Office Of Fair Trading Test Case

[nevos]

Hey Zoot, don't forget to add PC to your signature...

 

A pitty we couldn't organise a nationwide withdrawal, you remember the fuel blockades and go slows, well on a particular week in the year people across the country withdraw their cash for one week - see how clever they are then - a run on the banks would hurt them bad. If only

 

We could if we can get the press on board..

[zootscoot]

Hey Zoot, don't forget to add PC to your signature...

 

 

 

The reference to GOVAN and MSE in my signature relate to the victory in Hull which PC for whatever reason chose not to be part of.

[kog]

I'm personally sick of all the chit chat and feel it is time to take some kind of positive action by way of protest. I hope we can block the streets of London with our cars and CAG banners until they the establishment listen to consumers and do something.

 

If we don't do anything, and just roll over, I can almost garentee the courts will slowly follow the FOS and grant Stays on all claims.

 

However, I have wondered if the courts are granting Stays on the less prepared cases, is there any evedence of this?

[nevos]

Yep, PC jumped on the wagon about a week later, your right! This was my reason to believe that CAG can go it alone which IMO does not dilute the efforts of people like yourself.

 

The courts will probably blanket stay everything in time..unless the penny drops that this is an earner for them at 120 a shot to file 35 a go to remove a stay.

[zootscoot]

I'm personally sick of all the chit chat and feel it is time to take some kind of positive action by way of protest. I hope we can block the streets of London with our cars and CAG banners until they the establishment listen to consumers and do something.

 

 

 

We are thinking more on the lines of co-operating with OFT and to be involved some way in shaping the litigation. The OFT holds all the trump cards at the moment and to a large extent has removed much of the power from consumer groups. If we are to be involved in shaping the law we need to do so through OFT.

 

We are also still hoping to do our own test case The OFT test case has complicated things somewhat and we are still considering ways to achieve this.

 

Protests are not the best way to achieve a co-operative working relationship (Besides the fact that the last protest at OFT had a very disappointing attendance rate). CAG/MSE/PC engaging in protests would mean they are likely to lose out to consumer groups such as Which? Who represent a largely middleclass membership and are thus going to be less concerned for ensuring true social justice is achieved. They are unlikely to think beyond the bank charges themselves and see the other consequences such as defaults, bankruptcy etc.

 

 

However, I have wondered if the courts are granting Stays on the less prepared cases, is there any evedence of this?

 

It is still very early days. Some of the courts don't seem to have made up their own minds on strategy. At present it seems slightly more courts are imposing stays than not. This is not necessarily something as a result of the agreement, but quite normal practice in the courts when a test case is pending. In fact the agreement left it up to individual courts to decide. How much impact the applications to remove a stay will have is yet to be determined.

 

I know Hull court has still been issuing orders for claimants to comply with so it seems its business as usual there. Birmingham has been giving claimant's the choice to have a stay or proceed. These were two of the most controversial courts to date. Its obviously going to be tempting for courts to simply impose blanket stays, but we just have to show them that that's not a soft option.

 

Yep, PC jumped on the wagon about a week later, your right! This was my reason to believe that CAG can go it alone which IMO does not dilute the efforts of people like yourself.

 

 

PC was invited to come in with us but I believe they had other plans in the pipeline. We need to be working together to ensure our strengths. Martin has considerable sway with the media and CAG/GOVAN/pc have legal expertise and all three are in constant touch with those most deeply affected by bank charges. It is these ingredients which make us such a strong team.

[noomill060]

zoot- with regard to judges erroneously applying stays to credit card claims, do we just have to play the game and apply to get the stay lifted, or can something be done to ensure the judge is aware the waiver doesnt apply to CC claims?

[zootscoot]

No you still need to make an application to remove the stay using N244. There is still a chance the judge will refuse to lift the stay as many of the issues of law are the same such as the applicability of UTCCRs and the law on penalties.

[MacBoy]

crfx250 (and zootscoot)

Is this what you're looking for?

 

Yes, once again I've read it..and not just tonight. Let's go through what you quoted (I could go through the whole thing but it would likely take all night. I have many questions):

 

This is just one part of a cohesive strategy. Penaltycharges.co.uk is joining the CAG and MSE in working together on this. Collectively we aim:

 

i. To officially request to be a party in the OFT case - Understood and agree - this is one of the inequities of the OFT/FSA agreement, of which I'm attempting to raise wider awareness

 

ii. To lobby using the above charter to ensure a decent outcome - this is woolly - you can agree to lobby on the basis of a framework- an agreed set of objectives and principles, but why call it a charter? A charter implies a quasi-legal agreement signed up to by more than one party. I need some precise language here - tell me what you mean

iii. To test whether the stay will actually hold in the courts. It is very doubtful it will - conjecture, but I hope you are right.

iv. Anything else that comes up - there is a meeting to discuss action very soon - no questions

 

Additional questions:

• why is there even a need to introduce the six years into the framework - this is something I really take issue with Martin Lewis about. Misinformation for the masses.
  

• Why should we even bother to try and frame a figure around what a 'fair' price for a penalty charge might be? First of all aren't they what we are supposed to be fighting tooth and nail against? Are we becoming doubtful of the validity of our own argument? Once we go down this route, we erode the core of our argument and open up opportunities for the banks to make hay. We are not dealing with agreeable, well-intentioned opponents here.
  

 

These are just some of my concerns with this document (and yes I do accept and understand that it's a draft). I just don't see why it's necessary to be preparing what looks very much like a truce. If you contend that the 'charter' isn't a prematurely concilliatory approach, then please explain why. That is all I'm asking.

 

Many thanks in advance

 

Mac

[noomill060]

Thank you for clarifying the CC stay situation, zoot.

[noomill060]

zoot- would the stay thing work in reverse-

 

ie: If a CC company were hassling through a DCA or seeking to enforce a debt which was made up largely of penalty charges and interest levied thereon. Could the customer succesfully apply for a stay until the lawfulness or otherwise was established by the test case?

 

In the case of a DCA hassling, would this amount to harrasment, particularly in the light of the test case?

[zootscoot]

ie: If a CC company were hassling through a DCA or seeking to enforce a debt which was made up largely of penalty charges and interest levied thereon. Could the customer succesfully apply for a stay until the lawfulness or otherwise was established by the test case?

 

 

Yes they could apply for a stay. The bank may contest this on the grounds that it is not a current account. It would then be up to the judge to decide whether or not to grant the stay.

 

Alternatively the person could defend or counterclaim on the ground of unlawful penalty/ unfair under UTCCR 1999. The court may grant a stay on its own initiative or the Company may settle or request a stay.

 

ii. To lobby using the above charter to ensure a decent outcome - this is woolly - you can agree to lobby on the basis of a framework- an agreed set of objectives and principles, but why call it a charter? A charter implies a quasi-legal agreement signed up to by more than one party. I need some precise language here - tell me what you mean

 

It is wooly. It was written quite soon after the announcement and was inviting ideas, discussion and feedback. It was not setting an agreed agenda. The word Charter I believe was first put forward by BankFodder, presumably because it is intended as eventually having some form of legal effect probably not through the litigation but through OFT's power to issue guidelines which are quasi -legal. Don't forget that the OFTs investigation in current account is still continuing throughout the litigation. The OFT still has the power to issue whatever guidelines it feels fit even if the litigation proves to be unsuccesful for them.

 

why is there even a need to introduce the six years into the framework - this is something I really take issue with Martin Lewis about. Misinformation for the masses.

 

The six years I believe was raised to compare the OFT's investigation on credit cards where there recommendations had no retrospective effect at all. We did not feel that this was satisfactory. There is a limitation period of 6 years which applies in the courts. This may be displaced by s.32 of the Limitation Act yet, so far all cases which have tried this in court have failed. Some banks have paid out without defending. The OFT have stated that they will be raising the Limitations as a subsidiary matter in the litigation. If this is proved to be successful then it will be quite obvious that charges incurred before 6 yrs may be claimed so we do not need to fight this point.

 

• Why should we even bother to try and frame a figure around what a 'fair' price for a penalty charge might be? First of all aren't they what we are supposed to be fighting tooth and nail against? Are we becoming doubtful of the validity of our own argument? Once we go down this route, we erode the core of our argument and open up opportunities for the banks to make hay. We are not dealing with agreeable, well-intentioned opponents here.

 

 

If you compare the £12 figure the OFT came up with for credit cards you will be able to see that we did not want the OFT to get away with that sort of sum again. By putting £5 on the agenda along with our evidence of CYNthesys and the BBC figure of £4.50 the OFT is going to find it very difficult to reach a compromise figure with the banks.

 

Our own argument has always been that bank charges are unlawful penalties and or unfair under UTCCR 1999. We are quite confident that £5 charge is neither extravagant nor acting in terrorem so as to make it an unlawful penalty neither would it be regarded as disproportionate so as to make it unfair.

[MacBoy]

Thank you for the considered response, zootscoot. Some things are much clearer now.

[duncan_disorderly]

Thanks Zootscoot for setting out a lot of the thinking. However, I am also against the £5 suggested charge. Here is my reasoning.

 

People who I have helped recover the most in unfair charges generally fall into 3 categories:

1. People on benefits
   
2. Single parents
   
3. The lower paid

We all know that the people paying the most charges are in most cases those with the least amount of money to live on to begin with, whilst others who could afford to fund their own transaction charges, enjoy free banking services. This is the most unfair part of our banking system. I do not use the word unfair as in UTCCR but as in wholly and morally UNFAIR.

 

Living in Northern Ireland, I have looked at the banking systems in Republic of Ireland where the banks are more tightly regulated. The average default charge in Irish banks is €4.55 (which equates to about £3). The same banks north of the border charge £30 - £40 because they can get away with it (for the moment:)). Everyone then pays transaction charges. To me this is a much fairer system. The more you use the bank for transactions, the more you pay.

 

The gripe that I have with the £5, is that the banks are not going to accept this figure without trying to recoup their losses by introducing transaction charges anyway. I agree that that figure in law would not be in terrorem or extravagent, but neither would £2 or £3.

 

Some might think I am splitting hairs, but £5 can still be a lot of money to someone on income support, incapacity benefit or a non-working single parent. If penalties are going to be attacked, and the banks go down the route of introducing transaction charges in any event, I would prefer to stick the knife into penalty charges as they are now and twist it. If other studies have found the cost of these penalties to the banks to be £2.50, why give banks the luxury of sticking a 100% profit margin on this figure?

 

We can already point the OFT in the direction of regulated banking systems in our nearest european trading partner in Ireland to see how a fair banking system should be operated.

[nevos]

Free banking for the rich and the less well of are paying for it in penalty charges. Sounds about right.

[kog]

All who reclaim their charges have been fighting their case on the principle of case law, that is, that the plaintiff (in our case the defendant) should not be put in a better position than if the contract had been properly performed.

 

However, here we are talking about allowing the banks £5 for their penalty charges, which seems to imply we have been fighting our case because we did not like the price. If thats the reality, that we do not like the price, then anyone who is of the opinion that its the fault of those who go overdrawn, and should pay up and shut up, are in fact correct.

 

Personaly speaking I have reclaimed all my charges, which did not amount to much. But I fought my case because I believe in the principle, the law "that the plaintiff (in our case the defendant) should not be put in a better position than if the contract had been properly performed".

 

If the Consumer groups are infact fighting this issue because its their belief the price is too high and a more reasonable price of £5 sounds fair. Then I'm out of here.

[GOODIES]

Hi everyone,

 

I have my court case here in Trowbridge, Wilts. I phoned them on Friday 10/8/2007 as my court case is 31/8/07.

 

Asked what I should do, whether they require me to send in the Court bundle and also whether to send the copy bundle to Barclays, and they told me that unless I hear anything from them, the court case is going ahead as per instructions. I have not heard anything from them, so it is obviously going ahead.

 

So I have been doing rather a lot of photocopying as you can imagine?

 

My query is will Barclays show up on the 31st August 2007

 

If they don't have I won:???: , as before if the other party don't turn up we win by default and Judgement.

On the other hand . I expect that I shall get there and be told this that and the other and told that I will have to wait for the final decision after the OFT case, obviously I expect on three years time:mad:

Don't you think that this is a complete utter waste of my time and the Judges, as its not his fault is it? as like all of you many many hours of work has gone into this.

My claim is for £3000.00 so I will keep fighting.

But what are your views on the fact that I still have to go to court:confused:

 

Bi for now

 

Jay

[blazing-badger]

Hi everyone,

 

I have my court case here in Trowbridge, Wilts. I phoned them on Friday 10/8/2007 as my court case is 31/8/07.

 

Asked what I should do, whether they require me to send in the Court bundle and also whether to send the copy bundle to Barclays, and they told me that unless I hear anything from them, the court case is going ahead as per instructions. I have not heard anything from them, so it is obviously going ahead.

 

So I have been doing rather a lot of photocopying as you can imagine?

 

My query is will Barclays show up on the 31st August 2007

 

If they don't have I won:???: , as before if the other party don't turn up we win by default and Judgement.

On the other hand . I expect that I shall get there and be told this that and the other and told that I will have to wait for the final decision after the OFT case, obviously I expect on three years time:mad:

Don't you think that this is a complete utter waste of my time and the Judges, as its not his fault is it? as like all of you many many hours of work has gone into this.

My claim is for £3000.00 so I will keep fighting.

But what are your views on the fact that I still have to go to court:confused:

 

Bi for now

 

Jay

 

Barclays will be there and will request a stay. If you do not agree, they will apply to have your case struck out on the basis of the decision in Berwick -v- Lloyds. Be sure to have your case against a stay ready, and also be ready to defend yourself against a strikeout. (Remember, the Berwick decision was made on the basis that he was not in breach of his contract with the Bank. You disagree, you definitely are in breach, so it does not apply in your case.)

[PeterAnderson]

Zootscoot

 

I have only one question really - what about Common Law ??

 

Over on the two main Business threads, we as you know, we cannot rely on consumer law, but have to rely on Common Law; now, over the last few weeks following the announcement of the OFT+ 'test case' it would 'seem' to us that the main basis of the OFT case is based around the UTCCR's. I am aware that the UTCCR's are as a result of an EU directive, and that no doubt this 'new' legislation encompasses various other bits-&-bobs not connected with our claims - that the bank's charges are penalties and therefore illegal.

 

BUT for at least 100 years these penalty charges have been thrashed out in civil courts and we now have stated cases.

 

On CAG there are three POC templates - 1) private (new), 2) business (they differ from Wiki V's cag BTW) & 3) claiming back beyond 6yrs; and just maybe, a few using the CI argument.

 

It would seem to me that successful business claimants up till now have really been riding on the back of UTCCR's (although they have not used this in their claim) but the bank's have not turned up at court and therefore they have won by default, rather than thrash out the argument/counter argument in the court itself - shame cos the banks will not attend.

 

If the OFT case is based purely on the UTCCR's then why, as the business community have to do do - rely on existing tried and tested Common Law

 

Just a thought -

 

PS The cag POC template only refers to two Common Law cases

But please follow this post as MORE Common Law cases are listed

 

Dunlop Pneumatic Tyre Co. v. New Garages and Motor Co. [AC 79];

Lordsvale Finance PLC v. Bank o/Zambia [QB 752];

Murray v. Leisureplay [EWCA Civ 963 ]

Nurdin & Peacock v D B Ramsden [1999] 1 W.L.R. 1249)

Lord Elphinstone v. Monkland Iron and Coal (1886)

Clydebank Engineering and Shipbuilding co v. Ramos Yzquierdo y Casteneda (1905)[AC6]

 

The claimant draws attention to a report from the Competition Commission entitled "Northern Irish Personal Banking," published on 0/10/2006

 

And http://www.consumeractiongroup.co.uk/forum/general/109977-stuck-q-re-pocs.html

[zootscoot]

This is taken from the OFT website Q & As page on the OFT test case which demonstrates the the issue of penalties will be covered:

 

4. What will the test case cover?

In assessing whether the charges are consistent with the UTCCRs:

• The first step is to assess whether the charges are subject to the test of unfairness,
  
• The second step is then to consider whether the amount of the charges is unfair.

The OFT's legal action addresses the first point by seeking to establish that the provisions of the UTCCRs that deal with unfairness apply to unauthorised overdraft charges.

The legal action will encompass a representative selection of the banks current and previous terms and conditions.

This first stage of legal action is also expected to cover some additional points of legal principle: in particular whether these charges can be a penalty at common law.

 

The particulars of claim is not the place to be reciting copious amounts of case law. If you look at the new POCs drafted by a QC you will see that they do not refer to any cases at all.

[Muffintop]

zoot know your in great demand, need an answer really to this though and just cannot get an answer via my thead, my day 28 is tomorrow with abbey no defense offered and the court mcol have not said its stayed.... abbey however have written and said they have requested a stay but surely they are still obligated to offer a defense until they have been told by court its stayed? im planning on entering judgement tomorrow and hope doing the right thing. abbey say they have requested a stay in light of oft.skeggsy

[zootscoot]

The case remains unaffected until a stay has been ordered by the court. If they have not filed a defence by the stated deadline you can file for judgment by default.

[Muffintop]

thankyou

[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

[nevos]

Muggy: What is the answer then IYO?

[crfx250]

Zootscoot is right about the £5 and the need to be realistic if we are to be taken seriously enough to be listened to in the discssions. It's just the

way the world works.

 

But as Iv'e said before, any figure we state as being fair will have no bearing whatsoever on the final setting of the charge so it is of no relevance anyway.