MSE News: Bank charges update: the phoenix from the flames + full Q&A

Centium5000

JohnDinton wrote: »

If the fee is ten times what it should be that ought to be able to be considered unfair. The Supreme Court said the problem might be that there was no competition. Perhaps there ought to be an investigation as to why competition is not operating effectively, and whether the banks are operating an illegal cartel.

Absolutely - they don't even need to be operating an illegal cartel, just 'abusing a dominant market position' as per Chapter 2 of The Competition Act 1998:

http://www.opsi.gov.uk/acts/acts1998/ukpga_19980041_en_2#pt1-ch2-pb2-l1g18

I've posted about it a couple of times here, e.g:

http://forums.moneysavingexpert.com/showthread.html?p=27296623#post27296623

What do you think?

pie81

Centium5000 - this Chapter 2 argument doesn't work. For Chapter 2 you need to be able to point to ONE bank with a dominant position, not just say that together they are dominant.

Centium5000

Sorry pie81, do you have specific case law in mind?

Chapter 2 states:

(1) Subject to section 19, any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.

(The emboldening is mine)

This seems to cover not only 1 dominant company (a monopoly) but also several sharing the dominant position (an oligopoly).

If this is the case, the 'big four' would look to be good candidates for this legislation no?

buckers_wv

There was really never much doubt that the banks weren't going to win. It was destined to drag on for years. Those of us who were fortunate in the beginning got lucky, the rest of us just need to move on.

JohnDinton

I too doubt whether any one bank has a dominant position. You need about 40%, although it does not need to be in a substantial part of the UK. It may be that in a local area one bank has a 40% market share. You may well be right that similar conduct by several banks with 40% between them may be sufficient. I am also not sure that there have been any allegations of Chapter II conduct. The cartel offence in s188 of the Enterprise Act 2002 is more serious and can result in imprisonment and disqualification of directors as well as a large fine.

I did think it might be possible to rely on what the Supreme Court said about lack of competition. The passage I had in mind was in Lady Hale's speech at para 93. She asks a rhetorical question and then answers it. "Or is the real problem that we do not have a real choice because the suppliers all offer much the same product and do not compete on some of their terms? This is the situation here." It is too weak.

What we need to do is to collect examples of the banks' contractual terms over the years. It may be possible to show that they have all adopted the fiction that an attempted withdrawal which would result in an unauthorised overdraft is a request for a service, to avoid the argument about penalties, at about the same time. They may also have increased the fees at about the same time and to similar amounts.

ss20 and 21 of the Competition Act suggest that notification is the appropriate procedure. Richard Whish's book on Competition Law says that officials at the OFT have said, "Don't notify, do complain." There is no fee for a complaint and no specific form. The OFT's website has some leaflets, and I'll have a look for them.

pie81

centium5000 - you are right that collective dominance of an oligopoly can, in theory, exist, but it's incredibly hard to prove (never been done successfully I believe).

Centium5000

pie81 wrote: »

centium5000 - you are right that collective dominance of an oligopoly can, in theory, exist, but it's incredibly hard to prove (never been done successfully I believe).

In European case law the European Court of Justice has actually set out 3 criteria for Collective Dominance:

http://www.globalcompetitionpolicy.org/index.php?&id=1852&patvyywc=patvyywc&action=907

1. The existence of a collective position

(All the banks party to the Supreme Court case had a shared position, and this was furthered outside court via their BBA spokespeople - evidence of coordination)

2. The collective position being dominant

(The banks collectively have a 90%+ share of the Personal Current Account Market - well over the 40% marker JohnDinton mentions above, thanks for the prompt John )

3. There is abuse by the collective dominant entity

(This is the hardest to demonastrate normally. However, fairness of pricing can be considered under the Competition Act, unlike the UTCCR as it is directly pertinent to the question of abuse)

So, although there has never been a case like this before, the legal groundwork for it has already been laid, and there's never been such a clearcut fulfillment of the three criteria.

This is the perfect case for Chapter 2 of The Competition Act (which implements the European Article 82).

Just need someone / the OFT to be brave enough to take it to court.

They may find their pay cheques bounce the morning after though(!) :P

Centium5000

JohnDinton wrote: »

I am also not sure that there have been any allegations of Chapter II conduct. The cartel offence in s188 of the Enterprise Act 2002 is more serious and can result in imprisonment and disqualification of directors as well as a large fine.

I see your point John, and thanks for the alternative view and extra info.

The problem with the cartel offence is that it is criminal law rather than civil and as such requires a much higher standard of proof. Rightly so, but unlikely the agreement between banks would be beyond a reasonable doubt.

For the Competition Act, as civil law, I believe it is the usual balance of probabilities. From my post above, I reckon the court could establish a 90%+ likelihood given the recent behaviour of the banks, in court and via the BBA.

There's already strong eveidence regarding the coincidence of timings of price / interest rise on the part of the banks as you suggest. The OFT have collated this together and can be found in their 2006-2008 reports at http://www.oft.gov.uk/pca.

I really hope they gear up and take this one on. Would be an important and just precedent!

XRAT

Is Martin following the http://www.moneywise.co.uk/ vote?

elaine2303

This is from another thread but I think it may just be relevant here

Originally Posted by euronorris

I think a good place to start is if we all started writing to our MP's and to the PM. Ask them for a face to face meeting to discuss it. Or a town/city/village 'question time' type meeting.

If we all started doing that, in combination with writing to the press and gaining publicity about it, the government would start taking notice.

Particularly if we also appealed to opposing parties to include such reforms in their manifestos, close to election time.

They aren't going to change if we sit back and do nothing.
I totally agree. If we all wrote a letter to our MP and asked everyone we know who agrees with the idea to do the same then maybe we would get our voices heard. As you say, we have an election coming up so now's the time to flex our muscles and tell our elected representatives that if they don't do something about this we will be seriously considering where we cast our vote!

Does anyone know which is the bank with the lowest charges because if we all moved our accounts to them then maybe the rest would realise the time of them ripping us off is over and they will not get our business unless they reform their system?

On a related note, something which really bugs pretty much all of us with a printer is the cost of the ink cartridges, but I see that Kodak have started advertising their new printer and that the cost of the cartridges for that are £6.99 & £7.99. Wonder how long it will be before everyone else's prices drop dramatically.................... It usually works like that on the High Street and banks are on the High Street.............

Originally Posted by staffie1
Very true. We need to vote with our feet. Campaigning should be done I agree, but like you say, it's usually quicker and more effective if customers can force the price of things down by boycotting the biggest offenders.
I guess the downside to this though is that some people will be stuck with their current bank as they will have poor credit records and no-one else will take them on.
A bit of both would work though.
Absolutely but we have to start somewhere. I also think that the capitalism card would come into play here.

Many people have a bad credit rating because of being in this downward spiral and are not particullarly bad with money, just caught in the banks' greedy system. They would probably be much more careful in the future should they ever get out of it.

Any business needs customers to survive so if the bank with the lowest costs were to make it clear that if they were approached by someone with a not exactally brilliant credit history they would at least consider the application. You may still be turned down but at least you get to put your case to a sympathetic ear.