds (negatively) to your credit rating !

 

On that basis, it could mean that if I applied for loads of credit/store cards, every search would impact my credit rating and could impact my rating such that I would be ineligible simply due to the searches !

 

Talk about loaded dice !

 

Yep, Capitulator, the dice are loaded in every conceivable way.

[muggyno1]

Apologies in advance, I'm going to vent some spleen!

 

What absolute [EDIT] chaos, as the What banks are granting stays? thread shows.

 

Stays being automatically granted, stays being granted (or not) on a case-by case basis, business as usual, stays being granted in error against credit card claims etc. etc. etc.

 

All this guff from the OFT about launching the test case in order to clarify things and benefit the consumer. And these guys are supposed to be regulating the trading environment!! What morons, they launch a test case without a thought in their pretty little heads about the chaos that would inevitably ensue in the legal system. Too [EDIT] concerned about not upsetting the banks so that they would come to court quietly.

 

Neither the lower courts nor the FSA are in any way legally obliged to do anything in response to the launch of this test case. They could just as easily have continued as normal until a final judgement was reached.

 

My inevitable conclusion is that the OFT and FSA have colluded (and I use the word advisedly and with forethought) with the banks against the consumer. This in direct violation of both of their remits.

 

I know that all of this needs toning down, but we should try to expand on these arguments and hopefully use them as the common ground on which we can all fight.

 

Let's turn all of our guns on these two institutions now. We can continue to hit the banks in the courts, where possible, and we know that they are [EDIT], but it is the OFT and FSA that are to blame for the current madness and for hurting the consumer even more than they were being hurt before.

 

Sorry about the rant, burt any ideas anyone?

[muggyno1]

I think we all need to calm down and I know that is increasingly difficult given the complex and changing situation we are in added to seemingly endless process of closed doors.

 

That said, we have also witnessed stimulating and well thought out debate taking place on here, most of it, the vast majority, very constructive. There has been a wealth of really good work, great work, which has taken place and that includes all who are upset with with certain aspects of the Charter or those who were involved at the outset of some important threads.

 

I think that will be a main part of the key to mutual success, allied to the unlawfulness of bank charges.

 

It appears, and I have only picked this up from threads on here, that whilst some institutions may be using this as an opportunity to stop processing claims for credit card claims and perhaps charges on bank loans and mortgages too, that there may be an overlapping legal issue or at least, an interpretation that this is the case.

 

I have not been here that long but I know and love the power of CAG. Thats only possible because of each person on here and why they arrived.

 

Kenny,

 

You are right about the potential power of CAG and that the internal debate is both stimulating and to be encouraged. It is also true that the charter has generated a lot of internal heat.

 

What I'm not sure about is what your view is on turning our guns on the OFT and FSA and/or what the best way is to do this - see my previous post.

 

Cheers.

[muggyno1]

Thanks Kenny, everyone does need to contribute. I'm sure that the issue is being considered in some quarters.

[muggyno1]

Crfx,

 

The campaign to write to MPs is about bringing pressure to bear on the relevant bodies. My point has always been to put pressure on these people, the debate is about how to do it.