Bank Charges Test Case in the UK is a Complete Waste of Time

ALTRINCHAM, England, October 31/PRNewswire/ --


- Millions of Consumers Could be Fobbed Off for Three Years or More


BrunelFranklin.com, one of the largest regulated claims management companies in the UK, has serious concerns that consumers are again being badly short-changed and misled by the financial services sector. BrunelFranklin.com is of the firm view that the recent OFT Agreement leading to a Waiver on Bank Charges cases and a Stay on related Court proceedings is totally against the consumer interest. In reality, it could be more than three years until consumers know where they stand.


BrunelFranklin believes that just like the Governor of the Bank of England was recently called to account by the Treasury Select Committee, the Public Administration Committee should be appointed to review the conduct of both the OFT, the FSA and FOS in this matter. These views are echoed by other leading players in the claims sector, including specialist solicitors Miller Gardner Solicitors.


BrunelFranklin.com believes that the public do not understand the very limited nature of the Bank Charges Test Case because it only seeks to deal with certain preliminary issues, and is not structured so as to deal with the issue of whether excessive Bank Charges are lawful or not. The net result is that it could be years before there is clarity on where people stand with their bank charges.


Anthony M Sultan, managing director of BrunelFranklin.com, said: "The Test Case has been brought by the OFT in its capacity as Regulator, and supported by The FSA. The OFT is concerned primarily with the application of the Unfair Terms in Consumer Contracts Regulations 1999 which deals with the question of fairness. The Test Case seeks to determine whether the Regulations apply to bank charges or not. The OFT believes that the Regulations apply, and the Banks believe they are exempt from the Regulations. Therefore, in itself, the question of whether or not the Regulations apply does nothing to resolve matters one way or another, whatever the outcome of the Test Case."


"Although well intentioned, the OFT Agreement has the effect of providing the Banks with a moratorium on repayments, and allows them to continue charging. It is well known that until the Agreement was concluded at the end of this year, Banks were voluntarily refunding 100% of such charges when faced with Court proceedings. In hiding behind the Waiver, the banks will save an estimated GBP500m on claims they would have been paying out, this year alone."


"It is difficult not to draw an inference that the Banks must feel their position is in serious jeopardy, and they are stringing the public along for as long as they can."


"We have written to the FSA and FOS in the strongest possible terms, outlining we feel the Waiver is so one sided in favour of the Banks and should be withdrawn immediately. Furthermore, we are involved with ongoing briefings with a number of MPs across all parties who agree with our stance."


Rodney Gardner, director of Miller Gardner Solicitors, says: "Whilst the OFT proceedings allow the OFT to seek an injunction and to consider the position on penalty charges at common law, it does appear that the law of unintended consequences has given the Banks an unexpected windfall in freezing complaints; this has resulted in Court actions being Stayed, and Banks being allowed to continue making excessive - and in some cases increased - charges in the interim. The Banks are cock a hoop at the negotiated deal that can only be bad news for consumers."


Whilst in the very long run the OFT Agreement may eventually claim to champion the consumers' corner, in the short-medium term of 1-3 years it has done exactly the opposite.


Anthony M Sultan concludes: "Hundreds of thousands of Bank Charges claims have been submitted over the past 12 months. It was open to any Bank, at any stage, to allow Courts to adjudicate on the common law position regarding penalties not least, as well as the Regulations. Had this taken place, appeals to the High Court could have been dealt with by now and the law clarified. The OFT, FSA and FOS between them have done nothing to accelerate the process, indeed they have in fact exacerbated the situation; one can only assume that this is because they are protecting the Banks that fund their existence."


Notes to Editors


The Legal Arguments


If the Regulations (Unfair Terms in Consumer Contracts Regulations 1999) do not apply, it does not mean that such charges are lawful - because the common law position that has been adopted on behalf of bank customers in Court claims to date, is that the Banks, irrespective of the Regulations, cannot charge the customer more than the actual cost incurred by the Bank as a result of the default by the customer; i.e, going overdrawn without authority. In practice, the cost to the Bank is minimal, yet, typically GBP35 or more is debited to customers' accounts.


On the other hand, if the OFT obtains a positive ruling that the Regulations apply, it does not mean that the charges are unfair, as there would have to be a further hearing in such circumstances, for the Courts to consider whether fairness does or does not apply. This is likely to take a further period on top of the 12 months that has already been agreed as the initial term of the Waiver in the OFT Agreement. It should be noted that the initial review that the FSA promised after two months seems to have been totally ignored or forgotten by the FSA; the FSA has remained silent on this and not even bothered to comment on their website. The only reference that can be found to this is buried away in paragraph 43 of the memorandum 'Recent Turbulence in Global Financial Markets and Northern Rock's Liquidity Crisis' from the FSA to the Treasury Committee, dated 5 October 2007. The 2 month review has effectively come and gone without comment. When questioned directly, the FSA have said "there is nothing to comment on".


Hardship Cases


Whilst the Agreement requires banks to entertain hardship cases Rodney Gardner of Miller Gardner Solicitors has confirmed that in practice Banks merely take advantage of the Stay and ignore matters.


One Miller Gardner client is currently owed more than GBP17,000 in bank charges deemed penalties, and notwithstanding the repossession of his house, the presentation of a Bankruptcy petition and legal proceedings being in train against him, the Bank refuses to negotiate or agree the case can go forward. These are apparently not sufficient grounds for a hardship case: "At the very least, I would have expected the Bank to pay out," says Rodney Gardner, "but instead it is seeking a Stay from the Courts, which I view as an utter disgrace".



Press contact

Jon Gardner
BeyondPR
http://www.beyondpr.co.uk
Mobile: +44(0)7930-697773




Source: BrunelFranklin.com

Press contact: Jon Gardner, BeyondPR, Mobile: +44(0)7930-697773