MSE News: Bank charges: banks win test case appeal

MrLeeLee

natweststaffmember wrote: »

I'm gonna disagree with you with regards to his first point.

"The Supreme Court ruling is excellent news."

it was because they basically said that this avenue is what should have been argued on:

"Unfair Terms
5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.

(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair."

The OFT argued on regulation 6 of UTCCR 1999.
For reference: http://www.opsi.gov.uk/si/si1999/19992083.htm


Great result for all of us. Banks won the battle but the Lords knew that the war was not over quite yet....

Good to see a post from you Nattie, you've always seemed to 'in the know' with all these court cases and stuff. I'm not sure if you've had enough time to form a view (I know there are so so many things to read over) but have you had the time to consider what the chances are if we do go down this new route? I understand it might be impossible for you to know at the moment, if so just tell me to shut up!

natweststaffmember

I can't comment or I will be late for work today

never-in-doubt

natweststaffmember wrote: »

I can't comment or I will be late for work today

Don't forget that the charges term within your bank contract will not be binding under Regulation 8, as Regulation 5 points to terms being unfair if they are not individually negotiated and if they cause a significant imbalance in the rights and obligations of the parties to the detriment of the consumer.

Once it is established that the term violates Regulation 5, then Regulation 8 negates that term and so the banks will be liable to return all charges.

Effect of unfair term
8. - (1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.

(2) The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.

MrLeeLee

never-in-doubt wrote: »

Don't forget that the charges term within your bank contract will not be binding under Regulation 8, as Regulation 5 points to terms being unfair if they are not individually negotiated and if they cause a significant imbalance in the rights and obligations of the parties to the detriment of the consumer.

Once it is established that the term violates Regulation 5, then Regulation 8 negates that term and so the banks will be liable to return all charges.

The thing is, I have no idea about law or courts, but that seems clear as day to me that the bank are infact in breach of that.

So that begs the question, why didn't the OFT use that in the first place? Or is it really not as clear as I think it is?

never-in-doubt

MrLeeLee wrote: »

The thing is, I have no idea about law or courts, but that seems clear as day to me that the bank are infact in breach of that.

So that begs the question, why didn't the OFT use that in the first place? Or is it really not as clear as I think it is?

The banks are in breach, thus the Law Lords advised in the coded message to the OFT to seek guidance under Regulation 5 - i.e. hinting that they had pursued the wrong avenue...... but to be honest the result has now paved a clear path that can only lead to one outcome..... ;)
I am unsure of their reasoning to use rag 6 in the first place when 5 & 8 was the obvious choice (now we know of course lol)

WestonDave

Regulation 5 isn't easy to apply though. If you read the indicative list of things which are unfair under this clause, none of them look like bank charges. The nearest is subsection (e) but that is about penalties and the banks have already successfully argued that these are not penalties.

I suspect a lawyer for the banks will argue that as the customer has the ability to avoid charges by not going overdrawn, then there is no imbalance in the rights and obligations. Banks are not forcing people to spend more than is in their account - it is arising out of customer or third party errors, therefore the bank is not in a position where on the first occasion it can effectively force a charge. Where there might be some grounds for a case is on the follow on charges - i.e. a charge because you are overdrawn because of a charge. In that instance it might be arguable that the customer isn't in control. Other than the follow on charges the list of examples doesn't provide much hope.

Its also worth pointing out that although the Supreme Court judges pointed to regulation 5, they have not heard evidence against its use so its very possible that there are angles of attack that they have not considered - their consideration of reg 5 would have been incidental as it wasn't part of the main case.

never-in-doubt

WestonDave wrote: »

Regulation 5 isn't easy to apply though. If you read the indicative list of things which are unfair under this clause, none of them look like bank charges. The nearest is subsection (e) but that is about penalties and the banks have already successfully argued that these are not penalties.

Its ss.1 of reg 5 that we'd be using along with reg 8.

5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

WestonDave

never-in-doubt wrote: »

Its ss.1 of reg 5 that we'd be using along with reg 8.

I realise that - but if you read the examples - what they mean by an imbalance of rights and obligations is the sort of thing where you have to pay on time, whistle the national anthem while they deliver etc etc, and they can change the specification, deliver late, put the prices up etc with no comeback from you. In other words terms which effectively hold them to nothing whilst holding you to ransom. I'm not sure that is easy to argue with bank charges. This is not a case of just saying banks are big and nasty therefore the balance is all on their side, so its an imbalance - it is about specifics of how the contract between the two is set up.

MrLeeLee

WestonDave wrote: »

Regulation 5 isn't easy to apply though. If you read the indicative list of things which are unfair under this clause, none of them look like bank charges. The nearest is subsection (e) but that is about penalties and the banks have already successfully argued that these are not penalties.

(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation

Is this the part you mean?

WestonDave

MrLeeLee wrote: »

(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation

Is this the part you mean?

Yes that's already been knocked out because the charges have been ruled not to be a penalty for failure to fulfil the customers obligation.