OFT - Proposed Letter

[dave]

Dear Sir,

 

On xx/xx/xx your office released paper ref:xxxxxx, regarding credit card default charges. In your report it was stated that the £12 'limit' was not a limit but a threshold above which you would take legal action. It was also stated that you expected the credit card companies to lower their charges to a lawful level (i.e. to be a true reflection of their administration costs in the event of a breach of contract), and did not expect them to merely reduce their default charges to £12.

 

We are not suggesting that default fees should be set at £12, and a court will certainly not consider that a default fee is fair just because it is below the threshold.

 

It would seem that the credit card companies have not done this. Most have just reduced their charge to £12 to avoid legal action.

 

I would be grateful if you would furnish me with information as to the next course of action the OFT intends to take in light of this blatent disregard for your ruling.

 

I sure you will agree that it seems far too coincidental that the credit card companies have reduced their charges to a true reflection of their admin costs, that happens to be the exact same amount as your threshold.

 

I believe that for the credit card companies to do this, is effectively 'laughing in the face' of the OFT and believe that further action should be taken.

 

yours faithfully,

 

 

 

 

 

A few gaps.

 

Any comments?

[Bookworm]

Yes, lose the quote marks, it looks sloppy. "laugh in the face" is a perfectly acceptable analogy and does not need further defining by quote marks.

 

I would be grateful if you would furnish me with information as to the next course of action the OFT intends to take in light of this blatent disregard for your ruling.

 

Surely it would be worth adding something to the effect that you, and the 60000 people behind you, would like to know.... Oh, and "blatAnt", not "blatEnt".

 

I sure you will agree that it seems far too coincidental

I AM sure...

[Guest Niklowe]

Should you add something about Banks as well?

[JonCris]

I keep saying this with little response.

 

Copy all the lenders "get stuffed" + perhaps derisory offer letters & send them with your letter of complaint to the OFT That way instead of the occasional compliant which they will ignore they will begin to see just what contempt the money lenders hold the OFT in.

 

Now if most members disagree could they give reasons please so we can at least debate the subject

[dave]

Especially the letters where they claim that the OFT has stated £12 as a fair charge - which it clearly hasn't.

[JonCris]

Yup Dave

 

We could inundate the OFT with compliants & copy letters which they could hardly ignore.

 

Also they might be sparked into some firm action (at last) because they are peed off with the money lenders

[Bookworm]

I keep saying this with little response.

 

Copy all the lenders "get stuffed" + perhaps derisory offer letters & send them with your letter of complaint to the OFT That way instead of the occasional compliant which they will ignore they will begin to see just what contempt the money lenders hold the OFT in.

 

Now if most members disagree could they give reasons please so we can at least debate the subject

 

That's why (this was in response to my complaining about Halifax threatening to close my account if I sued them again), I have highlighted the relevant bits:

 

Dear Mr & Mrs xxxx,

 

Enterprise Act 2002 ('the Act')

Unfair Terms in Consumer Contracts Regulations 1999 ('the Regulations')

Halifax Plc ('the Company')

 

Thank you for your letter of 11 April regarding default charges imposed by the above bank. Your complaint has been logged for our records in order to further our understanding of this market and to inform this and any future investigations we may conduct in relation to this matter.

 

I am sorry to hear about the difficulties you have experienced. Unfortunately the Office of Fair Trading does not have the power to provide advice on individual complaints, or to help consumers to seek redress. Our primary duties include the enforcement of Competition Law, the regulation of the consumer credit market through a licensing system and the application of consumer protection legislation in respect of matters that adversely affect the collective interests of UK consumers.

 

As you are already aware, the OFT is currently looking at the issue of penalty charges for credit cards. Please follow this link to our press releases for further information:

 

http://www.oft.gov.uk/News/Press + releases/2005/135-05.him

 

and more latterly

 

http://www.oft.gov.uk/News/Press + releases/2006/68-06.htm.

 

However this investigation does not include charges for other areas such as personal banking and other sectors where financial penalties are incurred for breaches of contract.

 

The Financial Services Authority (FSA) is responsible for the banking sector. It has responsibility for the application of the Unfair Terms in Consumer Contract Regulations 1999 ('the Regulations') in respect of personal banking contracts. The OFT and the FSA have agreed that the FSA will take the lead on complaints such as those which relate to unfairness in contracts relating to personal banking. The FSA's address is:

 

25 The North Colonnade

Canary Wharf

London E14 5HS

Telephone: 0845 606 1234

Website: FSA.

 

The FSA do not have the power under the Regulations to intervene in individual disputes but the Financial Ombudsman Service can adjudicate if the company is unable to resolve matters satisfactorily. Their address is:

 

Financial Ombudsman Service

South Quay Plaza

183 Marsh Wall

London E14 9SR

Tel: 0845 080 1800

Website: Financial Ombudsman Service.

 

In our recent statement about credit card default charges which we published on 5 April, we have said that, in our view, the principles embodied in the statement will apply to other default charges - and that the banks and other finance businesses are expected to consider the wider implications of

these principles and bring any similar charges they impose for breach of contract into line with them, where and as appropriate, bearing in mind the different legal and practical contexts in which they operate.

 

In essence, although we are confident that the high level legal principles applicable to charges in other areas may be analogous, we are conscious that that they will probably require some modification or fine tuning to reflect the practical differences, or separate legislative framework or jurisprudence, in those areas.

 

Essentially, analogous charges would be where the supplier of a product is entitled under the terms of the contract to make a charge to the consumer who has breached the contract, (those terms would then be subject to the test of fairness in the UTCCRs so that the charge is not an unfair penalty) As we have not done the detailed work in the area of other charges, such as mortgages, we could not say at this stage with any certainty exactly which charges would fall to be considered and whether the current level of charging is fair, in our view.

 

Sorry I cannot be any more specific at this stage, but as you know we have focused our investigation to date on credit cards, and more work would be required to be able to give any further detail.

 

Yours sincerely

 

Kathryn Gresty

Consumer Regulation Enforcement Division

 

In other words, you can bombard all you like with correspondance from the bank, their answer will be: Not our job.

 

So, whereas Dave's letter does address something which falls squarely within the OFT's remit, yours doesn't, and it will get the brush-off. Sorry. (It's not just me, btw, when BF first suggested that everyone who has had the same kind of threats writes to the OFT, everyone who did write got that response.) And these people have an infinite capacity to pass the buck.

[JonCris]

I know this & it wasn't my intention that they should investigate individual cases.

 

It was my intention that they should become aware of whats going on & we as consumers are entitled to tell them no matter how much they try to wash their hands of the whole affair.

 

It has already been said by someone here who spoke on the phone at some length to an officer of the OFT who stated that if they receive enough complaints it WILL be investigated

 

& because at first we did not succeed is I think no reason not to have another go. Ithink we should make it clear that we don't expect them to investigate each compliant just that we are passing on information

[kevb0444]

Hi all,

 

I sent the OFT a letter yesterday asking them about bank charges. It was basicly the same as your "letter to your MP" template but with a few things tweeked (i hope you don't mind) to make it more relivant to the OFT.

 

If you want i'll let you guys know what they heve to say.

[thewifeandI]

I've been wondering if we (as in the Bank Action Group) shouldn't be negotiating with the OFT to allow us to represent the consumer's point of view. After all we have 62,000 members and rising, with all aspects of banking and consumer credit experience. We could put together a dossier of lies, delaying tactics, underhand tricks and other evidence of general wrongdoings and badness by the very companies who are currently accepted to be fit to hold a consumer credit licence. Statements like: -

 

"We've never paid out to anyone else, so don't expect us to pay you",

"Your statements are in the post",

"Our charges are fair and transparent",

"Suddenly it only costs us £12 to process a breach",

"We'll close your account",

"The DPA doesn't apply to ...",

"Microfiche means never having to send your data" and many more.

[JonCris]

& not before time may I say. We probably have more members than "Which" has circulation

[meagain]

If it makes any difference, my bank has now told me that it cannot refund my charges unless I give them a valid reason why I missed the payment. Really, should I have to give them a valid reason to reverse charges they're not allowed to apply?

 

I'm not convinced that any of this is going to work at all. The OFT has been found in dereliction of its duty. Can't we do something a little more effective than whine some more?

[thewifeandI]

The valid reason is that you didn't have enough in your account - obvious really...!

[meagain]

The valid reason is that you didn't have enough in your account - obvious really...!

 

... all of which is irrelevant. Why should I have a valid reason to ask for my money back beyond the fact that it's my money?

[JonCris]

meagain

 

I think thewifeandI was being somewhat sarcy.

 

Of course it irrelevant. Its a stalling tactic & they are hoping your a thick moron like them.

 

As for the OFTossers. I agree I think we should begin to turn our attentions to these so called regulators

[meagain]

I think thewifeandI was being somewhat sarcy.

 

Thank you for spoiling that bit of light relief for everyone else

 

As for the OFTossers. I agree I think we should begin to turn our attentions to these so called regulators

 

So, what action can we take against the OFT for its negligence? Consumers are being taken for a ride, and the OFT is doing SFA about it.

[meagain]

Out of interest, has anyone in their complaint to the OFT bothered to note that they are making a complaint under R12 UTCCR? If you did, you should have received a reply in writing stating that they will be pursuing an injunction, or giving a pretty damn good reason why they're not.

[livity]

Out of interest, has anyone in their complaint to the OFT bothered to note that they are making a complaint under R12 UTCCR? If you did, you should have received a reply in writing stating that they will be pursuing an injunction, or giving a pretty damn good reason why they're not.

Background: I complained to the OFT recently, about the unlawful penalty charges applied by the Student Loans Company. I received a response similar to the one posted above, but with the comment that the OFT was always interested in evidence of misconduct. I tend to view the OFT favourably (my OH works for CAB and thinks highly of them) and hope that their current reticence is because they're bogged down with the CC Co.s and now current accounts charge.

 

Anyhoo... what is this "R12 UTCCR" of which you speak?! Enquiring minds need to know more! This sounds like a useful tactic for my next OFT complaint!

[meagain]

Unfair Terms in Consumer Contracts Regulations 1999 - Regulation 12 requires the OFT to consider whether or not to take action against an organisation regarding standard terms in their contracts. The action open to them includes the usual sanctions (suspending/revoking licences, etc.), but R12 also provides them with the power to obtain an injunction to prevent an organisation from enforcing an unfair term. If they decide not to do anything, under R12 you're entitled to know a good reason why.

[livity]

Whoa! Superb! Another weapon for the armoury. Thanks, meagain!

[Guest Wild Billy]

Whoa! Superb! Another weapon for the armoury. Thanks, meagain!

 

Not really.

 

Unfair Terms in Consumer Contracts Regulations 1999 - Regulation 12 requires the OFT to consider whether or not to take action against an organisation regarding standard terms in their contracts. The action open to them includes the usual sanctions (suspending/revoking licences, etc.), but R12 also provides them with the power to obtain an injunction to prevent an organisation from enforcing an unfair term. If they decide not to do anything, under R12 you're entitled to know a good reason why.

 

The Regulations require "consideration" but that is open-ended. What is "consideration"?

 

And the removal of a consumer credit licence happens under the Consumer Credit Act and not the Unfair Contracts Regulations. Injunctions are possible under the regulations but it is a very long-winded and very costly process that involves court action- no regulator can just get an injunction and would need to build a case on evidence. To be fair to the OFT, I get the sense that is what it has been doing. It isn't much good us saying to them that we think the default charges are too high because we aren't really providing any evidence that is actually the case. We all know that £25 or whatever seems really high but none of us actually know if that is the cost or not do we? I'm generally supportive of what the OFT is doing in the sense that it must be based on evidence it has been collecting although it is disappointing that it hasn't taken a test case. Let's hope it does that for the bank charges.

 

I've been wondering if we (as in the Bank Action Group) shouldn't be negotiating with the OFT to allow us to represent the consumer's point of view. After all we have 62,000 members and rising, with all aspects of banking and consumer credit experience. We could put together a dossier of lies, delaying tactics, underhand tricks and other evidence of general wrongdoings and badness by the very companies who are currently accepted to be fit to hold a consumer credit licence.

 

I'm new here so it isn't for me to say but can we provide hard evidence to the OFT? Have we asked them what evidence they want from us to help them? Maybe they would meet with us? Could we write an open letter to them asking to meet? It might generate publicity. Could we then coordinate a dossier of that evidence and present it to the OFT? The point I make about injunctions is that it requires good quality evidence- not just assumption or assertion. Reading these threads, it seems clear that people generally struggle to provide much actual evidence of wrongdoing by the banks in terms of bank charges and I'd guess it would be quite difficult to go to court. Guess OFT has same problem if it has to rely on that quality of information?

 

By the way, be careful not to confuse the consumer credit issue with the unfair contract terms. This issue seems to be dealt with under the latter so let's not muddy the water.

[PeterG]

Dave

 

I have found the OFT website

 

Who to contact in the OFT

 

very informative as to what the OFT can and cannot do.

 

The linked Consumer Direct advice service is also a useful ally.

 

One significant point they stressed to me last week was that I (and anyone else fo that matter), am quite within my rights to ask for a detailed breakdown of how a default charge has been calculated (in the same way you would receive an invoice) and that it is the Financial Ombudsman Service that is then empowered to take this further, not the OFT.

 

What was fully not ascertained was what action one could actually take if the Bank did not comply with the request but I presume the answer would be as above, to complain to the FOS - which is what I've just told the Halifax. I suppose the other tedious option would be to take Court Action again.

 

PeterG

[meagain]

And the removal of a consumer credit licence happens under the Consumer Credit Act and not the Unfair Contracts Regulations.

 

Your point being ... ? It is still a power that the OFT holds, there's nothing that says that because you made a complaint under R12 they're not allowed to exercise it.

 

It isn't much good us saying to them that we think the default charges are too high because we aren't really providing any evidence that is actually the case. We all know that £25 or whatever seems really high but none of us actually know if that is the cost or not do we?

 

I would hope common sense would prevail on that count. Though, as we all know, common sense usually isn't.

[PeterG]

I had a go at HSBC Credit Card section yesterday for the sheer devilment of it really. Although we already hold a joint Visa card, they were trying to persuade my wife to take out another card - not for the first time - and I couldn't help but point out to the chap I spoke to that in their 'Key Information', their Default charges should include wording to the effect that one could be charged up to a maximum of £12 and this figure itself was not a norm.

I said I would expect a separate invoice detailing the extra work that the Bank had been obliged to do, specifically related to the default charge in question, so incurring the Bank in costs over and above the norm that they were now seeking to recover.

'Oh no' he said, 'There is a straightforward charge of £12 - there's no invoice or anything like that'!!!

I then acquainted him with what the OFT had actually said. He seemed quite perplexed, said he had made notes on what I had said and would pass it on for consideration by the 'relevant department' so that HSBC could offer an even better service. Meanwhile, he suggested that I go into my local branch and discuss my concerns with them - and he was serious!

 

PeterG

[ppauls150]

If it makes any difference, my bank has now told me that it cannot refund my charges unless I give them a valid reason why I missed the payment. Really, should I have to give them a valid reason to reverse charges they're not allowed to apply?

 

Your valid reason for missing the payment in the first place is due to the fact that they have taken money off you which meant that you no longer had that money to pay your bills. If they hadnt taken the money then you would of had that money to pay the bills which meant that they wouldnt of bounced simple it is their fault for stealing your money and leaving you with nothing