Amex £25 failed direct debit charge illegal?

zzzLazyDaisy

Well done AJBaker!

The issue about bank charges never ceases to amaze me. Maybe it is because I am a lawyer and see things from a different angle? The fact is that the banks have got away with putting these punitive terms into their contracts for far too long. They are powerful organisations and the bargaining power between the bank and the ordinary consumer is very unequal. That is why the Unfair Contract Terms Act was brought in.

Despite this, lots of people on MSE defend the banks. Why? It is a mystery to me.

If the banks are making unfair charges (that is to say 'unfair' in law, the 'morals' of all this are irrelevant) then those charges are unenforceable in law and the customer is entitled to ask for a refund. A charge is 'unfair' if it is disproportionate to the loss incurred by the bank as a result of the customer's breach. A fine or penalty charge is unlawful, whereas a genuine admin fee covering the actual cost of dealing with the breach is not.

The OFT seem to think the charges currently being imposed by the banks are not a genuine assessment of the costs incurred by the banks, but a way of making a profit from the breach, which would be unlawful. If the banks were sure of their ground, you can be certain that they would defend the cases in court - a ruling would put an end to the debate once and for all.

Thinks... maybe they don't want a ruling....

The_Boss

zzzLazyDaisy wrote:

Despite this, lots of people on MSE defend the banks. Why? It is a mystery to me.

Maybe its because nobody seems that bothered that it is illegal or punitive at the start of their agreement and dont make a fuss about it until it suits them.

ajbaker

Fair play Bokken! Cannot argue with your rationale.

TheBoss - you raise an interesting point about discussing contracts when you enter into them as opposed to crying foul when they work to your disadvantage. While I agree, as zzzLazyDaisy pointed out, the bargaining power between the bank and the ordinary consumer is very unequal. I believe it would be impossible to open a bank account with T&Cs different to those laid down by the organisation - and yet it would be very difficult to operate in society without a bank account. Therefore I don't think your argument is workable. I would love for someone to prove me wrong!

If you have a look at the Unfair Contract Terms Act it states that it is written for those contracts to which one party could not influence the terms of the contract. At least this act acknowledges the inequality between bank and consumer.

The_Boss

Most contracts are the same with one party not able to influence the terms of a contract. What about those that dont pay for enough parking time on private land where the terms are laid out at the time of entry (Thornton v Shoe Lane Parking springs to mind as an example of offer and acceptance), yet this is not deemed unfair and the charges are also 'punitive' if you stay longer than you paid for.

ajbaker

The Boss. Okay I am a little out of depth here...

From http://www.lawteacher.net/Contract/Contents/Exclusion%20Clauses%20Cases.htm

Thornton v Shoe Lane Parking [1971] 1 All ER 686
The plaintiff drove into the defendant's car park and was given a ticket by an automatic machine, which stated that it was issued subject to conditions displayed inside the car park. The conditions inside the car park were in small print and one of them excluded liability for damages to vehicles or injury to customers. The plaintiff was injured due partly to the defendant's negligence. The plaintiff was not held to be bound by the notice displayed inside the premises.

Lord Denning said that the clause was so wide and destructive of rights that "In order to give sufficient notice, it would need to be printed in red ink with a red hand pointing to it - or something equally startling".

I do not understand how this is an example of 'offer and acceptance' since the plaintiffs complaint was upheld.

(And no, I don't believe not knowing as much about the law compared to a banking lawyer, for example, is a reason for me not to take issue with bank charges.)

I do not know how the law operates in this area, but I am fairly happy with my minimal understanding of it regarding bank charges. Especially now the OFT has made a formal statement.

mr_fishbulb

The_Boss wrote:

Most contracts are the same with one party not able to influence the terms of a contract. What about those that dont pay for enough parking time on private land where the terms are laid out at the time of entry (Thornton v Shoe Lane Parking springs to mind as an example of offer and acceptance), yet this is not deemed unfair and the charges are also 'punitive' if you stay longer than you paid for.

Not relevent to that case, but relevent to this disscussion - If a cark park company are only allowed to charge a genuine assessment of the costs incurred by you overstaying your parking time, then surely the maximum they would be able to fine you is the hourly rate for parking there. Because the only costs to them would be being deprived of the opportunity for someone else to park their and collect the normal parking rates from that person.

Or are car parking charges going to be the next thing to claim back?