MSE News: Bank charges result at 9.45am Wednesday

phillh79

I'm gutted, I was expecting a payout of about £2,600. Is this definately over or is there still a chance of getting my money back?

Does anyone else think that the banks have paid off the supreme court? If I was the one deciding if bank charges were fair or not and someone offered me 10 million to go in the banks favour I'm pretty sure I would take the money.

I smell corruption......

orc_2

Here is a link to the judgements from the Supreme Court web site

Full judgement

http://www.supremecourt.gov.uk/docs/uksc_2009_0070_judgmentV2.pdf

Press summary

http://www.supremecourt.gov.uk/docs/uksc_2009_0070_ps.pdf

Press summary copy

25 November 2009
PRESS SUMMARY
Office of Fair Trading (Respondents) v Abbey National plc & others (Appellants) [2009]
UKSC 6

On appeal from the Court of Appeal (Civil Division) [2009] EWCA Civ 116

JUSTICES: Lord Phillips (President), Lord Walker, Baroness Hale, Lord Mance, Lord Neuberger

INTRODUCTION:

This appeal involved a relatively narrow issue. The Supreme Court had to decide not whether the
banks’ charges for unauthorised overdrafts were fair but whether the OFT could launch an
investigation into whether they were fair.
At present, banks provide retail banking services on the basis that customers whose accounts are kept
in credit (in other words who lend money to the banks) will not be charged for the services provided;
customers who have authorised overdrafts will be charged interest on the money that they borrow
from the bank; and customers who incur unauthorised overdrafts will be charged, not only interest on
the sums borrowed, but fixed fees for each particular service involved.
The OFT has power to assess the fairness of terms in consumer contracts but this is subject to the
limits laid down in the Unfair Contract Terms in Consumer Contracts Regulations 1999, which
implemented European Council Directive 93/13/EEC.
Regulation 6(2)(b) states that the assessment of the fairness of a term in a contract “shall not relate . . .
to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”.
In other words, the “value for money” equation is excluded.
The Court of Appeal held that this exclusion applied only to the “core terms” of the contract and not
to ancillary terms such as the charges for unauthorised overdrafts. The Supreme Court unanimously
held that the charges for unauthorised overdrafts fell within this exclusion. They were part of the price
paid by the customer for the banking services provided.
However, the charges might still be open to assessment by the OFT on other grounds under
Regulation 5.

BACKGROUND TO THE APPEAL:

The Office of Fair Trading (‘the OFT’) wished to investigate the fairness, under the Unfair Terms in
Consumer Contracts Regulations 1999 (‘the Regulations’), of the terms (‘the Relevant Terms’) in the
Appellant banks’ contracts with customers imposing charges (‘the Relevant Charges’) on unauthorised
overdrafts. The Regulations implemented European Council Directive 93/13/EEC. The OFT applied
for a declaration that it was entitled to make such an investigation, notwithstanding Regulation 6 (2) (b)

The Supreme Court of the United Kingdom

Parliament Square London SW1P 3BD T: 020 7960 1886/1887 F: 020 7960 1901 www.supremecourt.gov.uk

of the Regulations, which stated that the assessment of fairness of a term in a contract ‘shall not
relate… to the adequacy of the price or remuneration, as against the goods or services supplied in
exchange’. Both the High Court and the Court of Appeal decided that Regulation 6 (2) (b) did not stop
the OFT from making such an investigation. The banks appealed.

JUDGMENT

The Supreme Court unanimously allowed the appeal by the banks.

REASONS FOR THE JUDGMENT

 Lord Walker made clear that the scope of the appeal was limited – the court did not have the
task of deciding whether or not the system of charging current account customers was fair, but
whether the OFT could challenge the charges as being excessive in relation to the services
supplied in exchange (Paragraph 3). As Lord Phillips stated, even if such a challenge was not
possible, it might still be open for the OFT to assess the fairness of the charges according to
other criteria (Para 61).

 The key issue was whether the charges constituted the ‘price and remuneration’ as against ‘the
goods or services supplied in exchange’ within the meaning of the Regulations. The Supreme
Court considered and decided a number of arguments as to whether the charges could be said
to be ‘price or remuneration’ under Regulation 6 (2) (b):
(1) The charges were not paid ‘in exchange’ for the transactions to which they related – eg.
honouring a cheque when the customer had insufficient funds to do so (Para 75).

(2) The Court of Appeal was wrong to find that Regulation 6 (2) (b) did not apply to charges that
were ‘ancillary’ to the core contract between the bank and customer (Paras 38-41, 47, 78, 112).

Lord Walker commented that Regulation 6 (2) (b) contained no indication that only the
‘essential’ price or remuneration was relevant. In fact, any monetary price or remuneration
payable under the contract would naturally fall within the language of Regulation 6 (2) (b)
(Para 41).
(3) The charges were not concealed default charges designed to discourage customers from
becoming overdrawn on their accounts without prior arrangement (Paras 88, 114). The High
Court had rejected this argument and was right to do so.
(4) The charges were properly to be regarded as falling within the scope of the Regulations (Paras
43, 80, 104). They were in fact part of the price or remuneration paid by the customer in
exchange for the package of services which made up a current account (Paras 47, 89). The
fact that liability to pay the charges depended on specific events occurring was irrelevant to
that conclusion (Paras 47, 104).

 Accordingly, since any assessment of the fairness of the charges, which related to their
appropriateness as against the services supplied in exchange, fell within Regulation 6 (2) (b), no
such assessment could take place and so the appeal would be allowed (Paras 51, 90, 92, 118,
119).

Further Comments

 Lord Phillips also noted that in the absence of the charges the banks would not be able
profitably to provide current account services without a fee (Para 88). He stated that it might
be open to question whether it is fair to subsidise some customers whose accounts always
remain in credit by levies on others who experienced events they did not foresee when they
opened their accounts (Para 80).

 Lord Walker commented that ministers and Parliament had decided to transpose the directive
as it stood rather than to confer the higher degree of consumer protection afforded by the
national laws of some other member states. Parliament might wish to consider whether to
revisit that decision (Para 52). Lord Mance endorsed this comment (Para 118).

The Supreme Court of the United Kingdom

Parliament Square London SW1P 3BD T: 020 7960 1886/1887 F: 020 7960 1901 www.supremecourt.gov.uk


Everyone should take the time to read through

WASHER

A sad day, can't believe the result.

I really want to know what will happen to those who have had payouts already, I know that will be unpopular with some, but the ruling has been made and because it didn't go the way most expected or wanted, those people who have had payouts should be made to repay.

stephel

The_Hallowed_Way wrote: »

This is excellent news! This is a victory for those of us who manage our accounts properly and don't want to have to pay charges in order to pay for those who seem to want to treat the banks as a source of free money.

That's Martin Lewis's reputation hit for six as well. He'd built a whole career on this and it's now gone up in smoke.

You must be the only person on this web site with that kind of view.
Why are you on here if you are that perfect?????????

janceyb

mikeandrach wrote: »

i agree with the argument that people should manage their accounts, but a genuine error on an exchange rate calcualtion got us overdrawn by £38 with lloyds, then they charges more and more until we got back and had charges of over 200 by the itme we gotback, that is just ridiculous, why cant a bank open that charges a tenner a month, pays no interest on current account balances but has uk call centres that actually help you, i would gladly pay for that

I'm pretty sure most errors are genuine... you still went overdrawn on your account.

ScorpioLou71

:mad::mad::mad: Lord Philips I bet he's never been overdrawn in his life. Martin whats the next step??

neneromanova

How much money did the banks pay them to win?! There is something dodgy going on. An under the desk payment I think!

jamespir

Snakeeyes21 wrote: »

who would have thought that the terms people signed upto would be proven to be legal.

I for one am glad that I can continue to receive my free banking.

Why should I be penalized for other peoples ineptitude to manage their finances.

it has nothing to do with peoples ineptitude its what to do with what is fair

you cant tell me that youve never recieved a bank charge beacasue even the people who see to have and endless amount of money have and charging 35 pounds for going over drawn by 3 pence is seemingly unfair

mikeandrach_2

jancey b you made a genuine error, you parked your car too close to mine, please cani help myself to £200+ of your money?

if the answer is yes pm me, if its no then why the hell is my issue any different, an error is an error, a fine is a punishment

blind-as-a-bat_2

jamespir wrote: »

you signed up just to post that the doors that way

---

>

You bet me too it:p:rotfl:

Sorry guys, none of this affected me, and I can’t believe im saying this, as I went BR it would have only gone back to them anyway. That’s one positive of BR id did not think of, and at least I have not had to suffer such a long wait as the rest of you have to get what should be yours.



But I was still keeping everything crossed for the rest of you; don’t give up until every avenue has been exhausted.