OFT Test case ruling 8 Oct 08

[johnnymitch]

I have just read the ruling by Mr Justice Smith .......

 

http://www.judiciary.gov.uk/docs/judgments_guidance/oft-oct-judgment.pdf

 

 

Can someone please tell me , in layman's terms -

 

What the hell did it say or mean............

 

[Bookworm]

They're not penalties.

[scatz1972]

So how does that affect all the current claimaints? do you still think that we will get paid out?

[Bookworm]

Hang on, let me retrieve what I posted yesterday, it will save me repeating myself.

[Bookworm]

The charges are not penalties, so forget about claiming under that...

 

HOWEVER! The 1st part of the case (subject to appeal) was that the OFT does have jurisdiction on the banks under the UTCCR.

 

What does it mean for you and me?

 

Well, IMO, it means that once the OFT have completed their investigation into the overdraft charges (and leaked memos to banks suggest they have said the charges are likely to be found unfair), eventually they will do the same thing as they with their credit card report of April 2006, set a maximum amount the banks will be allowed to charge, but will say it is is guideline, not law, and expect all the banks to lower their charges according to that threshold. Banks will then offer the difference between that threshold and the amount they did charge in the hope the consumer will take it, thereby saving themselves HUGE amounts of dosh... and the more savvy consumers will hold out for 100% of their money, through the courts if necessary, exactly as we have done with credit cards for the last 2 1/2 years.

 

That's my thought on the subject anyway.

[Bookworm]

And (I answered a few yesterday, lol):

 

If you relied on the penalties argument and the historic charges are deemed to be penalties, then you win.

 

If you relied solely on the penalties argument and the historic charges are NOT deemed to be penalties, then you lose.

 

If you relied on the penalties argument and the UTCCR and the historic charges are NOT deemed to be penalties, it's still an open field as even though they're not penalties, you still have the argument they are unfair... but that's still subject to the appeal from the last decision...

 

(is your head hurting yet? lol)

 

Will the courts then un-stay claims en masse? Not on your nelly. I think they will keep things frozen as long as they can, and then strike claims out in bulk or award them in bulk... Unless of course, the banks are told to settle them as fast as they can so as to free dockets as quickly as possible.

 

It took the courts a few weeks to organise themselves when the stays appeared to stop us all in our tracks, I wonder if they'll be better prepared this time.

 

Bear in mind that if they're not penalties, then any claim thrown out on penalties can get a second bite on the UTCCR by complaining to the FOS, who must be bracing themselves for an onslaught as I type this.

[scatz1972]

Thankyou for explaining it to me in laymans terms, I couldnt make head nor tail of the judgement.

[johnnymitch]

Thanks Bookworm

 

You're a diamond - I didn't know you'd posted yesterday as my e-mail notifcation is down at the moment ...........

 

That makes it clear ,(I think, lol) -we must still wait and see before we can proceed ............?????

 

from bookworm:

Well, IMO, it means that once the OFT have completed their investigation into the overdraft charges (and leaked memos to banks suggest they have said the charges are likely to be found unfair), eventually they will do the same thing as they with their credit card report of April 2006, set a maximum amount the banks will be allowed to charge, but will say it is is guideline, not law, and expect all the banks to lower their charges according to that threshold. Banks will then offer the difference between that threshold and the amount they did charge in the hope the consumer will take it, thereby saving themselves HUGE amounts of dosh... and the more savvy consumers will hold out for 100% of their money, through the courts if necessary, exactly as we have done with credit cards for the last 2 1/2 years.

 

This puts it in context I think...... well worked out Bookie.......Lol!

[ssrsav]

Hi There - First time post but I need a bit of advice!

 

I received my General Form of Judgement or Order in September 2007 which states the claim is stayed until one calendar month after final judgement in the test case or 31st October 2008. And : "if no application is made to lift the stay or seek further direction before the earliest of the dates provided for the claim shall stand dismissed"

 

So how does the outcome on the 8th October effect this?

 

So I've contacted the court. They say that I should apply (form N244) (for a £40 fee) for the case to be stayed further..... HELP! Should I do that or apply for the case to be heard (and the £70 fee)?

 

Sure someone's already been through this and can help

 

Thanks, Sue

[johnnymitch]

Hi ssarsav, welcome to the forum:)

 

You seem to be in a bit of a catch 22 situation here - if you pay £40 to get it 'stayed' further , or you pay £70 for the case to be heard and the bank asks for it to be stayed.......

 

I'm not sure what your options are , but I think I know a man who does - he'll be along a bit later (I hope) and I'll ask him for his opinion .... that's one thing - you'll always get an answer on here .....

[johnnymitch]

Hi bookie - looks like we're about the only show in town tonight - I think even pete's gone to bed - please ,could you give sue the benefit of your opinion on what her next move should be .........

 

Thanks Ma'am

johnny x

[Gez]

I believe that there is yet another way to get 100% refund even if a "fair amount" is agreed and I am doing a claim now with HSBC which argues that the charges (under current terms) are unfair in their entirety under UTCCR. This could also be applied to historic terms with some creative POC..

 

It starts by asking the bank for an overdraft for the amout that you were overdrawn the most. In this case, about £550. If it is refused, which it was in this case, then you can argue that the charges are unfair in their entirety because the overdraft is being made available only on an unarranged/informal basis, but refused on an arranged/formal basis.

 

HSBC confirm that they use credit scoring to decide whether or not you can have an overdraft and if so, how much. Lets see them explain how this credit scoring led to the refusal of an arranged overdraft, but allowed an unarranged overdraft when the credit scoring had already decided that the customer was not good for it..

[Bookworm]

Sorry, Gez, but I don't understand what you mean. :-?

 

If a term is unfair as per the UTCCR, it is non-enforceable in its entirety. Therefore, if a £30 charge is deemed unfair, then you get 100% of it back, as long as you don't let the bank convince you otherwise. That's nothing new.

 

The OFT is highly unlikely to set a "fair amount", it is well beyond their remit. The test case is about whether they have in fact the power to assess the charges under the test of fairness of the UTCCR, NOT to decide how much is fair or unfair.

 

What they are likely to say is a) the charges are unfair, b) only a court can decide what is a fair or unfair amount, c) they are however setting a threshold of £ X at which point they themselves will take action if the banks don't lower their charges. (see their credit card report of April 06 to see what they did there, since that worked well, I doubt they will change the formula).

 

As for your scenario, since they charge you whether they accept or refuse the payment request, I don't see how the fairness test on refusal/acceptance would make a significant difference? Maybe it's me, but I don't get it. :-?

 

Sue:

 

You have no choice but to file the N244, but I sure as hell wouldn't ask for the stay to be prolonged, instead ask for the stay be be lifted! Let the other side ask for the stay to be continued, don't do their work for them!!! Yes, it is very unfair you should have to pay, but it's one of those things. Make sure you keep track of all those additional costs, when it comes to settlement you can add those too.

Edited October 15, 2008 by Bookworm
added link

[johnnymitch]

Thanks for that Bookie

 

There you go sue, very good advice from bookie...... it is a pity you have to pay upfront, but if you can afford to wait to get it back , then it's the way to go ..... and if the bank omit to apply for a further stay - you could possibly get an earlier payout.......

[ssrsav]

Johnnymitch and Bookworm - Thank you!

 

I knew deep down what I was "supposed" to do - but the thought of it actually going to the judge and me standing in front of him is a bit scarey!

 

Off now to fill in the form and I will keep you posted as this isn't that small an amount, the total in July 2007 was £4623 excl interest!

 

Thanks again, Sue

[Bookworm]

Ouch.

 

Sue, just for info, next time, can you start your own thread in the relevant bank forum, call it "sue v [evil bank]" and give us a synopsis of your claim, it will be easier to follow that way. ;-)

[Gez]

Bookworm:

Even if a "fair amount is agreed" whether it is set by a court or a threshold as per credit card charges, the fact that an overdraft is available only on an unarranged/informal basis should give you good grounds to argue that the charges/fees are unfair in their entirety.

 

For example, I ask the bank for an overdraft of £100 & they say no. At the end of the month an unexpected bill gets paid & sends your account £100 overdrawn. You are then charged an extra £25 arrangement fee for the informal overdraft.

So how is it possible that an informal overdraft can be granted, when an formal overdraft has already been refused? and how can the bank explain that after having refused a £100 overdraft facility, the account is now £125 overdrawn.

 

We have asked that all payments simply be refused if there are insufficient funds. HSBC have refused to do that stating that the account will be operated as per the T&Cs. My argument is that all terms relating to informal overdrafts should be deemed unfair if a formal overdraft facility has been refused. Especially given that the "services" for which these charges are levied were not agreed when the account was opened and were enforced on the account even after having stated that these "services" are not wanted.

 

Edited October 15, 2008 by Gez

[johnnymitch]

Wow -that's a serious amount sue...... certainly worth fighting for!

 

but the thought of it actually going to the judge and me standing in front of him is a bit scarey!

 

Actually, the County Court is quite user -friendly and infomal ... not like standing in front of a judge at all - more like sitting round a table... so don't let it throw you if you have to go..........

 

Let me know which Bank thread you're posting on and I'll keep a watch to see how you get on ......

[ssrsav]

Thank you again. I will post a new thread tonight with a little run down of my situation but this is with HSBC.

 

Sue

[johnnymitch]

Well , that's OK then sue - I'm on the HSBC site anyway

[veester]

And (I answered a few yesterday, lol):

 

If you relied on the penalties argument and the historic charges are deemed to be penalties, then you win.

 

If you relied solely on the penalties argument and the historic charges are NOT deemed to be penalties, then you lose.

 

If you relied on the penalties argument and the UTCCR and the historic charges are NOT deemed to be penalties, it's still an open field as even though they're not penalties, you still have the argument they are unfair... but that's still subject to the appeal from the last decision...

 

Bear in mind that if they're not penalties, then any claim thrown out on penalties can get a second bite on the UTCCR by complaining to the FOS, who must be bracing themselves for an onslaught as I type this.

 

So, in my case i submitted my cases to HSBC and NW using the POCs on this website in Feb'08....one is hoping i am covered!

[Bookworm]

Bookworm:

Even if a "fair amount is agreed" whether it is set by a court or a threshold as per credit card charges, the fact that an overdraft is available only on an unarranged/informal basis should give you good grounds to argue that the charges/fees are unfair in their entirety.

But that's my point! If a term is deemed unfair, it is automatically non enforceable in its entirety. Therefore, it is the fairness argument which is important, not the amount.

 

For example: Say that the bank, by some strange and totally hypothetical change of heart, decided to charge only what it cost them when you go over your limit/get a payment bounced. Let's say £2 for the sake of argument. Since Smith J has decreed that the charges can not amount to a penalty, the argument to be used would be the one of fairness at which point a judge would be likely to find that it is fair, regardless on how you got to be charged.

 

I'm sorry, but I still don't see how your tactics would make any difference to the end result. :-| Don't get me wrong, if it works, great, but I am not convinced. Please let us know how it goes.

[nevos]

The way I read the case was: The customer gave the bank an instruction to make a payment, either by, DD, guarantee card even though the money in the account was insufficient to cover it. In which case they are entitled to make a charge. Now, if you send for example an over seas payment, the banks will charge anywhere around £25. For them to make that payment is quick and electronic so, are those charges also a penalty?

[Gez]

Perhaps I'm not articulating it well enough, but I'm not at all focusing on the amount. I am arguing about the term itself being unfair. They may not make any difference to the end result, especially if we end up with some kind of blanket settlement system. However, if the bank has refused an overdraft facility based on bad credit scoring (the "logic" being that you are deemed too much of a risk for them to provide you with credit), then they can hardly justify granting an unarranged/informal overdraft afterwards for more than the amount they refused you for and which will leave you with yet further negative balance.

 

It may well come to nothing, but as ever, I just look for every possible angle, be it brilliant or bonkers as long as one or two of them turn out ok and the risk isn't too great.

 

Nice analogy nevos..

Edited October 15, 2008 by Gez

[johnnymitch]

I'm glad I started this thread ....... it's throwing up some interesting arguments/discussions .........

 

I can see your argument gez, it's totally logical - that's probably why a court would chuck it out ..........LOL!