OFT Publish Banks Test Case Defences

Nathan_Spleen

The OFT have at long last published the banks defences in the test case.

The Office of Fair Trading: Personal current accounts in the UK - banks' defences

OFT lawyers had been busy for some time ''redacting sensitive information'' before publication presumabley at the banks insistance but the page count of the OFT versions are no less than the court versions although I'm yet to look at them in detail.

Also very odd is the discreet way that the OFT have chosen to publish them. The defences have not been included in their site's 'what's new page' nor any of the the press release and 'advice and resources' pages in which all the other test case documentation is found.

nickmack

I've read the bank defences and the OFT reply to the defences. I'm still digesting it, but my initial thought is as follows:

One of the crucial points will be the language banks use and have used in the past to describe charges.

As is well known, the T&C's have changed to define 'charges' now as a 'service'. The OFT states this definition is misleading partly because of this alteration (backing up the previous 'cloaking' statement made).

Furthermore, because the banks could be deemed to be suggesting that exceeding a given limit is acceptable. For example presenting a cheque possibly knowing insufficient funds are available (illegal) but being told by the bank it is in fact a request for an 'informal overdraft' (or extension)

I suspect if anything, one of the outcomes will be clearer information from the banks regarding payments. For example, as with Credit Cards now, the T&C's show how credits/debits are applied and in what order. This for current accounts would provide information to the customer on which debits will be considered when exceeding a limit and which payments are processed and when.

It is also mentioned that banks have an additional marker on accounts sometimes known as an 'authorisation limit', which is above the value of the agreed overdraft. This figure determines whether a payment exceeding that limit will be processed. The banks present this to the customer as 'considering to meet the request' (asserting this is a service) but in reality, with the majority of cases no consideration is given, as the process is automated based on this 'authorisation limit'. Additionally, requests within this 'authorisation limit' are automatically met in most cases.

I find it incredible that the banks still maintain these have always been 'services'. Ignoring the argument about what actual 'service' is being provided, the OFT have provided examples of how some banks clearly previously described these same charges as breaches of T&C's.

defender_of_the_weak

Only had a quick read of these and the particulars of claim but a couple of observations.

As nicknack says it is interesting how these are now being described as charges for services, they are all following the same bluff with this one. Also in some of the defences they say 'we draw attention to and explain' (when the account is opened) certainly never happened with any account I have ever opened all I got was a handful of leaflets.

I have not yet had chance to wade through all the piles of client paperwork but have at least one letter detailing

We hereby give notice of default in respect of the sociey's agreement with you and goes on to say

Provision breached- if an unauthorised overdraft is created the account must be brought into credit immediately

Lastly, I see that Nationwide are being represented by Slaughter & May, they must be in trouble

jamesd

29.3 of the RBS one is interesting: "when the relevant RSBG Bank executes the instruction the contract is varied so as to permit the overdraft" about an ad-hoc request for a previously unauthorised overdraft. Now, what have they been telling credit reference agencies about these ad-hoc requested and permitted overdrafts? I hope that they haven't been falsely telling the CRAs that they were unauthorised while arguing in the OFT case that they are authorised. I assume that would breach the requirement to supply only accurate credit reference information.

nickmack

52.7 of HSBC is also interesting.

They state that since 1st October 2007, an alert will appear on HSBC Cash Machines if a proposed transaction will result in a informally requested overdraft.

Has anyone actually seen this message?

I tried to force this alert yesterday by requesting to withdraw an amount to exceed my limit. It dispensed the money, but no warning. If a charge appears for this, I will be referring them to their defence in this case.

jamesd

nickmack, there may be a charge for the service of considering and granting an ad-hoc request for an overdraft - that's the bank's argument of what the fee is for. What would be interesting is if it was reported to a CRA as your having exceeded your agreed overdraft facility.

nickmack

jamesd wrote: »

nickmack, there may be a charge for the service of considering and granting an ad-hoc request for an overdraft - that's the bank's argument of what the fee is for.

Which is why HSBC Defence 52.7 is curious. I had no such message, so I guess it's a test of whether this statement is truthful.

What would be interesting is if it was reported to a CRA as your having exceeded your agreed overdraft facility.

Indeed it would. HSBC don't seem to report my current account activity on any credit report, only my mortgage payments.

defender_of_the_weak

Does anyone know if there is a central base or site, where people can submit copies of documentation for gathering and submitting in evidence to the FSA and OFT. My concern is that some of the 'interpretations' within these defences may slip through and harm the chances of success.

I would be happy to put together a file of correspondence for submission to the legal team that details breaches such as those detailed above from nationwide or can anyone tell me where such info may be found or if such submissions have already been made

Separate note, will anyone from MSE be attending the court?

darlolad

Just to let people know, I have submitted a claim for £4k to the courts in relation Nationwide Building Society charges The Building Society who is soppused to be different is very greedy. I am a postie and I went on strike. Because I striked my wage went down so I incurred charges. When I approached the Society they said "No, you can't have any charges back." I am still stuggerling with bank charges.

bengal-stripe

darlolad wrote: »

I have submitted a claim for £4k to the courts in relation Nationwide Building Society charges......I am a postie and I went on strike. Because I striked my wage went down so I incurred charges.

Well, that was a long strike!