News 27 July 2007
OFT and Banks to go to High Court for test case
On 27 July, the OFT is starting a claim against 7 or 8 high street banks to test whether the fees imposed by banks for unauthorised overdrafts, bounced cheques etc. are covered by the provisions of the Unfair Terms in Consumer Contracts Regulations. The banks contend that the charges are fees for services, and are not penalties. If the banks won this argument, the UTCCR provisions of reasonableness would not apply.
See the OFT announcement at http://www.oft.gov.uk/news/press/2007/106-07
On that OFT page, click on "questions and answers for test case announcement" for further information including the full text of the agreement between the banks and the OFT and the FSA.
Just as a little side note, Royal Bank of Scotland Group, which includes NatWest, were late to join this agreement. The agreement was signed by Abbey, Barclays, Clydesdale, HBOS (includes Halifax), HSBC, Lloyds TSB and Nationwide on 25 July and the agreement on the OFT website had their names on it. But RBS did not join in until a day later and so they have a separate agreement with the OFT, although it is apparently on the same terms. Oh to have been a fly on the wall in the RBS boardroom as they agonised over whether or not to be part of this!
Bob the Bankbuster says,
"This may be good news if the OFT pursues its case vigorously against the banks. However, I am deeply suspicious of the OFT and I do not think that it really has the stomach for a major fight with the banks. They may allow the banks to get off the hook on this crucial legal argument and then cobble together a half hearted compromise that sees fees reduced a bit but still crucifying millions of bank customers.
"The media are suggesting that all current cases will be put on hold pending this decision. This should not happen automatically. It can only happen if a judge decides to stay a case either on his own initiative or if a bank makes an application for a stay. If this happens in any of the cases that I am pursuing, I will contest any stay order."
For other news stories, see News stories
Published and promoted by Bob Egerton, TR2 4RS