what is a "fair" unpaid Direct Debit charge?

willo65

Nathan_Spleen wrote: »

I accept your reference to the The HoLs case but it confirms that the bank were instrumental in facilitating it by way authorising and executing the payments, confirming that you cannot go overdrawn without the bank allowing it.

Still waiting for the APACS section.

Ok I admit defeat and cannot find anything relating to this on the APACS website but I would still say theft still has the same definition regardless of the terms for a cheque Guarantee to be valid. If you knowingly spend what you don't have knowing that the bank will have to pay it then it could still be classed as theft.

jambosans

willo65 wrote: »

Therefore you are guranteeing to pay something using the banks money which they cannot refuse as you have guranteed it and if the money isn't yours then this would still be theft.

I think you will find it is not theft, but is, at the very most, cheque fraud. No half decent bank will advise a customer they are committing cheque fraud when a guaranteed cheque is paid against an insufficient balance. Mainly because fraud is a scary word to most people and it is not always done with criminal intent.

Also, to reitterate what has already been explained to you, if a guaranteed cheque goes through on a customers account and incurs charges then this instance is covered by the terms and conditions. By the banks very own admittion in most terms and conditions they will provide the facilty for the account to go overdrawn and thus charge you for the privelage. They provide a facility for you to go overdrawn under the terms and conditions of the account and therefore it is not theft.

The simple act of a bank allowing you to go overdrawn rules out any accusations of theft as they are aware it is going to happen. Now, no doubt you will argue that cheques are guaranteed so therefore, the bank will have no choice and to an extent, yes, you are correct, they have to pay the cheque. However, just to clarify, if the banks cover this eventuality in their terms and conditions with an unauthorised overdraft and charges instead of "calling the police" it is in no way classed as theft. Plus, like a said, it is technically cheque fraud, not theft.

Nathan_Spleen

jambosans wrote: »

I think were I became confused is the ruling on penalties and assesment of unfair terms by the OFT. Instead of treating them as two seperate issues I have previously understood them to be connected. OFT says charges are penalties; High Court disagrees; OFT given right to assess charges for fairness under UTCCR; banks appeal to House of Lords. Once the penalities issue had been ruled in favour of the banks I assumed (incorrectly) that the OFT being allowed to asses charges for fairness was like "second prize" (in layman's terms), meaning charges were here to stay but their amounts may change if the appeal is thrown out. I fully accept were I have misunderstood this point, even through extensive reading on the subject I had not grasped this point until you highlighted it, and now makes sense.

You might be interested in the 'note' that accompanied The Master of the Rolls judgment in the court of appeal.

It includes a letter from the Deputy Head of Civil Justice to County judges which conludes that if the OFT deem the charges unfair the charge terms are ''unenforceable'' and also indicates that stays will be lifted at the point the OFT deem the charges unfair as opposed to the conclusion of the litigation of the substantive issues.

OFT v BANKS

NOTE

This note was read in open court on 26 February 2009 by the Master of the Rolls on behalf of the Court of Appeal.

1. The court is conscious that there are a large number of actions in the county court which raise the fairness of various bank charges and which are at present stayed or on hold pending the outcome of the OFT proceedings.

2. When those proceedings were before Andrew Smith J he twice referred to the position in the county courts. We refer only to the second occasion. He handed his judgment down on 24 April 2008 and at a subsequent case management conference held in late May 2008, at which permission to appeal to the Court of Appeal was given he said this:

“ … as we are all conscious, the proceedings in the county courts have been on hold, if not formally stayed, pending guidance, we hope, from this litigation, and at each stage, I had been considering whether there is any reason that that position should change. I hardly need to acknowledge again that the management of the county court proceedings is not for me or the High Court but for the county courts. But the reasons that those actions should not proceed seem to me as strong as they were and will remain so until any appeal by the banks on whether regulation 6(2)(b) applies is resolved.

We understand that that guidance was subsequently communicated to the county courts by letters on behalf of all the Banks. It was in our opinion very sensible guidance.

3. The Banks’ appeal to the Court of Appeal has now failed and we have now refused permission to appeal to the House of Lords. The Banks are of course entitled to apply to the House of Lords for permission to appeal. While recognising (as Andrew Smith J did) that management of county court proceedings is not in the first instance for us, any more than the High Court, it does seem to us that there is much to be said for the present position in the county courts to remain as it is until the House of Lords has decided whether to grant permission to appeal and, if it does, until the determination of the appeal. We also think that, if the decision of the Court of Appeal stands, there is much to be said for the status quo to remain until the OFT has carried out its assessment of fairness.

4. We have asked Moore-Bick LJ, as the Deputy Head of Civil Justice to consider the position, and he has decided to send a letter in the following terms to all Designated Civil Judges:

“As you may already know, the Court of Appeal has dismissed the appeal in the Bank Charges litigation, holding that the OFT is entitled to investigate the fairness of the terms which provide for the payment of charges for unauthorised overdrawing etc. There was no appeal on the penalty issue on which the Banks won below.

Permission to appeal to the House of Lords has been refused, but the matter does not end there, both because the Banks may petition their Lordships for permission to appeal and because unless the decision of the Court of Appeal is overturned, the OFT will now have to complete its investigation in order to determine whether the charges are unfair or not.

As you will appreciate, apart from knocking out the penalty argument, the proceedings have not yet produced a final answer one way or the other to the claims pending in your courts. You may be faced with applications to lift the stays which are currently in place. Circumstances may differ, but you may think that, insofar as claims turn on whether the terms in question are unfair under the Regulations and therefore unenforceable, there is much to be said for continuing the existing stays pending a decision by the House of Lords and/or the outcome of the investigation by the OFT.”

5. In so far as it is for us to express a view, and without prejudice to any decision which may be made on the facts of a particular case, we entirely agree that that is a sensible approach.

6. In these circumstances we invite the Banks to communicate the position set out in this Note to the county courts.



Sir Anthony Clarke MR,
for the Court of Appeal
26 February 2009