This blog has exhaustively sought to present evidence, and perhaps exhaustively is the correct word, both for me as the author and for you as a reader. It is however the only way I know to proceed because I hope one day, the full extent of the evidence on this blog will be used to reach an answer as to whether the charges levied by banks are fair or unfair for the millions that have been affected, and to this day are still affected, by such charges - where to date there has been no definitive answer as to their fairness or otherwise.
I introduce the term "any reasonable doubt" deliberately at this juncture because I have raised the doubt that the OFT, and their use of the UTCCR was not, for me, the correct starting point to find an answer to this issue. I have more than one reason for that conclusion, and each will form part of the evidence to follow.
What I wish to do at this stage is examine the actions of the FSA, not the OFT, and how the FSA use the powers they have been given by Parliament, and those which arise under EU Regulations.
Now some of those powers are shared between the OFT and the FSA. Recognising that fact - there have been agreements, Memoranda of Understanding, and Concordats signed by the OFT and the FSA.
Therefore I presented evidence: 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.
I now wish, through looking at the actions of the FSA, and the results of their actions, to combine Test 3 with the fourth of the Tests, ending with this evidence, namely:
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.
Those, and there are many, who have a detailed knowledge of this whole subject (many with knowledge much greater than mine) will recognise how that last fourth test would affect the banks and their earnings from charges, and why therefore I am dealing with this matter in exhaustive detail. But I ask those with that knowledge just to bear in mind that we do NOT yet have an answer to whether charges are fair or not - that knowledge is at present denied to us all.
Let's start here in our search for "any reasonable doubt":
In December 2009, the heads of the OFT and the FSA published a Memorandum of Understanding, incorporating Concordats and agreements signed earlier - you will find the full details in links in earlier posts - for now here are the extracts I wish to use:
• Consumer protection
Both the OFT and the FSA’s work under this theme have, at heart, the same outcome in
mind – essentially ensuring that consumers are treated in a fair, considerate and
responsible way in their dealings with financial services firms.
Consumer protection interventions by the OFT are designed to support the development of
competitive, efficient and innovative markets, where standards of consumer care are high,
consumers have choice and are empowered and confident about making choices, and where
businesses are not unduly burdened by government regulations and are encouraged to offer
benefits to consumers beyond the minimum standards of protection afforded by the law.
The OFT superintends the working of the Consumer Credit Act (1974) and regulations made
under it.
Interventions by the FSA to achieve an appropriate level of consumer protection are
designed to address the market failures in the relevant financial market that have led to
poor consumer outcomes. It does this in such a way that the costs are proportionate to the
benefits, and to manage the risks that firms’ conduct causes consumer detriment or
damages consumers’ confidence in financial services markets. Interventions in this area are
carried out through the FSA’s Conduct of Business rules and mainly target problems of
asymmetric and imperfect information.
Interaction under this theme is wide ranging. It encompasses several concordats covering
enforcement of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs), the
Consumer Protection from Unfair Trading Regulations 2008 (CPRs) the Enterprise Act 2002
(EA02) and the Banking Conduct regime.
In addition the OFT and the FSA are Competent Authorities under the Consumer Protection
Co-operation Regulation 2007 (CPC), which requires national bodies responsible for the
enforcement of European consumer protection laws, designated as competent authorities,
to help each other by exchanging information and cooperating on cases which harm the
collective interests of consumers and contain a cross-EU border element. The Competent
Authorities, including the OFT and the FSA agreed protocols setting out how they should
work together to carry out their responsibilities under the CPC.
Both the OFT and the FSA have powers in relation to unfair contract terms under the Unfair
Terms in Consumer Contracts Regulations. We coordinate enforcement action and cooperate to
ensure the effective and consistent delivery of consumer protection in this area. Under the
‘Unfair Terms’ Concordat, we set out arrangements for consulting and liaising to reduce
duplication of effort and to promote appropriate action by the body best placed to lead on an
issue. See Annex B.
The OFT and the FSA have adopted a similar approach in the Consumer Protection Regulations,
which can be found at Annex C.
Banking
The OFT and the FSA will work together to ensure that a consistent and coordinated approach
is taken under the Consumer Credit Act, the Financial Services and Markets Act, the Payment
Services Regulations and the FSA’s Handbook in relation to potential regulatory breaches and to
agree which party is best placed to lead in each case.
All of this is set out in a Concordat which details the working relationship and division of
responsibility between the OFT and the FSA, and which can be found at Annex D.
*****************
One of the most frequent comments offered to me by those who know of this blog, and who have detailed knowledge of the subject at issue, is that the OFT have certain responsibilities, and likewise for the FSA, and that it is therefore obvious whether it is the OFT or the FSA who should address one issue as against another.
From those extracts, indeed from all of the similar Plans, Concordats and agreements twixt the FSA and the OFT, I personally do not think it is obvious - I think there is considerable room for doubt - reasonable doubt. And there is evidence to support that doubt.
"Both the OFT and the FSA’s work under this theme have, at heart, the same outcome in
mind – essentially ensuring that consumers are treated in a fair, considerate and responsible way in their dealings with financial services firms." - is it reasonable to assume that both bodies recognise that they have a joint, not individual, responsibility to consider how the consumer is affected and dealt with to achieve that stated outcome?
Banking
The OFT and the FSA will work together to ensure that a consistent and coordinated approach
is taken under the Consumer Credit Act, the Financial Services and Markets Act, the Payment
Services Regulations and the FSA’s Handbook in relation to potential regulatory breaches and to agree which party is best placed to lead in each case - is it reasonable to assume that working together means using the various powers, not one versus another, to achieve the best outcome for the consumer?
Yes, I agree - whether those assumptions are or are not reasonable - we need evidence. That is what will follow in my next series of posts.
But just for the moment, ask yourself this one question - having read those extracts, and perhaps the whole document - are you sure, 100% sure, that only the OFT could have acted over this issue, and equally 100% sure that it had nothing whatsoever to do with the FSA?
Even when you read this: "... we set out arrangements for consulting and liaising to reduce duplication of effort and to promote appropriate action by the body best placed to lead on an issue.
Or, is that perhaps where it all went wrong, the wrong body took the lead?
Let's see what the further evidence tells us, when we look at those instances when it was the FSA, not the OFT, who took the lead.
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