What Is Happening With Bank Charges?
A high court ruling back in April, decided that the OFT could use the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR), in order to ascertain whether bank charges are fair or unfair. This will allow the OFT to put pressure on the banks, to stop charging people so much. The banks are appealing against all of this.
It was part of the same ruling, whereby the judge considered that the charges may relate to common law. Should this be the case, then this would differ from the UTCCR. Common law is the law that gets built up over the years, via multiple individual cases. It therefore differs from legislation, which involves laws that come from parliament.
The rule in reference to the UTCCR did not go in favour of the banks, whereas the one to do with common law, did. It was found that the current terms and conditions of the banks do not contain penalties in reference to common law. This did not take into consideration though, the fact that banks have recently changed terms and conditions, meaning that another hearing was needed, in order to consider this historical aspect.
There has recently been a second hearing, and the judge has ruled on it. The hearing was to do with whether old terms and conditions contained penalty charges in common law. The decision has not been made yet, as the terms and conditions of a number of banks still need to be looked at.
After the decision has been made, it will be a case of waiting for the results of the UTCCR appeal case, before a final decision can be made.
The biggest concern is if the banks employ a really good legal team that will have some effect on the outcome of the case.
The OFT are unsure yet, as to whether they would rule that penalty charges were unlawful, even if the right to do so is won, after the appeal hearing. The OFT recently stated that the investigation was being carried out as quickly as possible, and that discussions with banks, in regards to fairness, were ongoing.
The manner in which the OFT is handling the whole situation, is suggestive of them being in close discussion with the banks.
Below is a brief summary of the situation.
It has been decided by the high court, that the OFT can assess whether or not bank charges are fair, and this is what is currently being appealed against. It is now very much a case of whether or not the OFT decides to take any sort of action against the banks. One argument that has been clarified, is the fact that the charges are not legal in view of common law. It still needs to be decided though, whether they are illegal in reference to UTCCR law. There is still the FSA waiver in place, so for the moment, people remain unable to claim. The fact remains that the banks can still charge the consumer for the time being. People that are wealthy pay nothing for their accounts. at least when it is al over, consumers will know where they stand , in relation to charges.