Here's the latest from Moneyexpert.com: -
Q. Is this about all reclaiming?
No. This is very strictly only about reclaiming bank charges. If you’re reclaiming credit cards fees, loan insurance, mortgage exit fees or council tax they are not impacted at all. Sadly there’s a lot of confusion over this. For credit cards especially even some courts think it’s the same thing; it isn’t. I have request that the OFT and FSA put out a clarification on that, which they are looking at.
Q. What does the OFT’s announcement actually mean?
A. In July 07 The Office of Fair Trading announced it had agreed to a test case with seven major banks and one building society to decide the principles of reclaiming bank charges in the High Court. This doesn’t mean any individuals are actually going to court; the OFT is using its special powers to have a case heard on legal principle.
This should decide whether bank charges for unauthorised overdrafts (which includes bounced cheques or direct debits) are lawful or not. The banks that will be a party to the case are: Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc (includes Halifax and Bank of Scotland) , HSBC Bank plc, Lloyds TSB Bank plc, Royal Bank of Scotland Group plc (includes Natwest) and Nationwide Building Society.
Q. What is the test case about and when will it happen?
A: The case is expected to start on the 14 Jan 08, subject to confirmation from the High Court, and will last eight to ten days. It’s important to understand this first stage will determine if the ‘Unfair Terms in Consumer Contract Regulations’ (UTCCRs) can apply to bank charges.
Assuming the ruling is they can, then it is for the OFT to decide at that stage, whether bank charges are unfair. It is saying it expects to have finished its analysis into each of the banks by that point, so it will very quickly make its decision. Using previous rulings on credit cards, and the fact it has taken this case in the first place, it's very likely it will say they are unfair.
If that’s the case the OFT will go to their banks and see what they’re prepared to do. If no solution can be found, then it will go back to the courts. Obviously there can’t really be a time frame on this, as it could go all the way to the House of Lords; if that happens, sadly this could take years!
It’s also worth noting, that this case is primarily about current bank charges. The OFT does not have power to look at charges retrospectively, which is after all what bank charge reclaiming is all about. However the outcome will have a huge impact on reclaiming and in the meeting with the OFT, I strongly requested it consider that when things are settled it needs to incorporate this (see the Bank Charges Consumer Charter for more).
Q. What happens to reclaiming bank charges in the meantime?
A. The FSA has given banks a waiver from dealing with bank charge reclaiming cases until after the case, meaning they needn’t respond to complaints in the meantime. At the same time the Financial Ombudsmen also said it won't look at any cases either.
The courts didn't follow suit and whilst some individual judges have suspended claims until after the test case, others have continued to hear claims so you may still be able to go via that route (more details later).
Rather than doing nothing, this means it’s important you put a claim in now as a marker. See the what should I do section.
Q. How long will the waiver last?
A. No one knows. Technically, the FSA waiver is currently only in place for a year (unless the case is settled sooner), and is due to be reviewed at the end of Sep 07. It has said it will stop the waiver if it believes it is being abused or is to the detriment of consumers (though I believe a waiver which prevents people getting money that was being paid out to others, is in itself detrimental to customers).
Q. Were the campaign groups consulted?
A. Over a million people are reclaiming using this site, and hundreds of thousands through sites like Consumer Action Group; however, as far as I’m aware, none of the consumer groups were consulted before this was done. This is a disgrace, we had a fait accompli levied on us, in the name of consumer action, yet the official bodies failed to seek opinions.
Q. What is MoneySavingExpert.com’s view on this?
A. It’s estimated the banks will save £500 million due to the hold on claims this year alone. While a test case is welcomed, the effective stall on reclaims is a nightmare. It's also of concern that the legal restrictions on the OFT’s brief means it can’t look at all the arguments reclaimers have been making in courts.
Currently the Bank Charges Fighting Fund lawyers are looking at preparing additional legal argument for the case; it’s hoped the OFT will listen and put these across. Plus there’s a petition to number 10 which, if enough people sign, will also have an impact.
Q. Will the OFT win in Court?
A. Well I firmly believe they will, but I would say that wouldn't I! However, court rooms are funny places, and the banks have huge collective legal resources to argue this, so no one knows. Yet, it’s worth considering they’ve already paid out over £500 million to bank charges reclaimers, and the banks are on the back foot; all the legal advice I’ve had on this is that bank charges are unlawful and unenforceable.
Q. Is there anyway we can get the hold on reclaiming stopped?
A. Together with the other campaign groups, we’re looking at all the options. As a start point, please sign the petition at number 10 to ask Gordon Brown to support the Bank Charges Reclaiming Charter.
Also read this site for more details: -
http://www.penaltycharges.co.uk
Channel Islands Bank Charges
Linear Mode
