OFT bank charges investigation derailed by Supreme Court ruling
The Office of Fair Trading loses two-year fight to investigate overdraft charges by high street banks
Laurence Rabinowitz QC
The Office of Fair Trading suffered a major blow in the Supreme Court this morning when the country’s most senior judges ruled that the regulator could not investigate the fairness of overdraft charges for unauthorised bank charges.
The five justices of the Supreme Court, led by president Lord Phillips of Worth Matravers, ruled that such an investigation would be beyond the scope of the OFT.
The seven banks and one building society in question had lost their fight against the OFT in both the High Court and the Court of Appeal.
The High Court decided in April 2008 that the overdraft charges could not be deemed as penalties but they could be assessed on their fairness under the Unfair Terms in Consumer Contracts Regulations 1999.
That decision was upheld by the Court of Appeal in February but then the banks appealed to the House of Lords and that hearing was heard in June.
The decision to overturn the Court of Appeal’s ruling will come as a shock to the one million claimants who had sought compensation from the high street banks for being charged unfair overdraft fees. Those actions had been stayed until the 26 January 2010 pending the outcome of the two year battle. It is believed they will now be struck out altogether.
The line up:
DEFENDANT
The Office of Fair Trading: In-house team instructed Jonathan Crow QC, 4 Stone Buildings.
CLAIMANTS
Abbey: Wilson Thorburn, Ashurst, instructed Ali Malek QC, 3 Verulam Buildings.
Barclays: Colin Passmore, Simmons & Simmons, instructed Brick Court’s Jonathan Sumption QC at the appeal stage (instructed Ian Milligan QC of 20 Essex Street in the High Court and Court of Appeal)
Clydesdale Bank: Michael Barnett, Addleshaw Goddard, instructed Richard Salter QC, 3 Verulam Buildings.
HSBC: Simon Orton, Freshfields Bruckhaus Deringer, instructed Mark Hoskins QC, Brick Court
Lloyds TSB: Philip Parish and Andrea Monks, Lovells, instructed Bankim Thanki QC, Fountain Court.
HBOS: Marc Florent, Allen & Overy, instructed Robin Dicker QC, 3-4 South Square
Nationwide: Ewan Brown, Slaughter and May, instructed Geoffrey Vos QC, 3 Stone Buildings
Royal Bank of Scotland Group: James Gardner and Andrew Hughes, Linklaters, instructed Laurence Rabinowitz QC, One Essex Court.
The ruling justices of the Supreme Court
Chair: Lord Phillips
Lord Walker
Lady Hale
Lord Mance
Lord Neuberger
View results 10 per page | 20 per page | 50 per page
Readers' comments (43)
Anonymous | 25-Nov-2009 5:25 pm
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.
Unsuitable or offensive? Report this comment
Philip Rogers | 25-Nov-2009 5:37 pm
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.
Unsuitable or offensive? Report this comment
Paul Georges | 25-Nov-2009 6:46 pm
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...
Unsuitable or offensive? Report this comment
Paul Georges | 25-Nov-2009 6:49 pm
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
Unsuitable or offensive? Report this comment
kegs | 25-Nov-2009 8:51 pm
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 !!!!!
Unsuitable or offensive? Report this comment
Anonymous | 25-Nov-2009 9:16 pm
'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.
Unsuitable or offensive? Report this comment
Anonymous | 25-Nov-2009 9:32 pm
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 '
Unsuitable or offensive? Report this comment
Anonymous | 25-Nov-2009 10:16 pm
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?
Unsuitable or offensive? Report this comment
Chris | 25-Nov-2009 11:47 pm
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!
Unsuitable or offensive? Report this comment
Lee | 25-Nov-2009 11:54 pm
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.
Unsuitable or offensive? Report this comment