MSE News: PM wants swift bank charges compensation

Orford

A 'negociated agreement' reminds me of Neville Chamberlain and "I have in my hand a piece of paper..."

MSE_Martin

Nathan_Spleen wrote: »

I think you've done extremely well to elicit positive responses from all three parties and in particular the Prime Minister.

But my personal view is that I don't think you're looking at the bigger and there is a real need to look beyond just the urgency for quick payouts.

If I understand you correctly - and please excuse me if I don't - you want to dispense with a legal ruling on the charges in favour of a quicker, negotiated settlement.

Firstly I'd be wary of assuming that a negotiated settlement would in fact be any quicker than litigation. The test case agreement and waiver specifically requires the parties to proceed as quickly as possible. In the case of negotiating a settlement there is nothing to prevent the banks from stringing talks out for decades. At least with litigation there is an established framework. There would be no point to the 2 years of stays while the test case decides that UTCCR applies if we then ignored a positive result and left it to negotiation.

Secondly a negotiated settlement won't provide any legal clarity whatsoever and won't deal with the issue of future charging structures. If the OFT are successful in stage 2 of the test case it puts to rest the entire issue of bank charges, forever. Not just for the previous 6 years but for the next 600. Surely this is the most important aspect to concentrate on.

Thirdly the concept of allowing the banks to retain an element of the charges is in my view, perverse. It is almost certain now that the charges - hundreds of millions of them - are unlawful. I genuinely don't understand how it can be ''ligitimate'' to compensate the banks for the costs they incurred in administering each and every unlawful act.

Finally the test case isn't just about bank charges. It's also a test case about the the scope and effectiveness of UTCCR as a tool for the protection of consumers in ALL consumer contracts. And if the OFT win using it, it could benefit consumers in all spheres.

I think some of what you say is correct.

A negotiated settlement would be after a supreme court ruling that UTCCR applies to bank charges so that would be settled.

As for the level that will be up to the OFT. And here yes, I would prefer to see it solved quickly than it go specifically to court.

I agree that this does mean there's no binding precedent on the impact of UTCCR, but I do think the bigger picture here is the peopel waiting and desperate for a bank charges payout.

What we would have is an OFT opinion. And even with a binding decision on what is fairness if the OFT went through the courts that would still be challengable (and almost certainly would) by other lawyers on other cases as they'd argue it isn't the same as bank charges.

As for the speed of a negotiated settlement - done right it will be much quicker. If it isn't then the legal process will carry on anyway - certainly nothing should stop until a settlement is sorted and I think this process would be quicker.

And frankly... I dont think there will end up being much choice. All the politicians seem keen to want a defined solution at speed after the supreme court. They of course have to balance the interest of banking stability and certainty with the needs of the consumer and so I think its a question of how much we engage in the process.

Certainly without campaigner involvement this process will happen with the govt. the banks and the OFT anyway.

Any for allowing the banks to keep some of the cash - well that's negotiation - a bit of compromise. Ultimately we have always argued that this isn't about whether they can charge, but how much they can charge.

In that case we have to accept a small amount is fair - for me £2.50 is actually less than the consensus we had during the bank charges consumer charter. That was a public statement made by the bank charges campaigning groups (I suspect you are a 'legal beagal' in which case I know that group wasn't a part to it) at a time when the climate was less favourable - to retrench from that now wouldn't be right.

There is also the issue of wider public sympathy to be covered here. This has dragged on a long time, and as you'll see from these forums the ideas behind bank charges reclaiming are not universally supported. At the moment there is clarity that right is on our site yet by prolonging that we risk losing public sympathy, and public support, and even the fact that future legal battles are not won until the man with the wig decides it - you could call this the "bird in the hand" strategy.

I do understand your viewpoint - however actually I think I look at the bigger picture. For me that is the millions waiting on this result struggling to get their cash back and I think it is the priority.

We have to be careful here, if we have too much dissentition or disagement from what is lookingg likely to be a process then we risk becoming disenfranchised from it and having things done without any of us.

Martin

(sorry for the scrappiness, rushing to get our of MSE Towers, hopefully the gist will come across though)

BigBudgie

To be honest Martin I was extremely disappointed with the MSE news you posted this morning.

Firstly, you appear to have applied a measure of wishful interpretation to Gordon Brown's letter. The PM refers to his desire for a negotiated settlement but only once the legal issues have been resolved. You appear to have advanced your own suggestion for a negotiated settlement as an immediate solution, at least that is how it reads and how the users who have responded on this thread appear to have viewed it.
Secondly, you suggest a negotiated settlement but immediately offer concessions to the other party. You refer to the figure of £2.50, perhaps intimating that this is to be considered a fair level of charge and you also indicate a time period over which charges ( minus the £2.50 ) should be refunded. These are matters that can only be decided by a court. You seem to totally disregard the unenforcability aspects of unfair charges and aspects of the Limitation act 1980.

Thirdly, you appear to advocate compensatory interest based on the statutory 8% figure. This is totally out of kilter with the additional costs that many people who have incurred these charges will have suffered as a result and would certainly fall extremely short of stripping the banks of their illgotton gains as a result of their unlawful actions.

The danger is that because of your media profile it is highly likely that many people reading the news or otherwise will believe that what you are suggesting is the limit to which they may be entitled. The banks must be rubbing their hands together with glee.

There is also the principle of UTCCR1999 to take into account. Whilst PCA's are by far the largest group of consumer contracts covered by this regulation. Do you not think that a victory for the banks, ie in being able to remain in a profit situation following their unlawful acts might also be extremely damaging for the multitude of other consumer contracts covered by the UTCCR regulations?

To date we have seen no movement whatsoever from the banks. They continue to apply charges, they continue to force people into riduclous financial situations and in some cases even worse than that. They seem to only reluctantly offer interim refunds to those suffering severe financial hardship, which they have added to, after the claimant has reached the end of a long arduos journey to prove their hardship status.
They make pretences at lowering their charging structures which upon analysis actually appear to offer the banks with potential to make even greater gains than at present.

Why should we negotiate with them or at the very least why should we make the first moves towards a negotiated settlement? And even if negotiation was an acceptable solution to this matter, which I doubt it is under European Law anyway, why on earth would anyone wish to propose, at the first stage of negotiation, a lower level of charge refund, a lower rate of compensatory interest and a shorter refund limitation period than than that which the Consumer might probably be entitled to recieve. Lastly why on earth would you also provide the banks with an immunity against future litigation as part of that initial proposal?

Matters should be left to the Courts to decide so that a binding, far reaching resolution can be achieved that ensures that justice is served. People have known all along that the test case was likely to be a long journey and that the forthcoming decision in the supreme court was just a step on that journey.

I am sure that you are well aware that the test case was never intended to resolve the matter of how repayment of historic charges etc would be handled. This would have to be the result of further litigation such as a Group Litigation order or representative action and there is no reason why this cannot be commenced as soon as the supreme court judgement has been announced and then hopefully completed within an extremely short period of time.

I will break off here and perhaps allow others to respond but look forward to continuing the discussion.

Budgie

MSE_Martin wrote: »

You raise a view I had expected to see - the "no negotiation lets push all the way" view.

While I more than understand the argument - I disagree. All I hear from people is "when, when, when". Lets be under no illusions that a court route means probably two or three more years.

The banks will almost certainly challenge the OFT's decision in court and will go to all the way up to the Supreme Court again.

There's a level of pragmastism needed here - and also for the wider system getting this solved and sorted quickly and with certainty is important.

My conversations with all parties show they're focusing on a 'negotiated' solution - and that inevitably means they will aim for a way of stopping a court based route and have a big mass system.

I tend to believe that will see payouts much more quickly and to many more people. In your route, everyone could need to go to court to get the money as they must rely on the court precedent to enact it - and that will discourage huge numbers, and leave much of the cash ending up in claims handlers pockets.

I'd welcome your thoughts.

Headieboy

I'm a bit sceptical when Gordon Brown says "I believe that a negotiated solution could be in everyone's best interests". To me this reads like "look the banking system is in serious sh*t, we all know they've been robbing us blind and the court case is about to go against them but if they automatically repay every excess overdraft fee they'll all go bust and the tax payer will have to bail them out again"

Orford

BigBudgie wrote: »

Secondly, you suggest a negotiated settlement but immediately offer concessions to the other party. You refer to the figure of £2.50, perhaps intimating that this is to be considered a fair level of charge and you also indicate a time period over which charges ( minus the £2.50 ) should be refunded. These are matters that can only be decided by a court.

Already it's having an effect:

Headieboy wrote: »

I plan to claim for all the excess overdraft charges minus the £2.50 that the "banking professor" estimates is a fair charge plus the interest. Where can I get a hold of a copy of this report? I'd like to include it or at least a reference to it in my claim letter.

Headieboy

I said that as the whole case is not about the charges themselves but the level of charges.

Nathan_Spleen

MSE_Martin wrote: »

In that case we have to accept a small amount is fair - for me £2.50 is actually less than the consensus we had during the bank charges consumer charter. That was a public statement made by the bank charges campaigning groups (I suspect you are a 'legal beagal' in which case I know that group wasn't a part to it) at a time when the climate was less favourable - to retrench from that now wouldn't be right.

To be fair I was a supporter of the £5 figure in the Charter but that was in the days when we all thought that the charges were penalties -the logic being that we would be happy to pay a penalty if it amounted to the cost of the default.

But things have changed. The charges are not penalties but they almost certainly are in breach of UTCCR and as such the only effect is that the terms that trigger them are not binding. Not just a little bit binding but nul & void in their entirety. There is no legal mechanism to change that. And as such the charge costs versus the charge amount are irrelevant.

We are treading on dangerous ground if we ignore the letter of the law and push a different agenda. If the banks chose to ignore the regulations and pushed for their version of what is fair we'd be the first to complain.

For the record Legal Beagles have always advocated that there should be a charge but this applies to the future. The legal issue that now dominates the test case with regards to historical charges is not level of the charges or the cost of administering them but the terms responsible for them ie frequency, charges necessarily triggering more charges, lack of informed contractual consent etc.

Finally I'd be genuinely grateful if you could expand on ''We have to be careful here, if we have too much dissentition or disagement from what is lookingg likely to be a process then we risk becoming disenfranchised from it and having things done without any of us.''

As I see it, it is you and only you that has suggested the idea of negotiation in favour of stage 2 litigation and so to go on to describe this as the likely scenario just wouldn't be correct. To be brutally honest I think it is your view that is in the minority.

3400581

Gordon is not living in the real world. To a Banker Financial Hardship means the bonus is only just into 6 figures and I have to drink NV Champagne. My son is a mature student whose only income is student loans/grants and the fact we pay his rent for him. Nationwide owe him over £600 for a £14 overdraft over 4 days and are still charging him because his account is overdrawn because of their charges. He has applied to be dealt with under the hardship rules and they say because all students have debts he doesn't qualify. !!!!!!?????? Who does qualify? Bankers without bonuses?

MSE_Martin

Dear Nathan and Budgie

Thank you for your notes.

They make interesting reading and I know that is the legal Beagles perspective - and it warrants a look.

However I think we need be realistic here - there is a difference between what we want and what is going to happen.

Gordon Brown's letter is quite plain and do remember I spent a long time talking about the interpretation of it with No.10 as a briefing, so when you say "you seem to have assumed" I think you're being a touch unfair.

The PM has ALREADY asked the banks and regulator and OFT to look at a negotiated solution. I will tomorrow be publishing my notes after speaking to the Tory Shadow Treasury team - and they are on a similar track about a negotiated final settlement.

As you'll remember, when the court case and hold was initially announced there was no consultation with any of the campaigning groups - it was simply done.

We of course need to have a role in this - otherwise it could be a carve up between govt officials (who in effect own some of the banks) and the banks themsleves.

I think to assume this is simply going to trip through the courts and be resolved that way is unlikely. To go through the courts the OFT would need to push it - yet if the political will is for a negotiated solution then that is the likely path.

So we have a choice either be shouting on the periphery or be engaged in a process. I prefer the latter.

My PROVISIONAL suggestions of what's acceptible were just that. Do note I could've easily ignored other campaigning groups in the news article and my comments on it, but specifically chose to talk about trying to get everyone to come together, and quite deliberately wrote in a way that there was no binding suggestion.

My suspicion is the start point for the other side will be a long way away from what i say - never mind what you're suggesting.

And finally I'm afraid

As I see it, it is you and only you that has suggested the idea of negotiation in favour of stage 2 litigation and so to go on to describe this as the likely scenario just wouldn't be correct. To be brutally honest I think it is your view that is in the minority.

Is a long way from the truth. While I know the legal eagles forum are very involved, active and campaigning on this issue, in truth you're a small number of people.

We get many 1,000s emails week in week our asking "when will I get my money - I need it now" - when I walk down the street and the same question comes, each one desperate for it to be sooner not later. I have absolutely no doubt that the huge majority of people would prefer to get a payout asap rather than wait further for a court settlement.

By definition those who are activist campaigners will be much more fundamental on this - but we need to consider the million people plus on hold.

Martin

esmerellda

Martin, I have emailed you via Wendy regarding this subject.