News OFT bank charges investigation derailed by Supreme Court ruling By Catrin Griffiths 25 November 2009 11:08 17 December 2015 09:41 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 Anonymous 25 November 2009 at 11:40 Just typical of the OFT going after big business without thinking it through. Seems the judge said that the OFT got the terms of reference wrong. Now thousands of people will be even more out of pocket as the banks will not settle any claims and could even put them up. Congrats Mr Fingleton Reply Link Lena 25 November 2009 at 12:05 I can’t believe this. I just heard on the radio that whoever represented bank in courts, said – There is no such thing as free banking. Helloooo, we – people know that, what we also know is that the whole charging system is Unfair!!!!! For god sakes!!1 I am so annoyed about this. What can we do?! So, so Unfair!!! Reply Link Anonymous 25 November 2009 at 12:14 Another bailout for the greedy banks by those worried about the value of their personal shareholdings….what a disgrace. Banks borrow money (from the public) at rates as little as 0%….can the public borrow at these rates, or anywhere close to them? No. Banks make plenty of money by lending to the public at interest rates as high as 20% or more. The banks have been creaming off this country’s wealth for their shareholders for years, yet the public is currently underwriting them. This is ridiculous, and a national scandal. The government needs to end this cosy relationship with the banks and provide a proper, state run bank which lends to the public and small businesses at affordable interest rates, and isn’t run on a profit basis. That might actually lead to some wealth creation in the country, and less incidences of financial hardship for poor individuals whose situation is being made worse by punitive and excessive charges on top of the already high overdraft interest rates they are paying. Reply Link Anonymous 25 November 2009 at 12:37 As the Supreme Court has let us all down, we will just have to take action against the banks ourselves. I strongly suggest you find a gun, walk into your local bank, and KILL YOUR BANK MANAGER. Reply Link Anonymous 25 November 2009 at 13:11 Heaven preserve the legal profession (or perhaps their employers and clients) if the first four posts were made by lawyers as they contain just unreasoned ill informed emotive points without any rigorous analysis Reply Link Anonymous 25 November 2009 at 13:30 How oh how Anonymous 12:37 got published on this site is way beyond me, but what do I know…. Anyway, overdraft charges (and any other charge for that matter) are conditions of the account. It’s as simple as that. They are avoidable and so really, the OFT was simply answering to public pressure. I wonder how much money they have wasted. Don’t we also fund the OFT by the way? I agree with the very first comment. The OFT have messed up here. Talking about interest rates and the banks’ reluctance to lend is a completely different discussion. This is clearly an emotive subject for us all but that’s not really an excuse for Anonymous 12:37pm encouraging that sort of behaviour. Also, re the suggestion of a state run bank to lend to us all – that would be brilliant in communist Russia. In modern day Britain, not such a great idea Reply Link I .G. okorji Esq. 25 November 2009 at 13:31 The ruling of the Supreme Court is not about the unfairness of bank charges but about the legal status of OFT to challenge the charges. It is open to the consumers to individually pursue their banks in Court where unfair charges has been levied. I will be among the first group to challenge the unfairness of the charges in court post the judgement. Reply Link Richard 25 November 2009 at 13:36 The thing that annoys me about this is that. 1) They have said their is no such thing as free banking although most banks pay minimul interest on holding our money if any. And most bank accounts now have a sub charge per month anyway. 2) We bail them out with tax payers money for them to use it on bonuses and golden handshakes for leaving directors. Not for improving lending at reasonable rates for which it was meant. 3) the charge of £20-35 per charge, how can this be warrented. All they do is send an automated letter and have an automated system leave you a message on your telephone. As for the idea of a government run bank, they have caused this problem in the first place. Bailing out these banks when they should of been left to go bump like they deserve. And also has anyone known the government to do anything successfully. They cannot even process a Direct debit payment for Council Tax without taking more than they should. Reply Link Anonymous 25 November 2009 at 13:40 Absolute disgrace for both the Supreme court and the banks. Whatever happened to consumer rights in this country? Reply Link Taxpayer 25 November 2009 at 13:52 This decision is not particularly surprising. Given that the banks involved are propped up by taxpayers’ money, a judgement in favour of siphoning some of this money back to account holders in the midst of this economic crisis was always unlikely. Had this claim been brought 3 years ago then the cause may have gained favour with the Lords. Like it or not, any sort of claims against banks involving potentially large payouts are going to fall flat until they start making shed loads of cash again and this country’s economy is comfortably out of recession. Reply Link TC 25 November 2009 at 14:02 BLOODY BANKS. Dont they steal enough from us already?? Now the supreme court has found in their favour, it is going to get a hell of alot worse now. They are going to charge for EVERYTHING!!!! Use a cash machine, £2.50 thank you, an account enquiry, £2 to £5 thank you. Am I being paranoid??? You wait. You aint seen nothing yet. Reply Link Anonymous 25 November 2009 at 15:17 “held that such an investigation would be beyond the scope of the OFT”, therefore individual consumers would still have a case. I am but only a law student, but am I right in thinking that the as the appeal court held that the penalties were unfair under the fair Terms in Consumer Contracts Regulations 1999, this ruling on this point would still be authoritative? surely the ruling regarding the scope of a claimant would be a separate issue therefore the decision of the appeal court that the charges are indeed unfair could be used as authority for claimants? Reply Link Anonymous 25 November 2009 at 15:20 I dont get it. UCTA says these charges must reflect admin costs and cannot be punitive. £30 has been shown to be patently absurd as a figure reflecting the true cost of a bounced cheque/ unplanned overdarft. It doesnt matter that these costs subsidise other areas of the bank – they are still punitive against those that incur them. Reply Link sam 25 November 2009 at 15:25 Puts the onus completely on the FSA to finally get to grips with the banks and enforce ‘treating customers fairly’. Don’t expect they will of course considering how abject their regulation has been so far. The role of the OFT and FSA needs a complete revision as no one at the moment is protecting the public from greedy big business. (Goes for many other useless and expensive regulators too). Reply Link Anonymous 25 November 2009 at 16:41 This is all really quite bizarre ! An unauthorised overdraft is just that, unauthorised – money taken from the bank without it’s consent – it is just about tantamount to theft. I cannot see any moral or legal argument which the unauthorised borrower can justifiably deploy against the bank charging him/her for that offence. There may be an argument about how much, but to my mind that is an entirely contractual issue. If you don’t want to pay bank charges for it, then don’t take their money without their consent ! Reply Link RichardB 25 November 2009 at 16:57 I think it’s a bit unfair of Anonymous 11.40 to slam the OFT in this way. After all, they did win at High Court and Court of Appeal stage… Presumably he/she has never lost a case, in which case Anonymous please reveal yourself so we can all instruct you! Your criticism (and others here) intimate that fighting this was a waste of our money. Personally, I’m glad they didn’t just roll over, and presumably if they thought they’d lose, they wouldnt’ have bothered in the first place. I think it’s also disingenuous to dismiss comments flowing from the ever-rising tide of public anger (’emotive’ Anonymous 1.11) and equally to dismiss links with bonus and bank bailouts. In the public mind they are linked. In legal terms, obviously, one offence is not germane to another, but this judgement will only serve to look, in the public mind, as if one part of the Establishment is propping up another part, to the detriment of the consumer. The law is supposed to be blind, to offer a genuine, unemotive level playing field to all citizens. But as a citizen it is very difficult to imagine taking on these seemingly untouchable monoliths, possessed of incredible financial resources (look at the amazing array of QCs the banks fielded against the OFT for a start). If any of us do decide to pursue them, it can be time-consuming, difficult and, ultimately, crushing. Banks, ultimately, don’t care if they win or lose; they just raise other charges to ensure continued shareholder value. To the Little Man (or woman) it can be an important life-event. Having waded through endless blocking and delaying measures on the part of bank lawyers and reams of bewildering paperwork and aggressive, accusatory letters, the victory can often be a Pyrrhic one. On the face of it, this judgement appears to do just that: to dismiss a kind of class-action against the banks while saying ‘you can do it on your own if you want’. I hope many will. Many will simply give up. That the OFT has apparently overreached its remit (the Unfair Terms In Consumer Contracts Act clearly NOT to be taken at face value!) is not a matter of FACT. It is a matter of legal opinion, and we are left only to wonder about the Supreme Court’s refusal to allow an appeal to a Higher set of legal opinions. Right or wrong in legal terms, this victory for the banks (oops, sorry, Clarification…) could not have come at a worse time and will feel to the consumer as if we are being kicked while we are down. Reply Link Anonymous 25 November 2009 at 17:00 Why the sympathy for people charged for using money they were not authorised to use? Would you talk the same indulgent attitude to a neighbour who borrowed your car without permission, because his was not available. Or would you be on the phone to the authorities? Reply Link Anonymous 25 November 2009 at 17:05 All is not lost. The incompetent OFT has been using the wrong legislation all alog in my opinion. The frst thing they should have done is appeal against the penalties decision earlier this year. The second thing they should have done is us S5 of the UTCCR not 6(2). But then who am I to tell the all powerful, all useless OFT. Reply Link Anonymous 25 November 2009 at 17:10 A straw poll of the three lawyers in the office kitchen produced 2 totally surprised by the ruling and 1 not remotely surprised at all. I have yet to read the judgment in detail, so I am not going to comment on it directly – the devil is almost certainly in the detail. But, even if I do not think it is justified, I can, however, understand why all sorts of conspiracy theories will be put forward. It just goes to show that legislation does not necessarily mean what it says but what the final court of appeal says it means. The OFT do not seem to emerge from this with any credit: their strategy was wrong and their tactics have been wrong too. Abandoning the common law penalty angle after the High Court was needlessly risky and one report I have seen suggests that they missed another angle within UCTA itself as well. Something emerges about the Supreme Court too: it does not seem to have worried about courting public popularity for itself! (Whether that is foolish or reassuring, I have yet to make up my mind.) PS On a more facetious note, has anyone else noticed the similarity between the Supreme Court’s logo and that of the fictional Omega Sector agency in True Lies? Reply Link SP 25 November 2009 at 17:20 Interestingly, in my inbox this morning, I had an email from Natwest advising me of a change to their terms and conditions….and lo and behold, no unauthorised OD fee if OD by less that £15.00 and fee for unauthorised OD down to £5 from £38. Perhaps that have realised that they are vunerable under the Unfair Contract Terms in Consumer Contracts Regs after all!! Reply Link Anonymous 25 November 2009 at 17:25 From now on we should take the law to our own hands, we should govern ourselves, we do not need a government. We were the first to introduce the parliamentary democracy, why not be first to have a country with no government,just laid down customs and police, chucking out those who do not conform to these customary norms. Reply Link Philip Rogers 25 November 2009 at 17:37 The Lawyer’s article (‘It’s a fair cop’) is absolutely right: this is a competition issue. It should not deter individuals from pursuing unfair charges, however. They may get a result on merit. Reply Link Paul Georges 25 November 2009 at 18:46 All isn’t lost for consumers challenging banks over charges. The OFT chose the wrong angle for its investigation. Nevertheless the Supreme Court suggested that the OFT might have a case under a different regulation… reg. 5 of the UTCCR 1999… The case continues… Reply Link Paul Georges 25 November 2009 at 18:49 The OFT chose the wrong angle for its investigation: the banks objected that it could not, under regulation 6, question the ‘value for money’ aspect of the charges. Nevertheless, the Supreme Court suggested that the OFT might have a case under a different regulation… reg. 5 of the UTCCR 1999… Case still opened… To continue Reply Link kegs 25 November 2009 at 20:51 This country is corrupt. The banks were always going to win in the end. Money talks. Once again it’s the ordinary man and woman who gets stung. How come we need to have bank accounts anyway? Shouldn’t there be pressure put on the governmet to make it law that employers must offer wages to be paid in cash or into a bank account. Of course this will never happen as it’s the bank who are in charge and they want us all to have no choice but to give them our money. This is a national scandal !!!!! Reply Link Anonymous 25 November 2009 at 21:16 ‘UK banks win ‘stunning victory’ on overdraft fees’ Todays byline typically in The Daily Telegraph – banks’ stunning victory over whom – their poorer, unheard, ripped off, hacked off, customers. Reply Link Anonymous 25 November 2009 at 21:32 The banks play a clever game – take take take. Take govnmnt money to get them out of a mess of their own making. Take customers money in EXCESSIVE charges. Take as much as they can wherever they can using that respectable sounding little 3 letter word ‘ FEE ‘ Reply Link Anonymous 25 November 2009 at 22:16 Kegs – Banks in 70’s go to UK companies sell them on idea they need not handle cash – no security probs – banks get lots of new customers at little cost – workers dont get choice – banks get lots of new opportunities to pedal debt and charge ‘fees’ – oh and thro years make billions in profits. Now understand each household has given them around £4000 to help them out of self inflicted mess – we should be charging them some ‘fees’ for the bail out? Reply Link Chris 25 November 2009 at 23:47 Maybe the way to get the message to the banks that this is unfair and unacceptable, would be for everybody to withdraw all their money from accounts within them. As only 3% of money is in the form of hard currency as opposed to numbers on a computer, they would need to be bailed out again. We the people could then refuse to bail them out (there is an election soon and the government wants votes so will have to listen for once). It is clear that both the government and the supreme court are run for and by the banks! Reply Link Lee 25 November 2009 at 23:54 This anger and resentment is completely misplaced. One cannot simply form an image of a monolithic and completely innocent Poor Little Person who suffers at the hands of an unfair and corrupt System and a group of greedy Bankers. First, the judgement was not on whether the charges were unfair. Second, even if one is to look at whether such charges were fair or not, we are looking at people who took out overdrafts they were not authorised to take out! The banks are completely entitled to go for them. Those who suffered in this situation are not the grannies who have lost their pensions, the single mothers who have lost their savings, or any other of the recurrent images that do deserve our sympathy. The scale of bandwagon jumping and hysteria in this country is astounding. Reply Link anon 26 November 2009 at 12:28 I don’t think it’s been mentioned yet but going forward, surely regulation 54(c) of the Payment Services Regulations 2009 provides significant consumer protection. It requires that charges in relation to payment services must correspond to the actual cost. I’m not an expert on the regs but I believe current accounts fall under their scope. The PSRs are more likely the reason that certain banks have recently cut certain of their charges rather than the SC decision. Of course, the PSRs are of no assistance to those reclaiming historic charges. Reply Link Anonymous 26 November 2009 at 17:33 About time a clear ruling, and thus message, regarding personal responsibility for one’s financial affairs. If you go overdrawn you pay the price. If you go beyond your overdraft you pay the price. Simple really. Reply Link Mammal 27 November 2009 at 08:03 Why oh why are we reduced to scrapping and wrangling over minutiae and technicalities? we have become insanely analytical, reduced to microscopically poring over this legal interpretation or that interpretation in a desperate attempt to restore a sense of fair play….. Because the banking system is inextricably interwoven into the fabric of our economy and in turn our political and civil institutions. Therefore consumer anxiety about exhorbitant bank charges, and taxpayer reticence toward bank bailouts are quietly quashed by the authoritative powers, the legal channels for consumer redress have been gradually constricted in favour of the Financial industries. The UTCCR offered a glimmer of hope for the consumer, but not if it dare threaten and humiliate the Banking establishment……. We should challange the Banking Hegemony….before we sleepwalk into a very nasty socioeconomic catastrophe…(by any means necessary) Reply Link Anonymous 27 November 2009 at 10:53 The decision has attracted more heat than light: (1) The decision is that the particular charges can not be challenged under the Unfair Contract Terms Regs as they are exempt from the test of fairness as being part of the ‘pricing or remuneration’ for the current account services. The decision is nothing to do with the powers of the OFT as such to take action. (2) Comments about ‘greedy banks’ or ‘feckless consumers’ may vent ire but do not show the way ahead. (3) The brief comments of Lady Hale at paras 92-93 are worth reading –that consumer protection laws are to enable consumers to make an informed choice, not protect them from an unwise choice; that bank services are no different from other goods or services in that we are entitled to buy them even if they are not good value for money; that it is a matter for parliament but it will not be easy to find a satisfactory solution; and that it is unclear whether a solution would be to address competition by the banks (I suggest probably not), or to “condemn one particular model for charging for those services [i.e. the current system]” , or something else. (4) Yet again the OFT has demonstrated itself incapable of achieving consumer protection (assuming it is needed in this context). As a wider question, we should be considering removing supervision of credit from the OFT, leaving it with competition matters (see Hampton Report and others). (5) As a society we need to form a view whether the current system is fair. Those customers who pay large bank charges include (but are not exclusively) those who are unable to pay the charge – so that it escalates – and are less able to manage money. Do we introduce alternative bank account providers for them e.g. a state bank or non-profit body? Do we introduce a statutory prohibition on the current model, so coercing banks to charge for current accounts by way of (say) a monthly fee payable by all customers? As Lady Hale says, there is no obvious satisfactory solution, but these are the areas we must address. As Lord Walker and Lady Hale indicate, if there is to be change, it is for parliament to make. (6) Finally, we should be proud of our judges, and the various solicitors and barristers who managed this case. They have delivered a sober reasoned answer to the particular question put. It is now for others to adopt a sober reasoned approach to reform of the current bank charges system. Reply Link Samuel 27 November 2009 at 16:46 If being charged 39 pounds for going 1 pound overdrawn is not unfair and disproportionate, I just do not know what is.This decision has just given a green light for the banks to rip off the consumer even more. Reply Link Robert 28 November 2009 at 11:08 I for one have had enough. I now intend to devote a great deal of tome and effort into mounting a challenge against the Banks using Sec 5 of the UTCCR. I will be forming a Group and it will be in the name of that group that I shall take the matter forward. Comments….anyone. Reply Link Anonymous 28 November 2009 at 23:24 As a person who assists debtors to overcome their problems I find some of the remarks here not only trite but ill informed. Many low income debtors get into problems for being as little as 25p overdrawn which attracts a penalty of as much as £39. The debtor then finds that as they are unable to pay the debt it spirals out of control. I know of at least one case where the debtor went over by 25p wasn’t told until it was too late to rectify & within weeks the debt had reached in access of £700 & that doesn’t include the similar charges imposed by those companies being denied payment. Like many this person had not consciously attempted to take money that wasn’t his but had make a slight mistake of 25p when working out balance. I ask you where’s the fairness in that, unless of course like the banks you believe in draconian behaviour Reply Link Willy Wonka 29 November 2009 at 20:51 As has been said above, I too hope the more emotive posts here are not by lawyers. The case concerned a simple question, which was effectively whether overdraft fees (no matter how fair or unfair) were part of the charges for the service provided. If they were, then the OFT’s case was bound to fail. They clearly are, so it failed. It really is as simple as that. The Court of Appeal was so far off the reservation that it gave people false hope. Please, emotive posters, get your heads round this: The Supreme Court Ruling was nothing whatsoever to do with whether overdraft fees are fair. The Supreme Court has not ruled that overdraft fees are fair. Hey, how about you actually read the judgment? Whether banks are nasty and whether overdraft fees are too high is an interesting subject, but this is a strange place for the debate! The real scandal here is that hundreds of lawyers have been employed for 2 years over this argument. Reply Link Reverse Bank Charges 4 December 2009 at 10:10 PLEASE HELP BY SIGNING OUR PETITION TO GORDON BROWN TO SUPPORT A CLASS ACTION AGAINST THE BANKS FOR A REFUND OF BANK CHARGES. http://petitions.number10.gov.uk/classaction/ Reply Link paul housego 4 December 2009 at 16:15 I am sorry, but I really can’t understand this. Why don’t they put some small stautory instrument through that says that a bank cannot recover money on unauthorised overdraft unless the customer has specifically requested on a separate form that if they exceed their overdraft limit they would like the bank to meet the cheque/dd whatever on unauthorised borrowing terms. Then you’d have to opt in to the charges, and if you didn’t want to you couldn’t use the Bank’s money to meet your liabilities. And if you hadn’t signed you wouldn’t have to pay anything back, so the bank would be sure to do it right. It can’t be that simple, obviously, because it would have been done if it was, but could someone tell me why not? Reply Link Anonymous 10 December 2009 at 23:14 If the Office of fair trading is unable to determine if bank charges are unfair, who can?. Reply Link Anonymous 14 December 2009 at 11:00 i think the system should change in respect that if a bank can charge you for going overdrawn, is it not in there best interest to help their customers in need and offer them an overdraft as standard so that they do not get charged for going a few pounds overdrawn. overdrafts seem to be offered to those only with high credit ratings . these people can handle their money well and do not usually go into the red. the help is needed to those who cannot. banks should help them to learn how to manage their money , as everything now that you get paid for has to go into a bank account. Reply Link Lee Knight 18 December 2009 at 11:30 The action brought by the OFT, was too narrow. The end result, was expected. Reply Link Name Email Cancel reply Threaded commenting powered by interconnect/it code.