Bank Charges - Test 3. Part 2.

Previously on "Trial and Error" ...

If this is the first time you have arrived at this blog, do please be aware that this blog is like a jigsaw puzzle.  Each post is a piece in the jigsaw, and if you start here, without also reading earlier posts, by the time we get to the end of the jigsaw, you will say "But, there are pieces missing!"

Perhaps a brief recap may not go amiss.  You have found yourself in a series of posts addressing the subject of bank charges - and whether they are fair or unfair.

I have my own opinions, and am presenting evidence in support of these opinions. One of which is that the questions that arose over the fairness of Bank charges, questions that still to this day remain, fell, and do still fall, to Lord Turner and the FSA to answer.

I used the jigsaw analogy above deliberately.  I do not think I am alone in starting a jigsaw by looking for the 4 corner pieces, and all those that have a straight edge.  Finding those pieces helps me construct an outline, a framework for solving a jigsaw puzzle. 

That is in part what I am doing with the 4 Tests in this series of posts, I am building an outline, a framework for solving a puzzle - the puzzle over whether bank charges are fair or not. In doing so, I am hoping that others who are also trying to solve the puzzle will see pieces they have not looked at in any detail before - but we need the framework first.

So far, I have looked at Test 1 - Evidence that the Financial Services Authority regard "Treating Customers Fairly" as fundamental, - and - Test 2 - Evidence that the Financial Services Authority have failed to meet the statutory obligations imposed on them by Parliament - they form part of the puzzle.

At this juncture they are as complete as I wish them to be, but there are more pieces to this puzzle than just the 4 corner pieces.

Let's look at another part of the jigsaw puzzle and see if we can find its place in the bigger picture.

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.

Do you ever watch the BBC series Silent Witness?  It is about forensic science, the characters use their abilities in a series of examinations, in as much minute detail as is required, to establish what happened and why. The next two Tests require that level of forensic examination, and to allow you to follow each examination, I have intentionally broken them down into what I hope will be easily followed parts, rather than over-lengthy posts.

Ever heard the phrase "It's fine in theory, but it won't work in practice"? That phrase has always puzzled me. If it is indeed fine in theory, surely then it should work in practice? And if it doesn't work in practice, surely then that shows the theory was anything but fine?

So which is it, over this issue of Bank charges?  At different times and in different ways it involved both the OFT and the FSA - but neither found an answer to the puzzle?

Was it perhaps the theories of the OFT or the theories of the FSA , that, Court case after Court case eventually led to a result with no answer to the essential question - are Bank charges fair or not?. 

Or was it perhaps how they put their respective theories into practice?

Even more worryingly, perhaps, could it in fact be both, both theory and practice - neither working as they should? 

What could lie behind all the effort involved, the costs involved, the time involved, that could lead eventually to a relatively simple question about fairness never finding an answer? Looking at both the theory and the practice of the Concordat between the FSA and the OFT may begin to help us understand.

Let me start this series of forensic examinations with this example.  It is the basis of the test case, the agreement that was signed by the OFT and the Banks involved in the Court cases that followed.

I can use many parts of that agreement for comment, but what, at this juncture, as one small but very important part of this puzzle, I would ask you to note first is that there are 9 parties to the agreement over this test case, the OFT, the Banks concerned - AND the FSA.

But then note this extract:

" 6. FSA


6.1 If, at any time after the completion of the trial at first instance of the Preliminary Issues, the FSA wishes to join in the proceedings, then .... "

Why might it be that the FSA, perhaps our prime regulator in the area of financial services, having been listed as one of the parties in the test case, then do not join in the proceedings themselves from the outset?  The answer to that lies in the Concordat. So too do the implications.

If you have been reading since the outset of these posts, you might be asking  yourself, if the FSA "switched off" from involvement in the test case in the Courts from the outset, does that piece fit at all with another piece in the puzzle that I mentioned earlier, when Dr Heurtas told us " ...Technically, the FSA has switched off Principle 6 ("Treating Customers Fairly") ..."

However, let me leave you with this far simpler question to consider:

Can you trace anywhere a comment from Lord Turner or the FSA which tells you, tells anyone, what their view or opinion is over whether Bank charges are fair or unfair?

That is why I repeat again, and will continue to do so:

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?

I will examine another small part related to the Concordat in my next post.