Summary - for anyone new to this blog.

If you are new to this blog, may I first say "Welcome"! A short background review of this blog may be in order.

The blog is designed to offer evidence on the subject of whether bank charges are, and were, fair or unfair.

Many believe that the question has been answered, negatively for those affected by such charges, after a Supreme Court decision against the OFT, or following that decision, that it seems well nigh impossible to obtain an answer.

I believe the exact opposite, I believe an answer is available, a positive one for those affected - but hold that belief because in my opinion the answer lies, and always has lain with the Financial Services Authority.

Am I correct? Many, and they have considerable knowledge and experience in the subject, hold the opinion that I am wrong,  For me however, it is not a question of opinion, but of evidence, and this blog has from its inception sought to provide evidence, through which an answer can be obtained.  Are, and were, bank charges fair or unfair - it remains an open unanswered question.

I set myself four tests - against which to provide the evidence which I believe supports my conclusions.  Whether you form the same conclusions depends on your assessment of the evidence - and yes, sorry that means reading the blog from the start in order to gain an understanding of the evidence in full.

However, to help you decide whether to do so, here are the four tests:

Test 1 - Evidence that the Financial Services Authority regard "Treating Customers Fairly" as fundamental.

Test 2 - Evidence that the Financial Services Authority have failed to meet the statutory obligations imposed on them by Parliament.

Test 3 - Evidence that the Concordat agreed between the Financial Services Authority and the Office of Fair Trading established the basis for real consumer detriment and serious regulatory failings.

Last, but very very far from least ...

Test 4 - Evidence, which must be irrefutable and unequivocal, that the Financial Services Authority expect charges to be a fair reflection of the additional administration costs faced, not a way to increase profits or offset costs from other parts of a business
 

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To date I have covered Tests 1 and 2 as far as I feel is necessary to create the platform upon which Tests 3 and 4 can be presented. 

 

I have more to add to Test 3, and the importance of Concordats between the FSA and the OFT.  But I will do so shortly -  but as integral to Test 4 - which is by far the most crucial test.

 

In my last post I listed a set of extracts taken from FSA documentation.  They form part of Test 4, and in my next post I will provide the links to the source documents.

 

If you have an interest in the question of whether bank charges are, and were, fair or unfair, I hope you will find them of interest. They provide evidence, upon which you can form your own opinion.

 

Is it evidence that is - both irrefutable and unequivocal, that the Financial Services Authority expect charges to be a fair reflection of the additional administration costs faced, not a way to increase profits or offset costs from other parts of a business - the essence of Test 4?

 

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What evidence exists to show the FSA know what fair is?.

I ended my last post with these comments:

The crucial evidence - eventually - is:

1) to identify, without exception or qualification, the regulatory role of the FSA in the matter, and

2) the FSA's firmly established position on "fairness" when it comes to charges.

In the posts which follow I will offer the evidence against both of those items, and will continue to repeat this:

Let's ask Lord Turner and the FSA this very simple question:


Do you believe that the charges levied by Banks on their customers were and are fair or unfair?

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For reasons which I will explain - in full - later, I intend to offer evidence against item 2) first.

Let me just say for now that in repeating that very simple question to Lord Turner and the FSA throughout this blog, I already know that there is substantial evidence that they have already answered the question in the most fundamental way possible.

Now, that is not true to the extent that is necessary, because the evidence I will submit below relates to the FSA treatment of charges which in themselves do not involve bank charges.  However that qualification equally applies to all those who have any authority to adjudge the fairness or otherwise of the charges levied on customers.

The OFT have not answered the question, Parliament has not answered the question, and the highest Court in the land has not answered the question.  It's not just the FSA - no one has answered the question!

Just in case, let me remind you of two important items which support why I am emphasising, perhaps even over-emphasising, the complete void over an answer to what is a simple question - what is fair?

Firstly this - what Lord Turner once said to the Treasury Select Committee, he said " there was a clear legal decision "on the issue over bank charges.

Secondly this - two extracts from the Press Summary issued by the Supreme Court in November 2009, let's make sure we know (before we go further) exactly what that clear legal decision was:

"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.


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)."

So, please be very clear that the question over whether bank charges are fair or unfair has never had an answer, none, nada, zilch, from anyone (with the legal authority to do so) alive or dead in the entire history of mankind.

I hope this blog will play its part in changing that position, and we do get an answer to a very simple question.

How?  Well there is extensive evidence which can be provided on how the FSA address the question of fairness in respect of charges - and specifically those which arise in an identical manner to bank charges
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Let's have a look at this evidence, and allow you to form your own opinion.  As you may have surmised I already have my own opinion formed, both emphatically and for quite some time.

For instance, read the following comments, how do they begin to shape your opinion?

" ...a number of serious failings were identified in relation to its dealings with customers. These include ... .excessive and unfair charges for customers that did not reflect administration costs."

" ... The FSA has identified a number of serious failings. These include: Applying charges to customers' accounts that were unfair and/or excessive. These were: A fee for a returned direct debit which was charged regardless of how many times the direct debit had already been returned unpaid."

" ... and applied charges that were unfair because they were charged repeatedly or did not accurately reflect the cost of administering an account in arrears."

''... Firms which fail in their obligations to customers should expect not only a substantial fine but also that they will have to pay back customers who have been disadvantaged by their failings.''

" ... the FSA will take robust action where it sees that customers are not treated fairly. Retail firms which fail in their obligations to customers should expect not only a substantial fine but also that they will have to pay back customers who have been disadvantaged."



" ... The case sets a precedent, with the FSA concluding this investigation in a matter of weeks, and the firm working with the FSA to agree a process to enable customers to receive redress as quickly as possible."

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Those who know this blog well, will know I do not offer extracts without including links to the source.  The opening "highlighted" items above demonstrate that practice. This is my first exception - but it is wholly temporary.

In my next post, I will include the links to the source material for each of those comments.  For now let me just say that they are all comments from the FSA.

I asked how they might begin to allow you shape your opinion. At a minimum I think they may show you that the FSA are no stranger whatsoever to deciding on what is fair or unfair, and in taking appropriate action, when they deem something to be unfair, and what the ingredients that constitute unfairness involve.

Each item (and you will have full access to the items in the next post) involves circumstances where the FSA have dealt with cases that relate to charges. Charges which they declared to be unfair and which resulted in fines for the Companies involved and redress for the clients and customers who were affected.

It is also important to note, as you will see, that not one of those cases involved court action on the part of the FSA.

That stands in stark contrast to the expensive exercise undertaken by the OFT in their attempt to even gain the opportunity to look at whether charges were fair or otherwise - an opportunity eventually denied to them by the Supreme Court.

Am I forgetting item 1)  to identify, without exception or qualification, the regulatory role of the FSA in the matter? 

Nope, not for a second, but first let's firmly establish whether you, just like me, believe (based on evidence drawn from the FSA)  that they have more than sufficient experience to answer this question:

Let's ask Lord Turner and the FSA this very simple question:


Do you believe that the charges levied by Banks on their customers were and are fair or unfair?

Once we establish that position, we can then identify why a question they were legally obliged by Parliament to answer (by virtue of the Financial Services and Markets Act) has not been addressed by them, let alone answered.

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The final evidence ... the blog restarts.

The opinions and evidence presented to date in this blog, and that which is to follow, are I believe now being better understood and recognised by others.

There have been many individuals and bodies involved in the disputes over whether bank charges are fair or not. I wish to identify some of those so involved.

Amongst the consumer forums involved were Legal Beagles and perhaps the wider known site established by Martin Lewis, .Money Saving Expert. Both sites contain vast amounts of detail, opinions, and factual information on this whole subject of bank charges.

Recently on the Money Saving Expert (MSE) site a Guest Comment was offered by Mike Dailly of the Govan Law Centre, an individual heavily involved in the subject, and I intend to restart this blog, with a full extract from Mike Dailly's recent comments.

Both MSE and Mike Dailly have had e-mails from me in the past, and have today been recontacted, and asked to review the current evidence presented in this blog, and that which will follow.

First, let's look at what Mike Dailly has to say:

"Guest Comment: Bank charges fight still alive

Mike Dailly

Govan Law Centre

20 May 2011


Bank charges reclaiming has largely fallen off the radar after the banks' 2009 Supreme Court victory. But Mike Dailly (right), principal solicitor at Govan Law Centre, thinks the fight is still on.


Overdraft charges are fair and beyond challenge, according to the banks.


Of course, history is written by the victor, and when the Office of Fair Trading lost its test case against the banks in November 2009, UK consumers were wrong-footed.


The momentum in our campaign for fairness and transparency was lost even though the Supreme Court said overdraft charges could still be challenged under a different rule, the Unfair Terms in Consumer Contract Regulations (UTCCR).


This aims to ensure contract terms are indeed fair. So where are we now on unfair bank charges?


Little has changed. The banks still extract over £2 billion each year from vulnerable consumers in overdraft charges.


Some banks have introduced daily fees for going overdrawn without permission, but for many consumers in financial difficulty this makes little or no difference.


Legal challenge


Our legal team identified powerful arguments to challenge overdraft charges using different powers under the Consumer Credit Act (CCA).


Govan Law Centre will be debating these in court in August, but in truth these provisions are highly technical and what we really need is a simple, no nonsense solution.


Last month's High Court defeat of banks on mis-selling payment protection insurance (PPI) may present the catalyst for change that consumers having been waiting for.


This case clarified the precise status of the Financial Services Authority's (FSA) rules. So what does this mean in practice?


Two of the FSA rules which came into force in November 2009, under banking regulations, are potentially powerful.


One requires the bank's service to an individual customer to be 'fair', and the other requires 'appropriate information' about the service to be provided.


The strength of these rules is they are general principles – unlike the rigid UTCCR or CCA – so there is less scope for expensive lawyers to argue how many angels can dance on the head of a pin.


What is 'fair'?


If we consider 'fairness', banks have practically admitted in the bank charges case that a single overdraft charge is not fair to an individual customer.


That is because the price does not reflect the cost to them of the unauthorised overdraft transaction.


Instead, it helps subsidise customers who are always in credit and therefore pay no fees. And the customer who has to pay is often skint.


All of this means we can once again talk about the price of overdraft charges, and whether the cost is fair and proportionate to the consumer.


The Supreme Court said you couldn't do this with the UTCCR, but you can with the FSA rules. That is a radical and exciting proposition.


Banks change their story


On the subject of 'appropriate information', we must not forget the banks' complete lack of transparency.


In 2005, they told the House of Commons Treasury Committee bank charges were "going to pay for all the people we have who pursue debt, collect debt, speak to customers and chase payments". That wasn't true.


Nor was it true when the British Bankers Association told us in 2006 that every time a transaction was declined there was a bank employee sitting in an office looking through a customer's file and deciding what to do.


In 2007, the banks then claimed overdraft charges were a fee for an informal overdraft.


The truth only came out in the OFT's case, and most banks have still failed to communicate this. They admitted the charges are indeed used to subsidise other customers.


The fight for a fair and transparent bank charging structure is far from over. I believe hope is on the horizon. Watch this space."

Views expressed are not necessarily those of MoneySavingExpert.com

Taken from here: http://www.moneysavingexpert.com/news/reclaim/2011/05/guest-comment-bank-charges-fight-still-alive

Mike Dailly says " .... what we really need is a simple, no nonsense solution."

Mike Dailly has realised that the answer to this whole issue of "fairness" over bank charges may lie with the FSA, which the readers of this blog will realise has been the contention of this blog from the outset.

Be that as it may, proven as it can be, simple it isn't.

I believe, and always have believed, we need to go one step further than Mike Dailly, we also need hard factual evidence to elicit a solution - providing that very evidence is, and always has been the purpose of this blog.

The crucial evidence - eventually - is:

1) to identify, without exception or qualification, the regulatory role of the FSA in the matter, and

2) the FSA's firmly established position on "fairness" when it comes to charges.

In the posts which follow I will offer the evidence against both of those items, and will continue to repeat this::

Let's ask Lord Turner and the FSA this very simple question:


Do you believe that the charges levied by Banks on their customers were and are fair or unfair?

.