Proposed Judicial Review Proceedings

[crfx250]

Hector Sants

Chief Executive

Financial Services Authority

25 The North Colonnade,

Canary Wharf,

London

E14 5HS

CC Clive Briualt Managing Director FSA

By letter & e-mail

1 September 2007

Dear Mr Sants

It is with some regret that the Financial Services Authority have been unwilling to provide me with the answer to the simple and straight-forward question as to why it introduced the complaints handling waiver announced on 27 July.

Having attempted unsuccessfully to obtain an answer to the question as to why the FSA introduced the complaints handling waiver - by telephone, e-mail, letter and most recently with a request under the Freedom of Information Act - a question that can not in any way be considered unreasonable - it appears the only course of action left open to me is through the courts as I have reached the conclusion that the FSA will not disclose the information as a matter of policy.

The repeated templated reasons I have been given for the waiver include the suggestion that it has been put in place ''in the interests of all consumers''. This is just nonsense. It is also plainly dishonest. And as the waiver was requested by the banks themselves, is the FSA seriously saying that this was a joint initiative with the banking industry to uphold the interests of the consumer? The FSA's decision to waive the rights of account holders to dispute these charges while the banks can continue to levy them while the OFT are challenging their very legitimacy in court is lamentable.

In his statement on the 27 July Clive Briault says that complaints ''continue to be dealt with in the current inconsistent way'', an uncharacteristically

honest assesment, albeit unwittingly, of the FSA's catastrophic failure to enforce it's complaint handling rules on not just a few individual firms but the entire retail banking industry.

Mr Briault wrote to the CEO's of all banks that offer current accounts with a letter entitled ''Handling complaints about unauthorised overdraft charges'' that included a recommendation that ''the senior management of all firms that operate current accounts need to review their firms' complaint handling procedures to ensure they comply with our standards, which include handling complaints fairly''.

The letter would have been a welcome break from the eerie silence of the FSA on the entire issue of overdraft charges were it not for the fact that it was published on the very day - and in fact several hours after - the FSA had already granted the waiver that legally absolved the responsibility of all banks from processing these complaints for an undetermined period - a graphic illustration of the FSA's breathe-taking contempt for the consumer who's interests it is charged with protecting.

 

 

Proposed Judicial Review Proceedings

I am now considering taking formal action against the FSA by way of Judicial Review. The decision by the FSA that I may seek to challenge would be the decision taken by the FSA to introduce the waiver as set out in the statement of 27 July 2007 and it's legitimacy.

A full “letter before claim”, as suggested by the Judicial Review pre-action protocol, will be sent to the FSA on 28 September 2007, which will set out all the relevant issues and name all other interested parties.

I give you notice of this proposed Judicial Review action in order to inform the FSA that the reason for the decision to introduce the waiver is not an issue that can be avoided, nor one that can be put far down the administrative list.

If the FSA can provide me with information that satisfies me that such a waiver is both necessary to facilitate the OFT's test case and is genuinely in the interests of consumers, or, that the waiver is revoked by the due date of the proposed review on 27 September, then it may be that judicial review proceedings may not be required.

Yours sincerely

crfx

[duncan_disorderly]

Ecxellent work. As your latter states, the whole situation with the FSA is totally lamentable.

[patrickq1]

you could include some sections here cf your doing brilliant mate well done

patrickq1

are they in breach of this

section 148_7.c of The Financial Service and Markets Act 2000

[jansus]

excellent work - glad to see someone is carrying on the fight-

 

Jan

[dad]

crfx250,

 

Can I suggest you have a read of 'The Judge over your shoulder' at:

 

http://www.tsol.gov.uk/Publications/judge.pdf

 

This is a guide to Judicial Review produced by the government's solictors to help civil servants. It may give you some ideas as for your particulars of claim.

 

Administrative law has developed a series of tests for measuring the lawfulness of an exercise of public law powers:

 

1. Legality – acting within the scope of any powers and for a proper purpose;

2. Procedural fairness – so as for example to give the individual an opportunity to be heard;

3. Reasonableness or Rationality – following a proper reasoning process and so coming to a reasonable conclusion;

4. Compatibility with the Convention rights and EC law.

 

Personally, I would have thought your best chances are with Procedural fairness and Reasonableness.

 

Dad

[patrickq1]

Bias, Impartiality and Independence there is a whole raft of information well done dad

[tifo]

are they in breach of this section 148_7.c of The Financial Service and Markets Act 2000

 

148(7)© consider whether its publication would be contrary to an international obligation of the United Kingdom.

 

I doubt the above could be used as it's an internal thing and bank charges are not an international issue for any country.

[patrickq1]

thanks tifo understand it now after a re read

[Dougal16T]

What a great idea...A Judicial Review....Let's all support this and show the 'system' (which abuses us constantly) we are not finished by a long way..!!

My sincere good wishes...

Dougal.

[alecmac18]

CRFX250 - you are a genius - a judical review is exactly what is required. Here is the FSA flowchart for deciding when to issue waviers.

 

http://www.fsa.gov.uk/pubs/waivers/wpf.pdf

 

As you can see the banks need to apply for the wavier themselves. Have we already clarified whether the banks applied for the wavier of whether it was granted without consultation with the banks?

 

Also a FOI request should be able to drag up the minutes of the FSA committe and and notes on consideration of the case issues. (you would think anyway).

 

I applaud you on the judical review. But I've got a strange feeling that the FSA will issue a statement on SEPT 28th to try digg themselves out of the massive hole they have found themselves in.

[alecmac18]

5. How will the FSA ensure all the conditions of the waiver are being met?

 

We will review the waiver in two months to ensure the criteria for granting the waiver are being met, including whether banks and building societies are complying with the conditions set out in the direction. If we are not satisfied that these criteria are being met after two months or at any time after that, we can revoke the waiver.

For individual firms, senior management is responsible for its activities and for ensuring its business complies with our regulatory requirements and this will be monitored through our normal supervisory procedures.

 

Why the wavier in the first place?

 

The waiver is initially being granted for one year, or until the resolution of the test case. We will review it after two months to ensure that there is a stay of proceedings in the courts of England, Wales, Scotland and Northern Ireland; the FOS is not proceeding with cases about unauthorised overdraft charges until resolution of the test case; that firms granted the waiver are complying with the conditions; and, more generally, the continuation of the waiver remains appropriate.

 

 

Note to the FSA: The continuation of this wavier is now COMPLETELY INAPPROPIATE.

[alecmac18]

Not only was the wavier unfair and against the best interests of consumers from the start - but the banks that it was given to have not even complied with its conditions:

 

Banks/building societies:

• Banks/building societies will not have to meet the requirements on time limits for dealing with any complaint which relates to unauthorised overdraft charges during the duration of the waiver.
  
• A bank/building society will still have to acknowledge the complaint within 5 days of receipt, but the normal time limits for handling complaints will not apply.
  
• Banks/building societies will have to comply with a number of conditions set out by the FSA in the waiver, including:
  
• Banks/building societies must communicate with complainants, potential complainants and other customers in a way that is clear, fair and not misleading;
  
• Banks/building societies will have to keep proper records; and
  
• Banks/building societies need to have processes in place to deal with complaints in an orderly and efficient manner once the waiver expires and complaints handling restarts.
  
• Seperate Hardship cases from ordinary cases.

What do CAG members think about the above conditions? Has your bank even been complying with the UNFAIR WAVIER?

[alecmac18]

The long and the short of it is the FSA issue the wavier for the benefit of banks and no one else.

 

Why can the banks still debit your account for charges that are potentially illegal. Yet you can't claim them back.

 

British Justice at its finest courtesy of the F S A.

[alecmac18]

And what about people who started their claim back in JAN/FEB/MARCH. Some of these people were then told in July that their back no longer had to deal with their complaint. Thus the banks that took the longest to process complaints gained the most from this wavier. Fair? Not even fair to some of the banks that dealt with claims fast.

 

Fair to customers and people who had their accounts robbed:

 

Not a chance.

[crfx250]

Thanks all for your kind words of support and advice.

 

I'm taking lots of legal advice with this and will keep you posted.

[crfx250]

To:

crfx

From:

Natalie Baylis

Legal Advisor

General Council's Division

Financial Services Authority

cc. Laura Derby Chief Executive Office FSA

cc Simone Ferreira General Council's Division FSA

17 September 2007

 

Dear Mr crfx

COMPLAINTS HANDLING WAIVER: PROPOSED JUDICIAL REVIEW PROCEEDINGS

Thank you for your letter of 2 September about your proposed Judicial Review proceedings in relation to the complaints handling waiver issued on 27 July. Mr Sants has asked me to respond to your letter as it concerns proposed legal proceedings against FSA.

You have asked why the complaints handling waiver has been introduced, and you have said that you are dissatisfied with the answers you have received to that question from the FSA to date. I will try to provide you with as full an answer as I can to your question. I am afraid however that this will involve some repetition of points that have been made to you in correspondence so far, as the FSA's position has not changed from that set out to you in our initial replies.

The complaints handling waiver was introduced, after careful consideration by the FSA Board, under section 148 of the Financial Services and Markets Act 2000. The background to the decision has already been set out to you in e-mail correspondence, but is central to why the waiver was introduced and so I will set it out here.

For some time customers of banks and building societies have been complaining about the charges levied in relation to unauthorised overdrafts. The legal uncertainty about whether the charges were lawful or fair meant that complaints made by customers were being determined, but with inconsistant

outcomes for customers. Some customers were successful but others with similar complaints were not.

In September 2006 the Office of Fair Trading announced that it would undertake an investigation into the fairness or otherwise of certain terms in current account agreements. Since then there has been a significant increase in the number of claims made by customers against banks and building societies in relation to these charges, and in complaints and claims taken to the Financial Ombudsman Service

and to the courts.

The FSA considered that it was desirable for there to be further clarity as to how these complaints should be handled fairly and consistantly, by obtaining greater legal certaincy or otherwise.

The FSA was also concerned. following the results of thematic work that it undertook to access the extent to which firms were complying with the complaints handling rules in dealing with complaints about unauthorised overdraft charges, that there were significant deficiencies and important areas of weakness to their approach to handling these complaints.

At the end of July the OFT and certain banks announced an agreement to start a 'test case' in the high court for a declaration to resolve the legal uncertianties concerning the level, fairness and lawfulness of unauthorised overdraft charges.

In view of those developments, the FSA considered that it was not in the interests of consumers for complaints to continue to be dealt with inconsistancy by firms while the test case was still proceeding through the courts. Once the test case is resolved it is expected to give greater legal certainty in this area and to enable complaints about these charges to be handled fairly, consistantly and promptly

in the light of that greater certainty.

After careful consideration by the Board, the FSA decided to grant the complaints handling waiver to current account providers who consented to it's conditions. The vasr majority in terms of number and market share have done so.

The main effect of the waiver is to waive the rules that specify time limits for dealing with any complaint about the level, fairness or lawfulness of unauthorised overdraft charges. This means that the banks and building societies will not have to deal with these complaints within the normal time periods required by our rules. The waiver does not prevent customers from making complaints whilst it is in place, and firms with the waiver are required to log these complaints to be dealt with on resolution of the test case.

You have asked for information to satisfy you that the waiver is genuinely in the interests of consumers. I hope that the background to and the reasons for the decision which I have set out go some way to answering your question.In addition the waiver has a significant number of other safeguards built into it, in the form of conditions applying to the firms, which are designed to protect consumers.

I have enclosed a copy of the waiver direction with this letter for your information:

A Conditions (1), (2) and (3) in prargraph 12 are designed to ensure that customers and complainants are kept appropriately updated about the course of the test case, the waiver and there implications.

B Condition (4) relates to the procedure that banks and building societies must follow where they have made an offer to a customer to settle a complaint which has not yet been accepted.

C Under conditions (5) and (6) firms must keep records of complaints received and preserve records of current accounts so that they remain available for the consideration of existing and future complaints.

D Conditions (7) and (8) make requirements on firms which are parties to the test case in relation to their conduct to the case.

E Condition (9) requires all firms to update the FSA about stays of relevant court proceedings obtained.

F Conditions (10) to (15) relate to the handling of complaints by firms during and after resolution of the test case. One important protection for consumers whose complaints relate to financial hardship. Condition (10) requires firms to ensure that complaints relating to financial hardship (and others which are not relevant to the waiver) are identified and progressed promptly in compliance with normal rules and timescales in the Disputes resolution: Complaints manual of the FSA

Handbook.

G Condition (12) prevents firms from taking into account the time period of the waiver to rely on a 'limitation' or time limit defence to a subsequent complaint by a customer.

H Condition (14) prevents a firm from seeking 'full and final settlement' of a complaint during the life of the waiver.

I Conditions (11) and (15) require firms to handle complaints effectively and swiftly and in accordance with the principles established by the test caseafter it has been resolved.

Finally, the waiver is of limited duration: it will end when the test case has been resolved or at the end of one year if earlier, and in addition the FSA may revoke the waiver at any time if the criteria for the waiver are no longer satisfied. The guidance in the waiver direction (paragraph 7) sets out the approach that the FSA intends to take to the planned review of the waiver at the end of September, to considering renewal of the waiver after a year and to reviewing continuing satisfaction of the criteria for the waiver throughout its duration.

You have also asked for information to satisfy you that the waiver is neccesary to facilitate the OFT's test case which is one of the reasons for the waiver set out in the press release and in information about the waiver on the FSA website. The waiver will facilitate the test case in that it will allow the test case to proceed ahead of the other outstanding (and future) complaints about these charges. Once the case is resolved it will then provide some legal certaincy against which those complaints can be judged, which should result in fairness and consistancy between the outcomes of those complaints.

We acknowledge that our decision will lead to inconvenience and delay for some consumers - particularly those who were in the advanced stages of making a claim - in that their complaint will now not be resolved for some time. However we are clear that, bearing in mind the background against which our decision was made, and the conditions which are contained in the waiver, it is in the broader interests of all consumers in the longer term.

I hope you have found the information in this letterhelpful. It is a matter for you whether you still wish to challenge the FSA's decision by way of Judicial Review. We fully reserve the FSA's position in relation to any proceedings you may choose to bring. Should you decide to do so, however, you should be aware that it is our policy to recover from a claimant our costs of defending an action if unsuccessful legal proceedings are brought against us.

Yours sincerely

Natalie Baylis

[GuidoT]

I like they way they just chip in about the legal costs at the end, they are not much better than the banks.

 

Anyway, if you are about to embark on such (your are braver then me) then ensure you comply with the Pre-Action Protocol to avoid any adverse costs orders.

[alecmac18]

So they allowed banks to stop processing complaints:

 

BECAUSE THE BANKS WERE NOT FOLLOWING FSA GUIDELINES IN THE FIRST PLACE WHEN DEALING WITH THESE COMPLAINTS.

 

Rather than punish the banks the FSA & the OFT effectively rewarded them for screwing customers.

 

'inconsistencies' in dealing with complaints - actually I think they were all acting in the same way.

 

i.e. take as long as possible to process a complaint and pay out as little as possible. And for this they are given a waiver??? They should have been given a whopping great fine. Boggles the mind the regulators we have in this country.

[alecmac18]

Part 1

 

Conversation between FSA inspector and bank boss:

 

FSA: My, my you have a lot of complaints. How are you handling them?

 

BANK: Well we first ignore them, then we offer a really small amount of money, if the customers REALLY winge then we pay the most (but not all of their claim). If they take us to court we fight them tooth and nail and eventually we settle out of court.

 

FSA: Hmm I see, You understand you are breaking the Treating Customers Fairly rule?

 

Bank: Oh no we're not. TCF does not apply to really big banks, rememeber?

 

FSA: Oh Yes. I quite forgot. Silly me. Anyway - lets see how we can help you out. How would a waiver blocking ALL complaints sound.

 

Bank: Seriously? That would be great!

 

FSA: No problem. Its all part of the service.

 

Bank: You play golf?

 

FSA: Why yes.

 

Bank: Let's go!!!! Hahah - stupid retail customers.

 

FSA: Hahahaha - now about that job in compliance coming up next year....

 

Bank: Anything for my buddies at the FSA. How does six figures plus car sound.......

 

 

to be continued.............

[itchyfrog]

I for one hope you keep going with this, their response is laughable so far.

[smutley]

need to subscrib to this, reading with great interest!

[alecmac18]

Hey CRFX250,

 

I guess if you do go to a judicial review - you'll need some funds to fight them. I would be happy to contribute to a fighting fund if there was one available - and I'm sure others would do the same - if it comes to that. Just saying.......

[crfx250]

Hey CRFX250,

 

I guess if you do go to a judicial review - you'll need some funds to fight them. I would be happy to contribute to a fighting fund if there was one available - and I'm sure others would do the same - if it comes to that. Just saying.......

 

That's very kind of you but I've got it covered thanks.

[crfx250]

Hector Sants

Chief Executive

Financial Services Authority

25 The North Colonnade

Canary Wharf

London

E14 5HS

 

 

 

cc. Clive Briualt Managing Director FSA

cc. Natalie Baylis Legal Adviser FSA

cc. Rt Hon John McFall MP Chairman Treasury Select Committee

 

 

By letter & e-mail

 

 

19 September 2007

 

 

 

Dear Mr Sants

 

Proposed Judicial Review Proceedings

 

 

I refer to Ms Baylis's letter of 17 September. At 4 pages in length and with virtually no substance whatsoever, I certainly appreciate the effort and creativity expended in crafting it but I remain seriously dissatisfied with the response.

 

Let me remind you of the 2 questions I asked in my initial letter and Ms Baylis's response:

 

Q Why was the waiver necessary to facilitate the test case?

 

A 'The waiver will facilitate the test case in that it will allow the test case to proceed ahead of the other outstanding (and future) complaints about these charges.'

 

This response is meaningless. Outstanding and future complaints will have no bearing on the test case itself. Indeed the OFT case seeks only to establish a very narrow issue and will not, as Ms Baylis claims, deal with the lawfulness or fairness of the charges. The OFT has made this very clear. Also, the OFT has recently stated that the test case, although scheduled to be heard next year, is by no means certain to proceed at all, "If we do our own financial analysis, and they [the banks] come in with a number that is lower than our analysis would suggest is an unfair charge, there is no need for the court case to go forward". I am of course aware that the FSA can only introduce a waiver scheme as a result of it being requested by firms.

 

So the situation is thus: Banks have successfully requested the waiver on the premise that a future test case might proceed, dependent on an issue which is entirely within the banks control.

 

I have been assured by the OFT that the FSA not only offered no reasons whatsoever as to why the waiver should be introduced but have categorically stated that the waiver has no facilitary value to it's case.

 

Q Could you satisfy me that the waiver is genuinely in the interests of all consumer?

 

A Ms Baylis's response is astonishing. It simply 'sets out the background' to the test case but does not provide an answer.

 

The contention that ''some customers were successful but others with similar complaints were not'' couldn‘t be more misleading. The FOS have a 100 percent success record in upholding these complaints and of the many tens of thousands of court cases dealing with claims, defeats can be counted on the fingers of one hand. And so to suggest otherwise and then use this as the basis for introducing the waiver as a means to 'protect' consumers is laughable.

 

The FSA's repeated claims that the waiver ''has a significant number of other safeguards built into it'' is a area of particular concern. Most of these waiver ''safeguards'' are simply reminders of the FSA's own general rules that are already in place , regardless of the fact that all of the 'safeguards' are entirely dependent on the integrity of the banks - whose very integrity in fact, the FSA has voiced such grave doubts about as highlighted in the report on it's thematic work and letter to CEO's on the subject of complaints against these charges. I am amassing a growing amount of evidence that the conditions of the waiver are being routinely flouted, especially in cases of financial hardship.

 

 

As both these questions have not been answered to my satisfaction I would like to give youa final opportunity to answer them. Also, in the light of recent events since my original letter I wish to put 2 additional questions to the FSA:

 

1) Was the FSA aware, at the time the waiver was introduced, that the OFT would abandon the test case if a level of charge was agreed in the meantime and if not, can the FSA justify that the waiver should remain in place if the test case it is meant to facilitate is not at all certain to take place.

 

2) What mechanism does the FSA have in place to monitor if the conditions of the waiver are being met, which are due to be considered in it's 2 month review.

 

Finally I would like to make it absolutely clear to the FSA that if these questions are not answered to my satisfaction or that the complaints handling waiver is not revoked by the 2 month review date, I fully intend to commence Judicial Review proceedings against the FSA.

 

 

Yours sincerely

 

crfx

[alecmac18]

CRFX250 - did I ever tell you that you are a genius?