Bank Charges - Evidence Item 1 - Examined.

I left Item 1 of the Evidence I wish to present to stand alone, and provided the link to the source of that item. I did so because in using extracts to make comments on what was said I do not wish my comments to be seen as out of context in any way - it is essential that anyone reading this Blog is able to independently verify the accuracy or otherwise of my comments

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That said I now intend to use extracts from the exchange of comments between Lord Turner and John Mcfall.



In his opening remarks Lord Turner used these words:





Lord Turner of Ecchinswell: "Obviously, the Supreme Court has found in favour of the banks' arguments this morning that the overdraft charges are not assessable for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 and that effectively means that people do not have a basis of complaint on the grounds that these charges are unfairly high ..."



I regard those comments as accurate, but then does a change happen when later this question is asked by John McFall?  The following question:



Q3 Chairman: Should we just write off past bank charges and focus on the future then?



In his reply, Lord Turner says this:



" ... I think that it is clearly the case that the argument about whether these charges in the past can be deemed to be unfair, which is probably the basis of most of the complaints that have been brought forward, has been definitively resolved by the Supreme Court ..."





Now, can you see a difference? Have we moved from a position where the Supreme Court ruled that the OFT could not assess charges, to one where whether charges were unfair has been definitively resolved by the Supreme Court?



If like me, you see that difference, then what are its implications? That in part is what this Blog is all about. I believe they open up not only the question of fairness, but of serious regulatory failure.



But first, lets resolve the issue. What did the Supreme Court rule? Was it that the OFT could not investigate, or was it that the charges were not unfair?



I could at this point use, in detail, the actual Supreme Court Judgement, I will do in a later post, but it is easier on this one point to use a Press Summary issued by the Court.



Source of Extract:

http://www.supremecourt.gov.uk/docs/uksc_2009_0070_ps.pdf



Extracts start:



This appeal involved a relatively narrow issue. The Supreme Court had to decide not whether the banks’ charges for unauthorised overdrafts were fair but whether the OFT could launch an investigation into whether they were fair.



Extracts continue:



JUDGMENT

The Supreme Court unanimously allowed the appeal by the banks.



REASONS FOR THE JUDGMENT



Lord Walker made clear that the scope of the appeal was limited – the court did not have the task of deciding whether or not the system of charging current account customers was fair, but whether the OFT could challenge the charges as being excessive in relation to the services supplied in exchange (Paragraph 3). As Lord Phillips stated, even if such a challenge was not possible, it might still be open for the OFT to assess the fairness of the charges according to other criteria (Para 61).



Extracts end:



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If like me, you read those extracts you will see what the Supreme Court decided - it was NOT that bank charges were fair or unfair, it was a narrower issue of whether the OFT could make an assessment of fairness.



That, for me and many like me, leaves open the question of whether the charges were fair or unfair, it was not definitively decided as Lord Turner, and many many others have concluded.

My next post will question some of the other remarks by Lord Turner, and they may lead us to where an answer is found to this question of fairness, not within the compass of the OFT (as was suggested by Lord Phillips might still be possible), but directly under the control of Lord Turner and the FSA.