To provide a context against this post, let me quickly make reference to two earlier posts on this blog.:
- one where I called the Concordats. Memoranda of Understanding, and Plans drawn up by the FSA and the OFT as a "blizzard", and I listed a whole series of those Concordats etc to show just how much of a "snowstorm" it had been, and which in my opinion, despite what was intended, eventually led to a regulatory failure over this question of bank charges.
- the second where I suggested that the OFT had taken the lead in the matter of bank charges because of their previous accomplishments over credit card charges, but where I also suggested that their way of addressing whether charges were fair or not, based on the credit card position, was in my opinion far too narrow.
The full details, and the evidence, on both points are in earlier posts on this blog
In this post let me lead - evidence - which I believe supports both of those opinions.
Extracts from this blog are appearing elsewhere, and I am grateful to one of those taking an interest in what I am saying and challenging it, which I welcome, has provided me with evidence, I did not previously have, and with which I wish to start.
This is the source link for that evidence, and it appears on the Legal Beagles forum, a forum which contains members with an undoubted knowledge, and depth of knowledge, on this subject (and indeed many others).
These are the extracts, I wish to draw from that link, but as in all such cases where I am selecting extracts, please do consider reading the whole items:, they are originally sourced from the OFT
" ... Our basic position is that charges must be cost reflective.
The plan to take forward the preferred strategy of preparing and publishing a statement of principles for assessing the fairness of charges, which would state a threshold figure for our future intervention.
We recommend setting a single, straightforward threshold.
Our public line is that the principles established in the credit card cases apply to default charges in a wider range of financial contracts, such as for overdrafts and first mortgages."
That last extract, that evidence, I believe confirms the second of my earlier opinions, namely that the OFT won a victory over charges that related to credit cards, and right or wrong, saw that as the opportunity to take the same strategy and thinking forward and see it deployed on the question of overdrafts and mortgages.
However, I want to use that last extract, that evidence, in support of the first opinion that I stated above, and which forms the basis of 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.
Let's repeat the extract,the evidence, but let me highlight two words:
Our public line is that the principles established in the credit card cases apply to default charges in a wider range of financial contracts, such as for overdrafts and first mortgages."
That extract comes from a heavily redacted document (check it out via the link above). It was dated - February 2006 - a time when some of the very many Concordats and agreements between the OFT and FSA were in force.
However, in November 2007, something important began a change, something which eventually broke the complexities of all the Concordats, all of the OFT and FSA Plans, and for me, it is the clearest of evidence for all the dangers that this "blizzard" of documentation, caused.
What started as a change in 2007 is something which not only allows me to offer evidence on Test 3, but which far more importantly shows why I believe the FSA are the route to take to obtain an answer to this question over the fairness or otherwise of bank charges.
What was it that happened?
Start here:
" Mortgage Agreements - Dual Regulation
Avoiding dual regulation of residential mortgage agreements
BERR and HM Treasury have been working together to address concerns raised by industry stakeholders that there may be circumstances in which residential mortgage agreements can be subject to two competing regulatory regimes.
The Government consultation, which closed on 14 February 2008, sought views on proposals for legislation to avoid the simultaneous regulation of regulated mortgage contracts (RMCs) by both the OFT (which regulates consumer credit under the Consumer Credit Act 1974 (CCA)) and the FSA (which regulates residential first charge mortgages under the Financial Services and Markets Act 2000 (FSMA)).
The Government is amending section 82(2A) of the CCA to ensure that any RMC is regulated only under FSMA. The legislation will take effect on 6 April 2008.
This is a deregulatory measure only to avoid dual regulation. There is no change to the treatment of agreements that are exempt from regulation under the CCA regime except in relation to the risk of dual regulation of RMC agreements.
The Government response to the consultation was published on 14 March 2008 and is available on the HM Treasury website."
Source here. in the National Archives
If you wish to read the full consultation, go here (it was dated Nov 2007 and again drawn from the National Archives).
It was the end of the OFT's involvement in overseeing first mortgages which is why I highlighted those two words earlier
It established that it was the FSA, not the OFT, who were to use their powers to oversee first mortgages.
(Nope - I know, I know only too well, that I need to establish the evidence, the hard evidence, that leads us to bank charges and the FSA - that will follow.)
But what I want to do at this juncture is to complete this comparison of the FSA -v- the OFT. - to offer the evidence that contrasts what the OFT were thinking they could do - the threshold charge - and compare that not with what the FSA "thought" they could do, but what they have actually done.
I think - in the posts that follow - you will see a very stark difference.
A difference which arises - in the absence of the "blizzard" of Concordats, and which demonstrates the range of powers afforded to the FSA under the Financial Services and Markets Act.
The evidence for that stark difference follows in the next set of posts.
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