One of those, perhaps the most visited in the UK is Money Saving Expert (MSE) - and whilst I am not allowed to post a direct link to the existence of this blog there - under their forum rules- I am taking part in the debate (*) which surrounds this subject of bank charges.
The issue of the use of UTCCR, the legislation used by the OFT in the court cases, and which the Supreme Court ruled against, is part of an ongoing debate, and it is an important part of the whole debate - but in my view a dead end.
To justify that belief, this is a post I made on MSE, it is supplementary to the blog series I intend (these will resume in my next posts), but it has an overall importance, so for the record and to allow those who may not access MSE::
**************************
Reference to the applicability or not of the UTCCR to this question over bank charges has predominated throughout the whole period and I want to attempt to both open and then close reference to the use of UTCCR (as far as I am concerned) as the way to resolve the issue of bank charges - because for me it is a dead end.
It is not possible to write a blog without it containing the opinions of the person writing it, and there is nothing whatsoever wrong with that, but in itself it is just opinions, and that is why I have laid emphasis on presenting "evidence" that support those opinions, and it is then up to those to see whether that "evidence" leads them to the same conclusions as I have.
Referring to the UTCCR as above is very much a case in point, and whilst I agree with the comment made by Alpine Star, I want to offer evidence for that comment, not just opinion, not least in order to justify my comment that it is a dead end, a route to nowhere.
Nor is that only applicable to the OFT who chose that route to ask whether they had the power to challenge the fairness of bank charges, it is equally true for the FSA, so when you hear me make reference to the FSA as the road to travel, that is true, but it has nothing to do with the UTCCR.
Let me explain, using this evidence of the FSA's equal involvement in the use of the UTCCR - and then show why it would also be a dead end if we went that way.
This is an example of the FSA using the UTCCR:
As a qualifying body under the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) we can challenge firms that are using terms which we consider unfair. We review contract terms referred to us by, among others, consumers, enforcement bodies and consumer organisations. Our review of terms and conditions used in the RBS Group has led to The Royal Bank of Scotland plc, National Westminster Bank plc, Ulster Bank Limited,Coutts & Co and Adam & Company plc undertaking not to use certain terms that we consider unfair.
Under the Regulations we must notify the Office of Fair Trading (OFT) of the undertakings we receive. The OFT has a duty to publish details of these undertakings, which then appear on its Consumer Regulation website. We also publish a notice of these undertakings on our website. Both publications name the firms, identify the specific terms and explain why we thought they were unfair under the Regulations.
Even if firms have not given an undertaking or been subject to a court decision under the Regulations, they should remain alert to undertakings or court decisions concerning other firms as part of their risk management. These will be of potential value in showing the likely attitude of the courts, the FSA, the OFT or other qualifying bodies to similar terms or terms with a similar effect. Ultimately only a court can determine the fairness of a term and, therefore, we do not recommend terms that have been revised by a firm to address our concerns as being definitely fair.
Source ( and full details) here:
http://www.fsa.gov.uk/pubs/other/rbs_undertaking.pdf
Amongst the evidence, this is perhaps the best example of the FSA using UTCCR, for a number of reasons:
1: It clearly involves the UTCCR.
2: It involves the FSA, and establishes that the OFT were not the only regulator who could raise issues addressed by the UTCCR, so too can the FSA.
3: It offers the evidence that the final resolution of any issues under UTCCR can only be reached in a court of law -as Alpine Star has said.
4: It involves banks, and the terms used by banks.
5: It demonstrates the relationship between the FSA and the OFT, that leads to the importance of the Concordats that they have set up between them - an aspect of great importance dealt with in the blog. Why is it important? In this instance (given my earlier comments about starting points) note that the FSA, not the OFT, are described as the Lead Organisation.
However, am I in any way drawing a conclusion from that evidence, that the FSA, given their position to deploy the powers under the UTCCR in like manner to the OFT were the starting point for the court actions over overdraft charges? An absolute and emphatic - No!
We have already established via evidence that the FSA were not empowered to regulate overdrafts, that fell to the OFT. Equally, it did not ultimately matter, because the Supreme Court ruling is explicit, and would have applied whichever body had taken the lead.
However, and it is a big however, let's repeat exactly what the SC made explicit.
From the Press Summary the SC issued:
http://www.supremecourt.gov.uk/decid...essSummary.pdf
- this was made explicit:
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.
That, for me, is final, but it has two parts.
First, that the route to determining fairness over bank charges is not to follow the road sign marked UTCCR, it is a dead end, leading nowhere - the SC has ruled on that.
But second, the SC has made it abundantly clear (I personally don't think they could have made it any clearer) that it has not ruled on the fairness of charges.
Indeed, if you read the full judgement of the SC
http://www.supremecourt.gov.uk/decid...0_Judgment.pdf
- you will find additional evidence that, using the UTCCR leads to a dead end, but - that it is not by any means the end of the issue of the fairness or otherwise of bank charges - and that is not my opinion, it is clear for me from the comments drawn from the highest court in the UK:
LORD WALKER
It is therefore appropriate to spell out at the outset that the Court does not have the task of deciding whether the system of charging personal current account customers adopted by United Kingdom banks is fair.
Some would regard the United Kingdom system as being, in some sense at least, obviously unfair, though Mr Sumption QC (for the banks) vigorously disputed Lord Mance’s suggestion that his clients were engaged in a sort of “reverse Robin Hood exercise”. That is an imponderable question which depends partly on whether one’s perception of the average customer who incurs unauthorised overdraft charges is that he is spendthrift and improvident, or that she is disadvantaged and finding it hard to make ends meet. But it is not the question for the Court.
If the Court allows this appeal the outcome may cause great disappointment and indeed dismay to a very large number of bank customers who feel that they have been subjected to unfairly high charges in respect of unauthorised overdrafts. But this decision is not the end of the matter, as Lord Phillips explains in his judgment.
Moreover Ministers and Parliament may wish to consider the matter further. They decided, in an era of socalled “light-touch” regulation, to transpose the Directive as it stood rather than to confer the higher degree of consumer protection afforded by the national laws of some other member states. Parliament may wish to consider whether to revisit that decision.
LORD PHILLIPS
Thus the issue of whether or not the Relevant Charges form part of the “price or remuneration, as against the goods or services supplied in exchange” within Regulation 6(2) is not necessarily academic. No attack has yet been made, however, on the level of the Banks’ charges overall.
LADY HALE
... is the real problem that we do not have a real choice because the suppliers all offer much the same product and do not compete on some of their terms? This is the situation here. But it is not clear to me whether the proper solution is to find some way of forcing the suppliers to compete with one another in the terms they offer or whether the solution is to condemn one particular model of charging for those services. Fortunately, however, that is for Parliament and not for this Court.
It is not possible to write a blog without it containing the opinions of the person writing it, and there is nothing whatsoever wrong with that, but in itself it is just opinions, and that is why I have laid emphasis on presenting "evidence" that support those opinions, and it is then up to those to see whether that "evidence" leads them to the same conclusions as I have.
Referring to the UTCCR as above is very much a case in point, and whilst I agree with the comment made by Alpine Star, I want to offer evidence for that comment, not just opinion, not least in order to justify my comment that it is a dead end, a route to nowhere.
Nor is that only applicable to the OFT who chose that route to ask whether they had the power to challenge the fairness of bank charges, it is equally true for the FSA, so when you hear me make reference to the FSA as the road to travel, that is true, but it has nothing to do with the UTCCR.
Let me explain, using this evidence of the FSA's equal involvement in the use of the UTCCR - and then show why it would also be a dead end if we went that way.
This is an example of the FSA using the UTCCR:
As a qualifying body under the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) we can challenge firms that are using terms which we consider unfair. We review contract terms referred to us by, among others, consumers, enforcement bodies and consumer organisations. Our review of terms and conditions used in the RBS Group has led to The Royal Bank of Scotland plc, National Westminster Bank plc, Ulster Bank Limited,Coutts & Co and Adam & Company plc undertaking not to use certain terms that we consider unfair.
Under the Regulations we must notify the Office of Fair Trading (OFT) of the undertakings we receive. The OFT has a duty to publish details of these undertakings, which then appear on its Consumer Regulation website. We also publish a notice of these undertakings on our website. Both publications name the firms, identify the specific terms and explain why we thought they were unfair under the Regulations.
Even if firms have not given an undertaking or been subject to a court decision under the Regulations, they should remain alert to undertakings or court decisions concerning other firms as part of their risk management. These will be of potential value in showing the likely attitude of the courts, the FSA, the OFT or other qualifying bodies to similar terms or terms with a similar effect. Ultimately only a court can determine the fairness of a term and, therefore, we do not recommend terms that have been revised by a firm to address our concerns as being definitely fair.
Source ( and full details) here:
http://www.fsa.gov.uk/pubs/other/rbs_undertaking.pdf
Amongst the evidence, this is perhaps the best example of the FSA using UTCCR, for a number of reasons:
1: It clearly involves the UTCCR.
2: It involves the FSA, and establishes that the OFT were not the only regulator who could raise issues addressed by the UTCCR, so too can the FSA.
3: It offers the evidence that the final resolution of any issues under UTCCR can only be reached in a court of law -as Alpine Star has said.
4: It involves banks, and the terms used by banks.
5: It demonstrates the relationship between the FSA and the OFT, that leads to the importance of the Concordats that they have set up between them - an aspect of great importance dealt with in the blog. Why is it important? In this instance (given my earlier comments about starting points) note that the FSA, not the OFT, are described as the Lead Organisation.
However, am I in any way drawing a conclusion from that evidence, that the FSA, given their position to deploy the powers under the UTCCR in like manner to the OFT were the starting point for the court actions over overdraft charges? An absolute and emphatic - No!
We have already established via evidence that the FSA were not empowered to regulate overdrafts, that fell to the OFT. Equally, it did not ultimately matter, because the Supreme Court ruling is explicit, and would have applied whichever body had taken the lead.
However, and it is a big however, let's repeat exactly what the SC made explicit.
From the Press Summary the SC issued:
http://www.supremecourt.gov.uk/decid...essSummary.pdf
- this was made explicit:
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.
That, for me, is final, but it has two parts.
First, that the route to determining fairness over bank charges is not to follow the road sign marked UTCCR, it is a dead end, leading nowhere - the SC has ruled on that.
But second, the SC has made it abundantly clear (I personally don't think they could have made it any clearer) that it has not ruled on the fairness of charges.
Indeed, if you read the full judgement of the SC
http://www.supremecourt.gov.uk/decid...0_Judgment.pdf
- you will find additional evidence that, using the UTCCR leads to a dead end, but - that it is not by any means the end of the issue of the fairness or otherwise of bank charges - and that is not my opinion, it is clear for me from the comments drawn from the highest court in the UK:
LORD WALKER
It is therefore appropriate to spell out at the outset that the Court does not have the task of deciding whether the system of charging personal current account customers adopted by United Kingdom banks is fair.
Some would regard the United Kingdom system as being, in some sense at least, obviously unfair, though Mr Sumption QC (for the banks) vigorously disputed Lord Mance’s suggestion that his clients were engaged in a sort of “reverse Robin Hood exercise”. That is an imponderable question which depends partly on whether one’s perception of the average customer who incurs unauthorised overdraft charges is that he is spendthrift and improvident, or that she is disadvantaged and finding it hard to make ends meet. But it is not the question for the Court.
If the Court allows this appeal the outcome may cause great disappointment and indeed dismay to a very large number of bank customers who feel that they have been subjected to unfairly high charges in respect of unauthorised overdrafts. But this decision is not the end of the matter, as Lord Phillips explains in his judgment.
Moreover Ministers and Parliament may wish to consider the matter further. They decided, in an era of socalled “light-touch” regulation, to transpose the Directive as it stood rather than to confer the higher degree of consumer protection afforded by the national laws of some other member states. Parliament may wish to consider whether to revisit that decision.
LORD PHILLIPS
Thus the issue of whether or not the Relevant Charges form part of the “price or remuneration, as against the goods or services supplied in exchange” within Regulation 6(2) is not necessarily academic. No attack has yet been made, however, on the level of the Banks’ charges overall.
LADY HALE
... is the real problem that we do not have a real choice because the suppliers all offer much the same product and do not compete on some of their terms? This is the situation here. But it is not clear to me whether the proper solution is to find some way of forcing the suppliers to compete with one another in the terms they offer or whether the solution is to condemn one particular model of charging for those services. Fortunately, however, that is for Parliament and not for this Court.
***********************
I will allow you to form your own conclusions, but if using the UTCCR is closed, and for me it is a complete dead end - does that mean that there are no other ways of resolving this issue? For me the answer is that there are, and as is known to both MSE Guy and Mike Dailly, I formed that conclusion before the SC ruled.
What those extracts show is that Parliament is involved, and that will take us to what the political parties said about bank charges being fair or unfair - which I will address in the blog, they are important in all of this.
But, for me, the more important and outstanding question is this - which body, other than the OFT, was already empowered by Parliament - at law - both to regulate the banks, and in addition empowered - equally at law - to secure as one of its main objectives - consumer protection - securing the appropriate degree of protection for consumers?
Answer - the Financial Services Authority.
Extract:
We are a statutory body set up under the Financial Services and Markets Act 2000 (FSMA). FSMA sets out our four statutory objectives, which are supported by a set of principles of good regulation that we must have regard to when discharging our functions.
From here:
http://www.fsa.gov.uk/pages/About/Ai...ry/index.shtml
**************
The next posts in the blog will offer evidence of :
1) how the FSA address issues of fairness
2) why I believe the FSA are the way to resolve this issue over bank charges, and why they are already empowered by Parliament to do so
3) why, after providing the evidence for both those points, we are left with only one very simple question, namely:
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 post extracts as those posts are made.
**************************
(*) Link to the debate on MSE.
No comments :
Post a Comment