H.O.L Test case appeal. Judgement Declared. ***See Announcements***

[Seminole]

'Morning all, are we poised?

 

Like a sniper

[Seminole]

You have to wonder what the point of having an OFT is after this.

 

Politicians have emptied our wallets to pay vast sums to the banks to pay for their profligacy and now the banks have been given carte blanche to charge whatever the hell they like. It's quite pathetic really.

 

I suppose the one remaining avenue is for someone with deep pockets to revisit the issue of whether the charges are penalties or not. It's extraordinary that the OFT didn't pursue this issue to appeal and makes me wonder whether the whole test case was really a set up to screw the consumer.

 

Others with more legal knowledge will comment but I suppose this means that the stays on claims will now be lifted. Does that leave those claiming with any legal avenues to pursue in court. Today's decision doesn't really hinder them- it's the original ruling on penalties that does.

 

Whatever happens this must not mean that CAG comes to an end. We know that we have right on our side and this site helps an awful lot of people. Even if the bank charges issue dies (and I hope it doesn't), there's an awful lot of work to do to bring debt collection agencies, debt buyers and credit reference agencies to heal.

[Seminole]

So the ruling only has the effect of stopping the OFT from making a ruling. It doesn't say anything about fairness and doesn't strike out the Regulations (which are a statutory instrument). Personally I think it means that people can still make claims and have individual county court decisions on whether they're fair or not. If the claims are based on the Regulations rather than the penalties issue, there must still be a reasonable chance of success. Am I missing something here?

[Seminole]

So what you're saying is all our claims got put on hold so that we could see if the OFT could assess for fairness.

The courts say no, the OFT can't assess for fairness.

But it doesn't mean the charges are fair.

Which takes us back to the OFT's statement on credit card when they said only the courts could decide what constitutes a fair charge.

So we have to go back individually to the courts for each individual judge to decide on fairness.

So, the last 2+ years have been a giant waste of time??? :-? :-? :-?

 

Essentially yes, I think.

 

The original test case seems to have had two strands. The first considered whether the charges were penalties. The courts decided (quite inexplicably) that they weren't and the OFT didn't appeal. The second was whether the OFT could exercise their regulatory powers and the Supreme Court has decided that not only that they can't but that the OFT can't appeal to the European court.

 

My take is that everything after the penalties ruling has been a waste of time. The courts can decide whether the charges are penalties and whether they are fair. The penalties approach was dealt a heavy blow by the court ruling but no court has given a definitive ruling on whether they are fair or not. I'm no lawyer but I think that issue remains unresolved and individuals could still pursue claims. We are going to get an answer to this one way or another because I can't see any reason for the stays to remain in place now.

 

Bankfodder will have a view on this but personally I think we should swamp the courts with claims again, swamp the banks and the Financial Ombudsman Service with complaints and bury our MPs in letters.

[Seminole]

You missed a bit out, Seminole:

 

The courts decided (quite inexplicably) that they weren't and the OFT (quite inexplicably) didn't appeal.

 

Els

 

Sorry, yes you're right of course. In retrospect that decision not to appeal something that really could have opened the floodgates on claims looks very, very suspect now.

[Seminole]

Well, the appeals courts hadn't given permission for the banks to appeal to the HOL and they still did, not sure how it goes at the ECJ, but can't the OFT appeal anyway?

 

Would we want them to?

 

There is a chance that a successful appeal could mean that the UK government would have to put in place the refund mechanism that we have all been hoping for so that people could avoid having to go to court.

 

The downsides are that it would take years to be heard and the stays would no doubt be left in place in the meantime. Moreover, even if the OFT won I've a feeling that the establishment would find a way to ignore or water down the judgement.

 

What we are going to see now is a concerted attempt to persuade the public that they should give up pursuing historic charges (a lot of people will be duped into believing that they can't claim back charges) and a continuation of moves by the banks to make us believe that their charges are "fair" and "transparant". Personally I think today's ruling is liberating. Assuming that there's no stitch up over the stayed claims, I think people are free to start claiming again.

[Seminole]

why are we the only ones that can see that the bank charges are not fair? i really dont know where to go from here! can i claim them back any other way?

 

Just to be clear, no binding decision has been made on whether the charges are fair or not. The two decisions that have been made are a) they are not penalties (but this was decided in a lower court) and b) the OFT can't regulate charges on the basis of fairness. That isn't the same as saying that the charges are fair.

[Seminole]

Probably right, but the issue is not whether the charges are fair or not, it's whether the Banks will allow their fairness to be tested in open Court.

 

Before the OFT TC, this was a no-no, and I suspect nothing has changed, there.

 

I think we need to take a deep breath and relax. Amending POC instructions, if they are needed, will be here for us to get to. Panicking now may cause further issues down the line.

 

Absolutely. The banks will be hoping that everyone panics, allows claims to lapse and basically come to believe that this ruling means something that it doesn't.

[Seminole]

Here's what the 'Solicitors Journal' has to say about this morning ruling:

 

Crash, bank, wallop

Banks aren't exactly popular right now. They have become even less so after this morning's Supreme Court ruling on unauthorised overdraft charges.

It all started when the OFT decided to look into the fairness of these charges under the regulations implementing the EU's directive on unfair terms in consumer contracts.

Unfortunately, the consumer watchdog chose the wrong angle for its investigation: the banks objected that it could not, under regulation 6, question the 'value for money' aspect of the charges.

This minor steering error on the OFT's part eventually sent it crashing out of the race, as the Supreme Court, in its sixth ruling since it was set up in October, has upheld the banks' contention.

It was an awkward case from the beginning, questioning whether the OFT could challenge the banks at all. Predictably perhaps, the outcome is a disappointing win on a technical point.

But the two real shockers are elsewhere. Altogether the banks hired eight QCs between them and a fleet of juniors, which means the costs will be stratospheric – and the OFT will be landed with the bill.

Secondly, the court also suggested that the OFT might nevertheless have a case under a different regulation, regulation 5, which would allow it to assess the general fairness of the charges. It will take a brave chief executive to start all over again on this basis.

Alternatively, some of the Justices suggested, Parliament may wish to amend the law. Though with a general election on the horizon, nobody's going to rush to the bookies to place a bet on anything happening any time soon.

This is not only a costly funeral for a high profile case, it will further erode the status of the OFT as an effective consumer champion while comforting large corporations that they can take on government bodies and win.

* * *

 

That's a fair assessment and it brings into question the OFT's commitment in bringing this case. The fact that they chose to pursue an unnecessarily narrow aspect of the regulations is questionable. Even more so was their failure to appeal the penalties decision in the lower court.

 

The process that was followed together with the waiver and allowing banks to continue charging whilst the case was decided really does stink to high heaven.

[Seminole]

according to the fsa all stays should be lifted as the case is over

 

Careful. The only thing that's been lifted is the waiver enabling banks to not deal with complaints. Claims are stayed in the courts and as I understand it they won't be automatically lifted. The Announcements section includes a template letter that each claimant should submit asking for their stay to be lifted.

[Seminole]

Crusher, it all seems to be part of a concerted effort by the establishment to misrepresent the decision of the Supreme Court and squash any more complaints. The banks will move for mass strike outs (that hopefully most claimants and county court judges will resist) and the Financial Ombudsman Service has said (on its website) that it plans to dismiss most of the complaints that have been on hold.

 

This is all on the back of a decision that the OFT can't assess fairness on the grounds it brought before the court rather than any decision about fairness. It says an awful lot about this country that this government brings a deeply flawed legal case against the banks, stops people from claiming in the meantime, loses and then through another agency says that the complaints are invalid. At the same time the banks get away with misprepresenting the decision and will try to steamroller ordinary members of the public.

 

Consumers are entitled to expect protection from the state but what we actually get is the state aiding and abetting those who rip them off and treat them with contempt.

[Seminole]

Always remember that this campaign started with a small group of people taking on the banks and winning. Word got out slowly to begin with but it rapidly turned into the biggest consumer campaign in British history.

 

The media spin will pass. What remains is a very strong legal argument. As cases start to be won, momentum will build.

[Seminole]

That's an extraordinary presentation and I'm amazed that the MofJ associated themselves with it.

 

There is a huge difference between a consumer website like CAG and a claims management company.

 

Also there are thousands of examples of members of the CSA acting unlawfully and against OFT debt collection guidance. When does the OFT have cosy round table discussions with consumer representatives in the same way that it does with the CSA?

 

Overall though I think it's great that sites like CAG are clearly making a difference and helping to drive some of the more odious CSA members to the wall.

Edited November 30, 2009 by Seminole
Mixing up CAG with CSA :-(

[Seminole]

If you own a UK company the Freedom of Information Act will affect you to some degree. Every company is regulated, taxed or licensed by public authorities and many have public sector contracts.

Under the FOIA, unless the information they hold on you is legally exempt, it could be open to the public and your competitors.

And some companies carrying out public functions will eventually be covered by the Act, so will have to open their files to anyone who asks.

(Freedom of Information Act. Guide, news, consultancy.)

 

Actually that's a very interesting question. The government has a majority stake in three banks although they are still public limited companies. There is an argument that the FOI does apply but I suspect that they'll disagree in principle and quote commercial confidentiality even if FOI does apply.

[Seminole]

Oh you are potentially opening up the provebial can of worms. This would mean yet another (probably hopeless) Quango operated by civil servants. Then they'd need another one for deciding if the information could be issued. Probably have a third just for sending out the replies. I could think of some names for these but it'll go against site policy.

 

Michael

 

lol

 

It's a bit of a moot point anyway unless someone wants to take on the banks over the penalties argument (the OFT bottled it).

[Seminole]

Out of interest, what sort of summs would be required to mount such a claim ?

 

because if my numbers come up in the euro mill lotery I would be prepared to part bankrol it.

 

"And you can quote me on that".

 

I would guess low to mid 6 figures.

[Seminole]

I am in the process of requesting the Treasury to unveil how Northern Rock and Bradford & Bingley charges are arrived at...

 

 

As I said before I think this is an excelent idea. However, I think two things need to be done first:

 

1) Check whether the banks are covered with the Ministry of Justice. I think the act refers to "public authorities" and I don't know whether a bank would meet the definition.

 

2) If it is covered check whether the enquiry should be sent to the Treasury or to the bank itself.

 

The more I think about this the more I think that it's unlikely you will get anywhere unfortunately. The FOI wasn't framed with banks in mind and the govt and the banks will move heaven and earth to make sure that they're not covered.

[Seminole]

The only exemptions are can foresee are related to both s.29 (economic exemption) and s.43 (commercial interests) of the act.

 

It looks to me like the act defines a public company as one where there are no non-government shareholders. Unfortunately Nat West etc don't fall into this category as they remain quoted on the stock exchange and have external investors.

 

It's worth the argument but the section of the act you quote doesn't look too hopeful to me.

[Seminole]

But we already know why they are high - it is to make big profits. The banks no more need to justify the level of their profits than supermarkets theirs.

 

Yes, it's really only relevant to the penalties argument. There was a time when the banks tried to claim that charges only covered their costs. My wife sued Nat West trying to get bank charges automated systems disclosure under the DPA to try to prove otherwise but claimed it was a trade secret and had deeper pockets than us in the end.

[Seminole]

I was always of the opinion that the OFT test case and the OFT waiver smacked of an establishment stitch up and I was right. I know hindsight is great but I was saying this when the OFT announced it was going to take action but even I didn't appreciate the cynicism of pursuing a case that was so badly defined that it was likely to fail when many other options were open to them.

 

Personally I hope loads of Caggers now amend their claims and launch new ones on the basis of the amended POCs. The banks are in a better position to bully people but I doubt if they will want to fight us on the small claims track.

[Seminole]

Lame, lame, lame but yes, completely anticipated by us all. Ok, on the positive side there are now no barriers to a flood of claims once the new argument is complete. Let's hope the new strategy will be as strong as I believe it initially sounded.

 

As for working with the banks to ensure fairness in the future isn't that daft? The banks have just 'won', effectively meaning they can in theory go back to charging whatever they want, with a little extra too to claw back the payouts they already made. What can the FSA do? Squat.

 

"£90 for an unauthorised overdraft? Yes...very reasonable" I can hear them all saying, "We'll even send them a glossy pamphlet with their letter".

 

Not like anyone can complain about it now is it?!

 

If you want to know what banks are like when they win I can give you a personal example.

 

I recently went overdrawn on a business account. It's the first time I've incurred a bank charge in 8 years. It was completely my fault and I accept responsibility. The amount overdrawn was just over £2 for three days. The bank decided that this meant that it could charge me £88.

 

The banks did win a definate victory on the penalty charges issue in the High Court and, as part of the stitch up, the OFT didn't appeal when it could have won. This has closed the door to most business account claims (at least for the time being). The response from the banks is that they can now screw small businesses even more. No doubt they will now try to take precisely the same approach to personal accounts and ordinary consumers,

[Seminole]

I have been scandalised by some of the recent posts. Perhaps I should not be, but I am disappointed that some posters are adopting the habits of the worst kind of politician. I am put in mind of arsonists calling the fire brigade and complaining when they arrive too late to save the building. The late Harold Wilson said that a week is a long time in politics. It seems that a week is also a long time on this forum. Are memories so short that people have forgotten what they were saying and arguing before the SC decision? The OFT argued exactly what people wanted the OFT to argue. How many were there who expressed doubt but that the decision would go the way of the consumer? Conversely, how many criticised the banks for appealing not only to the AC but also the SC on the grounds that the law was oh so obviously against the banks? If other arguments were being put forward perhaps someone will direct me to the threads arguing them as I do not recall ever reading them. Now it is lost all of a sudden the OFT had it all wrong. If the OFT did have it wrong it was only because, under pressure, it put forward legal arguments that if it had not put forward would have had caused an outcry. But let us not forget that four judges agreed with the OFT, so the argument (even though as everyone knows I did not support it) could not have been entirely without merit, could it?

 

The OFT is now a scapegoat. This is unfair. The whole of the consumer movement should shoulder its share of blame for the fiasco. So where did it all go wrong? The consumer movement has two objectives:

 

1. To secure rights for the consumer.

 

2. Where the consumer has rights, to make sure the consumer is aware of them and that business complies with them.

 

The consumer movement is used to success and can be proud of its successes. When it comes to 2, the law is on the whole straightforward. The law invoked in respect of bank charges is also basically straightforward, but the problem was that it did not apply. It was not entirely unreasonable to think it applied, but (as we now know for certain) it does not apply. It was a case of over-elaborating and trying to apply to bank charges law that does not apply to them. I have been criticised, perhaps with justification, for suggesting that this was obvious all along; however, the fact remains that every lawyer I discussed the matter with before the "test case" ever got started was of the opinion that neither the law relating to contractual penalties nor the UTCCRs were going to be of assistance and that the answer, if there was one, lay in trying to prove there was a cartel operating. At the expense of being repetitive, this is precisely what Lady Hale said. I urge those who have not done so to read her words very slowly and digest them.

 

What happened was that someone whispered that bank charges were contractual penalties. Someone else, perhaps the same person, whispered that they were unfair under the UTCCRs. Both ideas were so attractive and seemed to fit the bill that they were taken up with enthusiasm. A bandwagon started to roll and it became a juggernaut that hurtled on until it went over the cliff edge. The odd Cassandra shouted to them that they were headed to their doom, but they were hooted down with cries of derision. These Cassandras now stand on the cliff edge looking down at the wreckage below, feeling no sense of satisfaction. But to those who started the bandwagon rolling and helped it along I say simply: If you are not prepared to concede you had it wrong, do not seek to shift the blame.

 

One site referred to above states, I thought somewhat complacently, that the campaign had really been a success because of the amount refunded and the fact that the banks are beginning to change their ways. That does not take into account the hundreds of thousands without any refund who had been led to believe that getting all their bank charges refunded was going to be so easy that compared to it falling off a log was a complex manoeuvre.

 

I have said before and I say again:

 

1. Lawyers do not always get the law right.

 

2. Non-lawyers are quite capable of discovering the law (and indeed may even on occasion surprise lawyers).

 

3. Even so, a lawyer is more likely to get the law right than a non-lawyer. This is not to insult the layman any more than to suggest that a doctor is more likely to make a correct medical diagnosis than someone without medical training.

 

The internet is a great source of information but regrettably also diseminates, often well-meaning, misinformation. The problem is that one can never be sure of the source of the information/misinformation and accordingly everything you read, however often you read it, needs to be treated with caution.

 

I have no idea if any of the new solutions proposed will work. What is important though is that no one assumes ever again that they have the answer. If Lady Hale does not have the answer, then who can be expected to have it?

 

Assuming you are correct, for one moment, then one has to ask the question why, if the law was so clear cut in favour of the banks did they pay out hundreds of millions of pounds in goodwill gestures rather than fighting the claims?

[Seminole]

Finally, there are some who are now rubbing their hands in glee having cosied up to the OFT and criticising previous actions... What they fail to recognise, or conveniently choose to ignore, is that at the time, a) the OFT were NOT interested in talking to us, b) it's only because of actions such as CAG's that the OFT FINALLY decided that they had to be seen to be listening to the little people.

 

the OFT already know that their days are numbered as the CONSERVATIVES have prommised a complete overhaul of these toothless quangos this is what shook them into action and the action was on the flimsiest of agruements collectively the OFT FSA could have an still could force the banks to take a positive role in bringing an end to unfair charges but they have decided not to i dont think the OFT have the stomach for another round with the banks but this also begs the question as to WHY NOT why has nt MR BROWNSTUFF AND DARLING acted and brought forward penalties against the Banks

 

Because most of the banks are financially crippled and any action is likely to require additional taxpayer subsidy (even if it doesn't the banks will bleat that it would). Public policy at the moment- low official interest rates (interpreted by the banks as ultra low rates for savers and sky high rates for borrowers), the unofficial devaluation of sterling and quantitative easing (supposedly to increase liquidity but actually strengthening banks balance sheets and stoking up inflation) is all about getting the banks off the floor.

[Seminole]

The OFT did what was wanted by CAG, they gave the banks' their day in Court and we did move forwards which I doubt would have happened had there not been a case.

 

I was at both of the OFT demonstrations and, yes, I wanted the OFT to do something. What I had in mind is that they should have exercised their statutory powers to deal with bank charges instead of initiating a test case with the banks.

 

In that scenario the issue would have ended up in court but the OFT would have been starting from a stronger position and it would have been clear it was on the public's side. Instead of that we got a reluctant intervention (partly driven by the chaos in the county courts) that was not handled competently and from which the OFT run away (during and after the process) from any serious confrontation.

[Seminole]

They chose not to appeal the penalty charges argument.

 

Everyone has their own view on whether the OFT did the right thing in bringing the test case in the way that it did. My view that I expressed at the time was that the way it was done looked like the typical British establishment way of smothering uppity members of the public. Given what has happened I believe that I was right although I would much rather not have been.