OFT v Banks - **Don't panic!!!**

[un1boy]

The OFT have said that they mite pull out of the court case becasue the banks are reducing their charges and the OFT believe that is sufficient.

 

8 Banks have said though that the OFT have no jurisdiction and may proceed with the case:

 

it's on:ceefax 202 on bbc 2.

[stonedecroze]

Whether its for commercial reasons, PR or whatever, the inference is surely that there is no need for their charges to be as high as they currently are. Certainly, the removal of the 29% interest rate, is the removal of a very obvious penalty and the considerable reduction in the penalty charges surely suggests that, whilst they have always argued these were fair and reasonable, they can infact be considerably cheaper! Therefore, this surely effects their previous arguement and may effect the judges consideration with regard to stays.

 

The more I think about it, it comes across as an admission that their penalties were not at all reasonable or fair.

 

Whilst I have no idear how to go about it, I feel it would be a wasted oportunity not to use it.

 

Matt

 

It also means that you are aware of any charges that you may incur, and thus will not be able to to reclaim them. On the face of it, it does appear to be a reasonable deal, if you are willing to pay any charges. a I said before, a very smart marketing move

[un1boy]

The OFT are thinking of withdrawing the test case:

 

 

OFT may compromise on bank fees

 

By Ian Pollock

Personal finance reporter, BBC News

 

 

Lloyds TSB has already changed its overdraft fees

 

The Office of Fair Trading (OFT) could drop next year's High Court test case over bank overdraft charges, a senior official has said.

But the OFT added it would only do this if the banks put forward an agreeable compromise and if such a deal was in the best interests of customers.

The court is due to decide next year whether the OFT has the power to rule that bank overdraft fees are unfair.

The eight banks challenging the OFT say it has no jurisdiction in the matter.

On Monday, Lloyds TSB became the first of the big High Street banks to cut some of its overdraft fees, after paying out millions of pounds in so-called "goodwill payments" to tens of thousands of unhappy customers.

Lloyds customers - and those of other banks - have claimed that charges levied for running up unauthorised overdrafts are illegal and unfairly high.

Negotiation

Other banks are expected to copy Lloyds example in coming months.

We will be looking out for what is the best outcome for the consumer

 

 

Cavendish Elithorne, OFT

 

 

Any such changes will not, on their own, deflect the OFT from its legal action.

But a senior official, Cavendish Elithorne, made it clear that the OFT was open to negotiation on the issue.

"If we do our own financial analysis, and they [the banks] come in with a number that is lower than our analysis would suggest is an unfair charge, there is no need for the court case to go forward," he said.

"We will be looking out for what is the best outcome for the consumer."

But Mr Elithorne did stress that so far there has been no face-to-face negotiation with the banks.

Authority

However, if and when, the judge will not be asked to rule on whether bank charges are legal or fair.

Lee Coward is one of the thousands of customers to sue their banks

 

 

Instead the judge will have to decide whether the OFT has the authority to decide the issue itself, under the Unfair Terms in Consumer Contract Regulations.

The OFT believes typical bank overdraft fees come under these regulations, that they are unfair and that it therefore has the power to order changes.

But banks argue that the charges are a core feature of their current account business and so they are not covered by the regulations, they are fair and that the OFT has no powers in the matter.

Agreement

Intriguingly, the OFT revealed that it actually agrees with part of the banks' arguments.

We think the fairness test will still apply

 

 

Cavendish Elithorne, OFT

 

 

They claim that their charges are not penalties, but are fees for a service - for running a current account while it is in the red.

"In most instances we would probably agree with the banks' arguments that these are not penalties as defined in common law," said Mr Elithorne.

But he insisted that the OFT Still believes the charges are unfair - even if they are "fees for a service".

"We think the fairness test will still apply," he added.

All these legal arguments will be novel in the UK courts and are clearly of great importance to both sides.

However a final decision may be more than a year away if the case goes to the Appeal Court and then the House of Lords.

No more free banking?

With the OFT two-thirds of the way through a nine-month investigation into the fairness of overdraft charges, banks are now giving the watchdog their own estimates of how much it costs to run an account in the red and to bounce cheques.

It may be that some banks may charge some customers an annual fee

 

 

Cavendish Elithorne

 

 

The regulator is about to do its own number crunching to establish what level of charges it believes are unfair.

However, it estimates that fees and charges for going overdrawn without permission bring in between £2bn and £3.5bn a year to the UK banking industry's revenue.

The OFT has denied that the case could lead to the reintroduction of monthly or annual account charges; the end of so-called "free banking" for those whose accounts stay in credit.

"It may be that some banks may charge some customers an annual fee," said Mr Elithorne. But he pointed out that in contrast to the fees earned from charging for overdrafts, a standard charge of £300 a year, applied to the country's 75 million current accounts, would generate an extra £20bn or so in income for the banks. "I believe that if the banks tried to extend such charges much more broadly that some other banks would continue to compete quite vigorously to keep free banking," said Mr Elithorne.

 

[stonedecroze]

BBC NEWS | Business | OFT may compromise on bank fees

 

There is a little bit more here

[adamc6671]

Hi All

 

Have posted some thoughts on a 'compromise' deal here -

 

http://www.consumeractiongroup.co.uk/forum/show-post/post-1125128.html

 

Would be very interested in what anyone else thinks.

 

All the best - Adam.

[bruce47]

This doesnt seem like good news

 

The banks say "The eight banks challenging the OFT say it has no jurisdiction in the matter"

 

This shows they do not want to compromise they want to draw out a long winded court case.

 

"However, if and when, the judge will not be asked to rule on whether bank charges are legal or fair.

 

 

 

Instead the judge will have to decide whether the OFT has the authority to decide the issue itself, under the Unfair Terms in Consumer Contract Regulations."

 

This is also crazy whats the point of the test case if it isn't to find out if the charges are legal or not. What is the point of the waiver??? i thought it was to see if the charges are legal or not that is what the OFT have been saying.

 

Does the POC's say this that it is just to see if the OFT can challenge them or to see if they are legal or not?

 

MAIN QUESTION

 

If they do withdraw from the test case because the banks lower there charges what happens to all the ongoing and future claims. will they still be able to get refunds??

[mattemotion]

Stonedecroze,

 

I didn't think I was claiming that I was unaware what the se charges were, I thought I was claiming that they were disproportionately high and, therefore, a penalty which makes it unlawful. Obviously over simplified.

 

In these cases we claim that they are unfair and unlawful, the bank argues that they are fair and cover the cost to the bank for the service they provide and, therefore are lawful. If, as LTSB are now saying, they can provide that same service at a considerably reduced cost, it is by definition an admission that their charges were previously disproportionately high and, therefore a penalty to their customer, unlawful.

 

The fact that they have reduced their penalty for a returned DDM from £35 to £20, does not mean that I, or anyone else claiming, accept it is now fair. My point is their admission that their previous policy was unfair.

 

Maybe I'm grasping at staws, but I think this is a little more significant than it first appears.

[un1boy]

This doesnt seem like good news

 

The banks say "The eight banks challenging the OFT say it has no jurisdiction in the matter"

 

This shows they do not want to compromise they want to draw out a long winded court case.

 

"However, if and when, the judge will not be asked to rule on whether bank charges are legal or fair.

 

 

 

Instead the judge will have to decide whether the OFT has the authority to decide the issue itself, under the Unfair Terms in Consumer Contract Regulations."

 

This is also crazy whats the point of the test case if it isn't to find out if the charges are legal or not. What is the point of the waiver??? i thought it was to see if the charges are legal or not that is what the OFT have been saying.

 

Does the POC's say this that it is just to see if the OFT can challenge them or to see if they are legal or not?

 

MAIN QUESTION

 

If they do withdraw from the test case because the banks lower there charges what happens to all the ongoing and future claims. will they still be able to get refunds??

 

My understanding:

 

The test case was to see if the banks' current accounts etc were covered under the UTCCR, which the OFT DO have juristiction over.

 

As for if they pull out - well, I think we will still be able to claim anyway, so it make no difference anyway.

 

We still cliamed once they reduced credit card charges to £12.

[un1boy]

Stonedecroze,

 

I didn't think I was claiming that I was unaware what the se charges were, I thought I was claiming that they were disproportionately high and, therefore, a penalty which makes it unlawful. Obviously over simplified.

 

In these cases we claim that they are unfair and unlawful, the bank argues that they are fair and cover the cost to the bank for the service they provide and, therefore are lawful. If, as LTSB are now saying, they can provide that same service at a considerably reduced cost, it is by definition an admission that their charges were previously disproportionately high and, therefore a penalty to their customer, unlawful.

 

The fact that they have reduced their penalty for a returned DDM from £35 to £20, does not mean that I, or anyone else claiming, accept it is now fair. My point is their admission that their previous policy was unfair.

 

Maybe I'm grasping at staws, but I think this is a little more significant than it first appears.

 

I understand what you're saying, but at the end if the day, until they provide proof of exactly how much it costs them any amount they charge is unfair.

 

What I don't understand is that the FSA are pushing a "Treating CUstomers Fairly" campaign in that all companies regulated by them should be fair and transparent - how does the banks' actions relate to TCF? Well, they don't!!

[stonedecroze]

Stonedecroze,

 

I didn't think I was claiming that I was unaware what the se charges were, I thought I was claiming that they were disproportionately high and, therefore, a penalty which makes it unlawful. Obviously over simplified.

 

In these cases we claim that they are unfair and unlawful, the bank argues that they are fair and cover the cost to the bank for the service they provide and, therefore are lawful. If, as LTSB are now saying, they can provide that same service at a considerably reduced cost, it is by definition an admission that their charges were previously disproportionately high and, therefore a penalty to their customer, unlawful.

 

The fact that they have reduced their penalty for a returned DDM from £35 to £20, does not mean that I, or anyone else claiming, accept it is now fair. My point is their admission that their previous policy was unfair.

 

Maybe I'm grasping at staws, but I think this is a little more significant than it first appears.

 

maybe I worded it wrong, what I was trying to say is, All new customers that sign up to new accounts will be made aware of the new charge regime, there precluding them from claiming that they are unfair at a later date. These new charges have no relevance to existing customers. they have not admitted that the present charges are disproportionately high, they will say that it is a marketing move to gain new business. after if they have 100 customers pay £30 charge they make £300, but if they gain100 more customers they then have 200 customers paying £20 charge giving them £400. smart business move!

 

It is a good argument to use if you are applying to have stay set aside, and I plan to add this to my arsenal if I ever manage to get a hearing.

[nevos]

We still cliamed once they reduced credit card charges to £12

 

They the OFT did not reduce the CC charges they said over £12 they would get involved.

 

if they have 100 customers pay £30 charge they make £300, but if they gain100 more customers they then have 200 customers paying £20 charge giving them £400. smart business move!

 

Erm not so smart think you meant to add more 0's

[nevos]

In my opinion: The Banks v the OFT this new twist on if the OFT has the authority to decide is a PR job on behalf of the OFT one which will widen the issue thus, extending the time scales for any kind of legal ruling.

 

The Banks are more than happy to file the claims in a some time 2 years down the road box and carry on business as usual, creating more financial hardship to people.

 

When you see 6000 people a day are contacting the C/Advice for debt help it further confirms the state of the country and that there are far more important issues on the table. The middle income bracket has been hammered to death to pay for every thing that the government cock up such as, immigration, unemployment,the housing market with the introduction of HIP. Not to mention and this will probably get deleted by a mod economic migration of our new EC members and any other person who feels like landing here with often false passports and documents.

 

In short this once great country is getting screwed and so you can all expect to be screwed on bank charges, mobile phone bills, gas, electric and water, a bill a day will come your way.

[GaryH]

Not to mention and this will probably get deleted by a mod

Why? Your allowed to post an opinion!

[nevos]

Hi Gary: Usually any mention of economic migration has in the past been deleted lol..though, I may have been more specific at that time.

 

Nice to see the so early in the morning.

[un1boy]

maybe I worded it wrong, what I was trying to say is, All new customers that sign up to new accounts will be made aware of the new charge regime, there precluding them from claiming that they are unfair at a later date. These new charges have no relevance to existing customers. they have not admitted that the present charges are disproportionately high, they will say that it is a marketing move to gain new business. after if they have 100 customers pay £30 charge they make £300, but if they gain100 more customers they then have 200 customers paying £20 charge giving them £400. smart business move!

 

It is a good argument to use if you are applying to have stay set aside, and I plan to add this to my arsenal if I ever manage to get a hearing.

 

I got a message when I logged in to my online banking (had an account wiht lloyds for ab out 15 years) saying that they are changing their charges....

 

Don't foget, these banks have the best solicitors money can buy!

[un1boy]

They the OFT did not reduce the CC charges they said over £12 they would get involved/

 

I know mate!

 

It will be the same principle if the banks are askied to compromise - so we should still be able to sue the banks. I think this is why they want the test case to go ahead - I think they wll win and I think they know that too!

[mattemotion]

Stonedecroze,

 

Yep, wouldn't have minded using this in my arguement to try and get my stay set aside, but as usual t........................................iming all wrong!

 

Matt

[AndyPoole]

Hi guys, a bit out of my depth here so please excuse me if I am coming across as a bit naff.

 

I have just had my court application stayed (initially started via MCO) and so havnt even had a court date sent to me yet.

 

Thus I havent sent out the Court Bundle.

 

I am just running through the appeal statement template to lift the stay and was wondering if in light of these developments should simply remove all reference to the OFT test case etc ?

 

If not, where can I get a copy of the Test case POC to attach to my statement?

 

Cheers

 

A

[bruce47]

http://www.oft.gov.uk/shared_oft/bus...s-of-claim.pdf

 

I am sure you will get some more good advice it seems you may be able to use the fact the test case may never happen in your application as well. Someone will give you the correct info.

 

Thanks

[w i l l]

So what's the situation now?

 

Do we still continue with stage 4 and threaten to take LLoyds to court etc or give up? Are there any cases of refunds now?

[TideTurner]

All,

 

Did I hear correctly yesterday that there are only two banks left in the running with this test case?

 

If so, HBOS and who?

 

Tide

[Bookworm]

Where did you hear that, TT?

[TideTurner]

Hi BW,

 

On the News, but it was only a brief statement. I could be wrong, so don't take it as read.

 

I was in Court the week before last with the firm representing HBOS. I have an ongoing saga with them, and know they were present at the hearing. They are the second largest firm in the country.

 

Can anybody confirm there are only 2 left?

 

Tide

[photoman]

The OFT reply to defence is published on their website (and still contains the names of all the original banks).

However, when I've tried to open the document my browser quits ?

 

Anybody else having the same problem ?

 

Was wondering if it's some quirk with my browser, or if the OFT link has been withdrawn for some reason (eg; particulars changed, number of defendants changed etc)

 

Can somebody else go to the link at the OFT site, and try to view the reply to defence, and let me know if it's just me, or indeed something to do with the OFT site ?

 

The Office of Fair Trading: making markets work well for consumers

 

 

PM

[ice maiden]

It worked well for me.