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 Post subject: A stunning victory?
PostPosted: Wed Nov 25, 2009 4:35 pm 
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"British banks win 'stunning' victory in landmark ruling on overdraft fees", says The Daily Telegraph, amongst the many media sources to comment on the ruling by our "Supreme" Court. HSBC, Royal Bank of Scotland, Barclays and Lloyds are among seven lenders who had asked the Court to halt a challenge to their fees brought by the Office of Fair Trading, but there is more to the ruling than meets the eye.

View full article here

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 Post subject: Re: A stunning victory?
PostPosted: Wed Nov 25, 2009 6:09 pm 
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This should be publicised to a wider audience.

I was aware that the Unfair Contract Terms Regulations 1999 was European legislation but the reporting of the issues, prior to this judgement today on consumer websites, has portrayed the Act as "the consumers' friend."

One of my children is affected by this decision so I will post a link of your article to Money Expert.com once I receive my new password from them!

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 Post subject: Re: A stunning victory?
PostPosted: Wed Nov 25, 2009 7:19 pm 
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I can't remember how I got my teeth into this today, just had the suspicion that the law that governed this judgement was EU law. Anyway, I phoned the Supreme Court. The receptionist put me onto the press office. I actually got to speak to the web site designer, or so he claimed. I have just had a call back from an equally useless guy. He did say that the OFT could progress this further via the government or maybe the ECJ. He recommended I speak to the OFT. Meanwhile in the Telegraph, they have a comment piece entitled "A unique opportunity to rebuild parliament." I'm afraid I went to town on their comments section, but didn't really go anywhere near far enough. The media is most of the problem that has let our rulers screw us.


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 Post subject: Re: A stunning victory?
PostPosted: Thu Nov 26, 2009 11:44 pm 
I have just read the judgement...the judge states that EU law was not an issue in this case.Basically he did not even have to use the EU directive(or related UK law),because he deemed that overdraught charges were NOT a seperate product/service,they had to be seen as part of an overall product/service, which is in effect, the whole current account package....he didnt like syphoning off bits of the overall package and then looking at these bits as seperate new contracts, as it were.

So looking at the overall package....the whole account and all its services(including overdraught fees)....if one applied EU law to this, it was fair in EU terms as the banks had clearly laid out terms and conditions (in most cases)and there is a freemarket operating in the industry.

However this was irrelevant to this case anyway because the lawyers acting for the customers were only seeking for the charges to be reviewed as seperate new entity.....and they argued that the charges for this new contract were incomensurate with the service thus provided....the judge simply refused to allow this and so would not take the next step and have it interpreted by law as fair or not..... so EU law never even came into it.....sorry.


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 Post subject: Re: A stunning victory?
PostPosted: Fri Nov 27, 2009 12:21 am 
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vince 62 wrote:
I have just read the judgement...the judge states that EU law was not an issue in this case.Basically he did not even have to use the EU directive(or related UK law),because he deemed that overdraught charges were NOT a seperate product/service,they had to be seen as part of an overall product/service, which is in effect, the whole current account package....he didnt like syphoning off bits of the overall package and then looking at these bits as seperate new contracts, as it were.

So looking at the overall package....the whole account and all its services(including overdraught fees)....if one applied EU law to this, it was fair in EU terms as the banks had clearly laid out terms and conditions (in most cases)and there is a freemarket operating in the industry.

However this was irrelevant to this case anyway because the lawyers acting for the customers were only seeking for the charges to be reviewed as seperate new entity.....and they argued that the charges for this new contract were incomensurate with the service thus provided....the judge simply refused to allow this and so would not take the next step and have it interpreted by law as fair or not..... so EU law never even came into it.....sorry.



Are you reading the same judgement:

Quote:
The question for the Court is much more limited, and more technical. It is whether
as a matter of law the fairness of bank charges levied on personal current account
customers in respect of unauthorised overdrafts (including unpaid item charges and other
related charges as described below) can be challenged by the respondent the Office of
Fair Trading (the “OFT”) as excessive in relation to the services supplied to the
customers.

4. That issue depends on the correct interpretation (in its European context) and
application of Regulation 6(2) of the Unfair Terms in Consumer Contracts Regulations
1999 SI 1999/2083 (“the 1999 Regulations”). Regulation 6(2) is as follows:
“In so far as it is in plain intelligible language, the
assessment of fairness of a term shall not relate –
(a) to the definition of the main subject matter of the
contract, or
(b) to the adequacy of the price or remuneration, as against
the goods or services supplied in exchange.”
The context requires “adequacy” to be read in the sense of “appropriateness,” as Lord
Rodger of Earlsferry pointed out in Director General of Fair Trading v First National
Bank plc [2001] UKHL 52, [2002] 1 AC 481, para 64.

The Directive and the Regulations

5. The 1999 Regulations were made under section 2(2) of the European
Communities Act 1972 in order to transpose into national law Council Directive
93/13/EEC on unfair terms in consumer contracts (“the Directive”). The 1999
Regulations revoked and replaced similar regulations made in 1994 (SI 1994/3159) in
order (as the explanatory note to the 1999 Regulations puts it) “to reflect more closely the
wording of the Directive”. Regulation 6(2) of the 1999 Regulations does indeed follow
closely the English text of Article 4(2) of the Directive, which is as follows:

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 Post subject: Re: A stunning victory?
PostPosted: Fri Nov 27, 2009 1:12 am 
Yes ,he mentions the EU directive but that is not his judgement ,it is what the customers lawyers were trying to have the case heard under,i.e.whether the overdraught charges in isolation were "fair"...but the judge later circumvents the whole argument they present by declaring that the overdraught charges are an "ancillery" part of a current account,not the main part or a seperate part,and that they cannot be legally regarded seperately from the whole package of services provided by the current account.

The judge could have applied the law if they looked at the whole terms and conditions of the current account in its entirety(including overdraught charges and all the other services and charges involved)...if he had looke at the case under those conditions he said they would have been fair under EU rules which state that any product /service must be set out in clear intelligable launguage and be open to free competition.....his opinion was that current bank accounts as a whole satisfy EU directives and UK law....but that wasnt the issue here.


He ruled that overdraught fees are not a service or product that can be looked at in isolation,so they dont exist as a legal entity on their own, so he cant apply the any law to something that is not a defined as complete a product or service....so he allows the banks appeal on a technicality........far as I read it...and it did take some reading


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 Post subject: Re: A stunning victory?
PostPosted: Fri Nov 27, 2009 10:28 am 
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I thnik the point is that the OFT thought that the law applied (and should apply) but the judges ruled that it didn't. Thus an EU law which is supposed to protect consumers from unreasonable contracts actually turns out to provide no protection. And, given that consumer protection is an EU competence (and an occupied field) there is nothing the UK can do to change this situation without the permission of Brussels.

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 Post subject: Re: A stunning victory?
PostPosted: Fri Nov 27, 2009 1:24 pm 
Richard
The judge said you have to look at the current account as a whole.Those people in credit think the banks current account service is fine and a good product.It is only those who go overdrawn who are complaining..a point drawn out by the banks defense.So most people ...the majority(42 million) are happy with the service the banks provide on current accounts...the rest(12 million)who have incurred unauthorised charges obviously say they arent happy...but as you say...they would wouldnt they.

The judge agreed with the banks that if these charges were not made they would have to start charging on "free" current acounts to make up the shortfall....resulting in the death of free banking(30% of bank revenue from current accounts comes from unauthorised fees).He also said Relevant Charges(fees imposed for unauthorised transactions) were quite clearly laid out in the terms and conditions the bank declares when a customer opens a current account,so as a whole it is a fair package....nothing hidden.

According to the judge this reasoning is done without having to assess the case under EU law it is already covered by domestic law fom previous cases ......


"96. The parties have in their written cases and oral submissions identified two broad
issues for determination. The first concerns the proper interpretation of regulation 6(2)(b),
the second whether the Relevant Charges fall within the scope of that regulation, properly
interpreted. The first issue is one of European law. As to the second, however, no
question of European law is involved in the determination of the relevant circumstances"


So he concludes......

"For these reasons I would allow the appeal. The declaration sought by the banks in
their counterclaims is inappropriate for the reasons explained by Lord Phillips at the
beginning of his judgment. I would declare that the bank charges levied on personal
current account customers in respect of unauthorised overdrafts (including unpaid item
charges and other related charges) constitute part of the price or remuneration for the
banking services provided and, in so far as the terms giving rise to the charges are in plain
intelligible language, no assessment under the Unfair Terms in Consumer Contracts
Regulations 1999 of the fairness of those terms may relate to their adequacy as against the
services supplied

The motto is dont go overdrawn.....and if you do and dont like the charges...you can take you "debt" elsewhere.

However he does rather oddly come out with this.....



"The banks may not be the most popular institutions in the
country at present, but that does not mean that their methods of charging for retail
banking services are necessarily unfair when viewed as a whole. As a very general
proposition, consumer law in this country aims to give the consumer an informed choice
rather than to protect the consumer from making an unwise choice. We buy all sorts of
products which a sensible person might not buy and some of which are not good value for
the money. We do so with our eyes open because we want the product in question more
than we want the money. Should financial services be treated differently from other goods
and services? Or is the real problem that we do not have a real choice because the
suppliers all offer much the same product and do not compete on some of their terms?
This is the situation here. But it is not clear to me whether the proper solution is to find
some way of forcing the suppliers to compete with one another in the terms they offer or
whether the solution is to condemn one particular model of charging for those services.
Fortunately, however, that is for Parliament and not for this Court.

I wonder if he is overdrawn at the bank?


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