News Litigation Banks set to appeal OFT charges ruling By The Lawyer 24 April 2008 15:27 17 December 2015 00:01 Sign in or register to continue reading. It's FREE Sign in Email Password Keep me logged in Forgot your password? Not registered? It's FREE! Register now Register with The Lawyer Steven Friel, Davies Arnold Cooper 24 April 2008 at 15:48 Bank charges The decision in the bank charges case has been hailed as a victory by consumer organisations, and to a large extent it is. Although the judge held that the bank charges are not penalties and are therefore not to be struck down under the common law (some small comfort!), he did find that the charges are governed by the fairness requirements of the Unfair Terms in Consumer Contracts Regulations 1999. It remains possible, therefore, that the charges will eventually be held to be unfair and therefore prohibited by the Regulations. If that were to happen, it would lead to a fundamental change in what we pay for personal banking services. But the fight is not over. Will the banks appeal? Most probably. This one is likely to go the whole way to the House of Lords, possibly more than once, as there is so much at stake. Indeed, it will be interesting to see how the banks’ share prices react in the meantime.” Reply Link Ingrid Gubbay, Cohen Milstein 24 April 2008 at 15:51 Bank charges The OFT has won a significant point because it has been affirmed as having the power to regulate banks charges under the Unfair Terms in Contracts Regulations. If the OFT had lost today the regulations would have proved to have been worthless to protect consumers against market abuse and bank customers would have been left vulnerable’. We hope that the court will shortly decide that the unauthorised overdraft charges are disproportionate and unfair to bank customers. Reply Link Anonymous 24 April 2008 at 16:38 BANK CHARGES Despite using 8 “magic circle” firms and 8 QCs the banks find themselves on the losing side. A good day for the man in the street and eventually some form of accountability for our banks. Reply Link Martin Rands 24 April 2008 at 16:50 Bank Charges I imagine that the banks’ liability to compensate is already discounted in their share prices. In any event this is chicken feed compared to their mortgage backed securities liabilities. I haven’t read the judgement yet but I am interested in why the judge ruled that the charges are not penalties. When they were introduced they represented the actual cost of processing (a typist had to be employed!) Over the years the damages claim morphed into a penalty charge in my opinion. Isn’t there a chance that a higher court will decide that the charge is a penalty – re-opening the door for business customers to claim, or can’t that point be raised again? However I am sure that the banks will appeal because they need to postpone for as long as possible their ultimate liabilities because of more pressing ‘credit crunch’ matters. Reply Link Ralph Lovesy, Denton Wilde Sapte 24 April 2008 at 17:32 bank charges This is an important decision, but is only one stage in the process and does not have any immediate implications for consumers. The judge has given the banks until May 22 to decide whether to appeal. If they do appeal, as seems likely, this case could go all the way to the House of Lords and even the European Court of Justice. The FSA has issued a waiver from its complaints handling rules that apply to unauthorised overdraft charges complaints. This means that any court claims or claims to the Financial Ombudsman Service relating to unauthorised overdraft charges are likely to remain on hold for quite some time. It is also important to remember that this ruling mainly concerns whether overdraft charges are capable of being assessed for unfairness. The Court did not decide whether such charges are in fact unfair; that question may well involve a separate test case, which would further delay a resolution to the general issue of whether unauthorised overdraft charges are unfair. Reply Link Anonymous 24 April 2008 at 18:37 OFT v Banks IBrian Doctor QC of Fountain Court victorious against an array of silk! Justice for the consumer, indeed. Already Angela Knight of the BBA making noises of introducing bank ‘fees’ we must remember her previous incarnation as a Treasury Minister under a Conservative Government. Court of Appeal Judjment 8 February 2008 No A3/2007/0805 NWB v Trustee in Bankruptcy, Babai (Michael Driscoll QC) similarly vindicated in the consumer interest ‘1980 Statute of Limitation’ required reading. Reply Link CincinnatiPete 25 April 2008 at 13:54 OFT v Banks Does it not seem strange that the judge has decided that the charges are not penalties at common law? I agree entirely with Martin Rand’s point It seems if a business incurs difficulties with overcharging then it will have no recourse (as the UTCCR’s only apply to consumers) which seems totally unfair. Does this mean people will try to run personal accounts for business purposes? This point must be appealed Reply Link Adrian 25 April 2008 at 18:51 business bank charges does this mean that as a small business owner, that i cannot claim my business bank charges? Reply Link Martin Rands 28 April 2008 at 16:00 business bank charges I still haven’t read the judgement (and probably never will!) as it is 200 pages plus. My understanding is that the judge decided that the charges were not penalties. The consumer can rely on the UTCCR but business is not afforded this protection. Does anyone know (in a few sentences) why the judge dismissed the penalty arguments? I do not see how a disproportionate charge of £38 can be anything but penal. Although as I said in the earlier post, large charges comprised the actual cost of returning cheques 30 years ago as secretarial and clerk services were employed, unlike today. I hope the OFT can and do appeal this point or small businesses will have to pass on this unfair penalty. Reply Link CincinnatiPete 28 April 2008 at 16:22 OFT test case Adrian, I think as things stand you will struggle to claim back business charges. However the banks are bound to appeal the judgment so we must hope that the OFT cross appeal on the common law penalty charge issue. Martin I understand that the judge said the charges were not charges at all but payments for a service and therefore the common law did not apply. Quite how he squared that with the UTCCR applying to personal accounts I have no idea Reply Link Martin Rands 28 April 2008 at 17:39 OFT Test Case Thanks Pete I am almost tempted to have a look at the judgement! I thought the banks were on a wing and a prayer with the service charge argument, but true to form they got away with it. I guess the decision must have been that the ‘service charge’ COULD be at an unfair level on consumers? Sounds like an appeal could be the best result for bank customers! Reply Link stuart gibbons-halstead 17 November 2009 at 14:47 I am certainly all in favour of the high courts decision so far,maybe very angry people like myself,who has been caught out by these charges a thousand times before,may actually see some light at the end of the tunnel. Poor income families are the worst hit,and have no defense against these beaurocrats with already enough money in their back pockets,lined by the poor people like me. I have two bank accounts,several hundred pound overdrawn,and every penny is their charges…JUSTIFIED? Reply Link Name Email Cancel reply Threaded commenting powered by interconnect/it code.