Why Reclaim Bank Charges

natweststaffmember

hicskis wrote: »

Well either way Nattie it doesn't come across to me that the banks initiated it as we are led to believe by the posts above. This is an event that has come about by a whole series of other events - shall we just leave it at that....???

If you want direct reason for the OFT test case then it is the banks asking for that.
If you want indirect reason then it is Stephen Hone et al bringing the media coverage of bank charges reclaiming into focus.
I think that is fairly balanced approach, right?

Alpine_Star

hicskis wrote: »

Well either way Nattie it doesn't come across to me that the banks initiated it as we are led to believe by the posts above.

That's because, as Nattie rightly points out, the Wikipedia entry under the heading ''Facts'' (sic) is factually inaccurate:

''Hone eventually recovered £5000 from the bank, although his original claim was for £840. The banks then sought a declaration that their charges for exceeding overdraft limits were not penalty clauses.''

Clearly the banks didn't seek a declaration on penalties in (or as a direct result of) Stephen Hone's case. The test case was initiated by the banks for the reasons given by the banks' lead QC Lawrence Rabinowitz in is opening remarks to the court during the first instance hearing:


''As my Lord is aware, the matter comes before you as a test case to determine certain issues in general concern with the enforceability of charges imposed by banks on current account customers who seek to borrow money from the banks on the basis of what might be termed unarranged overdrafts, and more particularly, as my Lord will know from the many and lengthy skeletons that your Lordship has received, the issues before your Lordship concern first the application to those charges of certain provisions of the Unfair Terms in Consumer Contract Regulations of 1999, and secondly, the application to those charges of the common law doctrine of penalties.

Now the backdrop to this test case, as my Lord again knows, is the torrent of claims instituted against the banks in County Courts around the country and the deluge of complaints lodged with the financial ombudsman service arising out of the banks leveling these charges on customers, charges which, as my Lord knows, were of course contractually agreed.

Whilst the OFT is of course not a party to any of the claims brought in a County Court, it is particularly appropriate that the OFT should be a party to the test case and this is so for two reasons: first, because the OFT is currently itself conducting an investigation covering among other things the charges which are the subject of those many County Court and FOS complaints, and that is an investigation being conducted by the OFT under part 8 of the Enterprise Act 2002. Secondly, because the flood of claims currently engulfing the court system in this country is at least in part the consequence of certain, we would say, with respect, ill judged comments made by the OFT itself
about bank charges of this kind following the OFT's production of its report into credit card charges in which the OFT suggested that exactly the same principles that the OFT considered applied in the context of credit card charges were equally applicable to charges imposed on personal current accounts.

We respectfully submit that those comments were unfortunate not least because they were made by the OFT before it even began its detailed investigations into the charges.''

hicskis

This is why i love the Law so much - the trigger was all the claims in the County Courts - that's what initiated this process - but i do agree that the banks started it!

Alpine_Star

In asking the OFT for a test case, the banks initiated it.

hicskis

Which tells you therefore the banks knew they were going to win, otherwise they would not have done so - does that answer the conspiriacy question(s) that were being punted about that the FSA, OFT, Government and banks were in cahoots - no right or wrong answer but i know how i feel?

Looks like we're moving towards fee based banking then afterall (Times article today)

http://www.timesonline.co.uk/tol/money/savings/article7052219.ece

Guess the banks win - well they get to keep the money that they seized - and now they get a regular monthly income from us too.

Bit like the VAT proposals on food - another public rip off to subsidise this Governments overborrowing and the banks mistakes.

Tax the *#*'*#+#*# is what i say - enough is enough.

natweststaffmember

Hicskis, they lost two judgements and 4 judges did not agree that they would win. However, there was a likelihood that they would win the argument on penalties but not necessarily UTCCR 1999. The end of the test case kinda opened more questions than it necessarily resolved.

hicskis

NO - the banks got the cases stayed in the courts (delayed), whilst they carried on charging. The banks would have used some of that money to pay for a hundred QC's and off the record advices from 50 judges - they knew that they would win in the end, they knew what the outcome would be too.

Defence - cross subsidy - free when in credit.

Outcome - delay, fee based banking, retention of the money already gleaned.

natweststaffmember

hicskis wrote: »

NO - the banks got the cases stayed in the courts (delayed), whilst they carried on charging. The banks would have used some of that money to pay for a hundred QC's and off the record advices from 50 judges - they knew that they would win in the end, they knew what the outcome would be too.

Defence - cross subsidy - free when in credit.

Outcome - delay, fee based banking, retention of the money already gleaned.

There were case delayed while CCA Test cases went through. If there is a test case then it is only right that cases already in the system are stayed awaiting a higher legal authority judgement. You could have had a farcicle situation in which claimants won in court yet the test case meant they lost so the bank could have appealed all county court cases or perhaps that someone lost in court when no bank turned up.
You may not have liked the stay but it is a reasonable thing to happen. The bank would have and did have the money to pay for their defence, what did you think they would do? Say, ok you win guv'nor.
The penalty argument: they did know that they would win. In fact there is a poster on CAG called Aequitas who argued that fact months prior to the OFT test case beginning. He was 100% correct. No one knew the answer and I will explain more. The document that ultimately lead to my sacking was about the bank having the ability to proactively refund charges to its customer database if it lost the case. If they believed 100000000% they would win then why waste the expense of having that in place? You are getting close to a line of assuming the banks know more than they actually do know. They didn't know that they would win, they did not know that they would win and certainly could not have anticipated winning. As it is, the likelihood of recommendations on lowering charges, this time on bank accounts, will put pressure on banks to do so. You assume too much of what is know without providing evidence of this.

hicskis

You are not a strategist are you?

Have you heard of the term - "cover your bases"?

These are only my thoughts Nattie - but i'm not stupid.

1. Lots of legal cases in the courts and with Ombudsman;
2. Banks ask for a test case based on their own terms of argument;
3. Banks get cases stayed by FSA;
4. Banks win.

The OFT screwed up - they should have brought the argument on their terms - not the banks.

hicskis

From MSE:

http://www.moneysavingexpert.com/reclaim/oft-bank-charges

What was the law examined in the test case?

The test case focused on the Unfair Terms in Consumer Contracts Regulations, yet in the end it all boiled down to one simple nerdy technical point – were bank charges a core part of a bank account?

Unlike the lower courts, the Supreme Court ruled that they were, and that meant under those specific regulations the price of bank charges could not be used to examine whether they were fair.

Even I could have told you that bank charges were a fundamental part of the contract - it beggars belief that two courts saw differently and raises a serious question - why?