The new supplier is E-on. So far they seem to have treated her decently. If the outstanding bills are not transferred, then at least I know which direction to proceed in. I can write a letter demanding details of how their figures were arrived at, rather than incorrectly demanding to know why the balance wasn't transferred. I don't believe she has given BG her bank details - ever. However it is possible that someone else has, either by accident or maliciously. I'll help her write another letter demanding a copy of the DD mandate which was used to authorise those transactions.

My friend who still lives in England has changed supplier within the past year, because she couldn't keep up with the bills with the old one, and I found her one that was much cheaper. I had recommended she switch some time before that - I don't know why she didn't. She now pays less for both gas and electricity than she did in 2007. She is still getting payment demands from the old supplier (Southern Electric), and the numbers don't seem to add up by my reckoning. At one point she got a demand for over £4000 for electricity alone, which we flatly ignored as absurd (corresponding to about 10 years worth of completely unpaid bills). The more recent demands are for much smaller amounts, but still roughly twice the amounts I calculate should have been owed, which stem from about 3 months of unpaid bills after two rate hikes in quick succession. My main question is thus: Are outstanding bills from a previous supplier supposed to be transferred to the new one? Another oddity is that British Gas, who is not her new supplier, has somehow managed to activate Direct Debits for at least £250. I do not know how this could possibly have been achieved. I think I can help her sort this out myself, though.

The bank will probably claim that newer leaflets supercede the older ones. Look for a clause in the first one you have, which allows itself to be overridden, typically with 30 days' notice. Then look for a clause in the latest one which states that it overrides the older one, and gives a commencement date. If those are missing, then you can probably use the older one! That's the kind of clause you need to look for. Good on you for finding it. However, that's a relatively weak one - read very carefully what it states is a breach: the act of going overdrawn. This is, legally speaking, not the same thing as not having enough money to satisfy a transaction, and thus might not cover you for the Unpaid Item Fees. Better would be the stronger obligation of keeping enough money in your account to satisfy transactions that you instruct them to make. If you can find such a stronger statement, that will help you much more. Wording like "you must" is just as good as "you are in breach if you do the opposite". The T&Cs that applied at the time of the charge should be used. You might need to separate the charges in groups by date to be watertight about it. I would expect 2001 T&Cs to be covered by the "penalty charge on breach" strategy. You can use either the common-law rules or the UTCCRs for this. This is probably true until the T&Cs were revised, likely in 2006, assuming they did the superceding thing correctly.

Reading Mr. Justice Smith's decision from yesterday, he explicitly avoided saying anything about Abbey's terms. This was because the OFT basically screwed up and gave him the wrong terms to examine in Abbey's example. Beyond that, I suspect your case would rest on the UTCCRs. You do perhaps have an advantage there, in that your bank explicitly admits that their "terms and conditions leaflet" actually does contain the contractual terms that apply to your account. I won't advise you on whether to proceed or not. However, do examine your T&Cs for any clause which you must certainly have breached at the time of the first relevant charge. This could be something like "You must have sufficient funds in Your account when you issue an Instruction which causes funds to be withdrawn." If you do find something very similar to that, you might still be able to go ahead with the old "breach of contract" argument. Otherwise, have a look at my list here and see which of those UTCCR clauses you reckon you can make "stick" to your case. I've cut out the obviously irrelevant ones and put commentary by the others. The test case has so far ruled that the contracts' terms invoking the charges are subject to the UTCCR's fairness test. The OFT has then stated that it believes that by applying the fairness test, the charges are found to be unfair. This is, however, subject to appeal.

I might have a set of "old" charges to test, from an HSBC account that was already closed when I did battle with Natwest. The only trouble is that I'm no longer resident in Britain, which makes it more complicated to file things and turn up in court if necessary. I do think the test case has been done completely the wrong way. Rather than "OFT vs. Banks", this should have been done with a selection of actual consumer cases. As it stands, nobody seems to have any sense of urgency, and everyone is pondering over technicalities rather than logistics.

Well, this is *my* interpretation: This is the crux of the argument, as it essentially codifies the elements of common law (specifically the test on "liquidated damages") which we were relying on to begin with. The consumer's "obligation" in this case is to keep sufficient funds in his account to satisfy any and all transactions he instructs; failing to do so in various forms causes the charges to be applied. Rough calculations I did around 2005 note that the cost of rejecting a Direct Debit is no higher than 35p, and bouncing a cheque 70p, the bulk of this being the cost of first-class postage. At that time NatWest was charging a hundred times that for Unpaid Item Fees. For every one of my DDs or cheques that they bounced, they levied more charges than the original transaction had been worth. This is thrown up by the latest decision, as of 21st January. The banks typically refer to their "terms and conditions leaflets" when questions of contract terms come up, yet Mr. Justice Smith is of the firm opinion that at least some of these do not read as sets of contract terms. Thus it seems unclear what the contract terms actually are. The common refrain among consumers affected by charges is that they had no idea that the banks could levy such high charges. The banks decide for themselves whether to refuse a transaction (causing an Unpaid Item Fee) or to initiate an unplanned overdraft (giving rise to Paid Referral, Unauthorised Overdraft, Overdraft Maintenance and Debit Interest charges). Needless to say, they normally choose the latter option in the first instance. It would be fairly easy to argue that the unilateral initiation of an overdraft facility, on an account where no overdraft facility had previously existed ,would count as invoking this clause. This is doubly true where an "arranged overdraft" had previously been refused - and I can document this as having occurred at least once. Banks have repeatedly refused to take consumers' financial predicament into account when asked. They have also, whether by incompetence or malice (or some combination of the two), misled consumers as to their rights. At the same time, they widely and clearly advertise their "compliance" with the Banking Code, which prohibits those two actions, among others. If I'm not much mistaken, references to the Bank Code even appear in these "terms and conditions leaflets" that they are so fond of shoving under our noses. Certainly Natwest sent me a copy of the Banking Code in response to one of my nastygrams, upon which I went through it and highlighted all the provisions of it that they'd breached so far. I have personally seen Natwest apparently become unable to perform simple arithmetic, resulting in some extremely odd series of "corrections". You would naïvely assume that these were core competencies for a bank. But let the consumer sneeze in the wrong way, and watch the banks come down on them like a ton of bricks. This is a good one. The banks love to point the consumer at the Ombudsman in order to distract them from the legal system. Some of them also make it difficult to obtain back statements, despite their obligation to make them available under the Data Protection Act (another core competency). Finally, they appear to have successfully obfuscated the identity of the contract terms which apply to the account, making it very difficult to formulate robust legal arguments. The UTCCRs don't apply to contracts between businesses, although it could be argued that they could apply to a "sole trader" in the client position. IANAL, of course - though I have stared down a bank in the past.

Sounds like they confused a "Paid Referral" with an "Unpaid Item Fee". But yes. The fundamental issue now seems to be precisely which terms apply to the contract between customers and banks. And it's probably incumbent on the bank to show this - if only somebody knows to ask.

Not exactly. Mr. Smith pointed out very clearly that, for the specific terms considered at that point, the breach would occur when the overdraft was created, *not* due to the "attempt" to create the overdraft. He noted (with reference to Abbey) that the Unpaid Item Fee is what would create the overdraft if it were to be levied. In fact he rejected Abbey's part of the decision simply because the terms he was asked to consider did not actually apply to the type of account the leaflet was supposedly printed for. The "Instant Plus" account didn't have cheques or cheque-guarantee cards, and the terms he was shown only applied to cheques and cheque guarantees. The last two sentences of that are worth noting in their own right. I noticed that Natwest tended to allow "paid referrals" as long as the account was initially in credit, but turned to "unpaid items" otherwise, and is may be part of the reasons why. There are no other references to "direct debits" in the entire decision, except in a clause that Mr. Smith described as "of advisory or hortatory effect" and thus not a contractual term.

Yes, that is what they have been doing in the past. But Mr. Justice Smith has now given us a very big lever to suggest that the leaflets are not, in fact, sufficient to show that a contractual obligation exists. By levying these charges, the banks are, by default, asserting that they have a contractual right to do so. What I'm suggesting is that we make them prove that contractual right by showing us the terms.

It's worth reading the judgement in detail. I don't think it's a loss as far as post-2003 claims are concerned at all. Instead, it strongly implies that the T&Cs leaflets are *not*, in fact, the terms of the contract (in most cases). In which case we should be asking what the terms of the contract actually *are*. I think a worthwhile tactic for existing and future claims would be to ask the banks to show the terms which they believe allow them to charge the fees. So far, they have been shoving leaflets under our noses... BTW, jaxads, that 17th January birthday you were thinking of? That was mine. ;-)

I've read the judgement very carefully just now. Since it is only ten pages, that was fortunately not too difficult! The decision actually hinges upon whether or not the "leaflets" containing "terms and conditions" actually form part of the contract between the bank and the customer. In most cases they did not. In which case, where *are* the contractual terms to which the customer and bank are subject in their business relationship? I don't seem to have been given any. In the two cases where the decision was that the terms in the leaflet *did* apply to the contract, the precise terms considered in one of them was inappropriately specific. This is the OFT's fault - Mr. Justice Smith is not able to "show initiative" in this kind of case. As such, he has not actually answered any substantive questions as far as we consumers are concerned. Instead, he has raised new questions. However, these new questions may turn out to be useful. Here's a new avenue to consider: Ask the bank to clarify which *contractual* terms apply to the account, and to point out under which of them it was entitled to charge the fees.

Unfortunately, she's a weak reader - this place would totally overwhelm her. I suspect I'm better off helping her directly, with advice from you people when necessary.

Assuming they follow the correct procedure... If they file against you in court, you'll get court papers informing you of their POC's, and giving you the ability to Acknowledge and to File Defence. You would put your counterclaim in the Defence. Those more knowledgeable than me should advise on the precise details to put there. I imagine however that you would advise the court (through the defence) that you believe the debt they are claiming is solely made up of penalty charges, and then outline the legal basis for your belief in the same way as if it were a POC sheet. You could also reference your existing case in your defence, noting that the same principles of law apply. You could even use the banks' own tactic against them and apply for a stay, suggesting that you'll lift your stay when the bank lifts theirs! I assume you've already repaid the original 20p overdraft. If not, perhaps you should do so to make things simpler. Note that as the defendant, you wouldn't have the luxury of breaking off the action if the bank decides it wants to settle. Instead you will have to press to win your case, and maybe the bank will get nervous and break it off themselves. You will also have to be particularly well-prepared if it actually goes to the courtroom. You might even be able to make things interesting by talking about "vexatious litigation". However, this is an area I am totally infamiliar with, and you should ask an expert about it.

I say... let them take you to court for the £280-whatever in charges. They barked, it's up to them to bite. You might need to open a parachute account to operate with in the meantime. Your defence, if they bother to do so, would probably be in the form of a counterclaim, similar to the claims in your existing case. If they don't bother to actually take you to court (have they got the nerve?), perhaps you could consider claiming financial difficulty to the court, as grounds for lifting the stay on your original case.

Personally, I think the idea of using Lloyds' admission of your financial difficulties to try and get the stay lifted... is a good one. Did you try it yet?