The Bank Charge Judgement
Cardano | 29.11.2009 14:21 | Globalisation | Social Struggles
The Banks think they had a luck escape with the recent Supreme Court Judgement. However, they are in a the process of creating a greater crisis for themselves. A crisis where customers charges banks for services because the banks are settling County Court Cases on the basis of the Supreme Court Judgement and not on the facts.
The recent Supreme Court Judgement around bank charges has led Lloyds TSB to start handing out legal advice. Something they, as bankers, are not professionally qualified to do. Their advice to customers is to forget about reclaiming the bank charges. At the same time they will be approaching the Courts and asking them to end the stay on proceedings. This means that the court cases will go ahead. At which point the Banks will ask for a dismissal on the basis of the Supreme Court Judgement. Job done, feet up, cup of tea.
Except that is not what the Supreme Court Judgement means. The Supreme Court was not judging those cases. the Supreme Court was only answering a narrow and technical question. This question was not about fairness:
"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."
(The Office of Fair Trading (Respondents) v Abbey National plc & Others (Appellants) para 1).
This question was not about if the charges could be levied. The question was about when the charges are levied are they excessive in relation to the service supplied to the customer:
"The question for the Court is much more limited, and more technical. It is whether as a matter of law the fairness of bank charges levied on personal current account customers in respect of unauthorised overdrafts (including unpaid item charges and other related charges as described below) can be challenged by the respondent the Office of Fair Trading (the “OFT”) as excessive in relation to the services supplied to the
customers."
(The Office of Fair Trading (Respondents) v Abbey National plc & Others (Appellants) para 3).
The Judgement does not settle the outstanding court cases, yet, the banks will write to customers and advise them that the SUpreme Court Judgement does settle their claim. The truth is, the Banks are running scared.
If the Banks interpretation of the Decision is correct, then there is nothing stopping any Depositor from charging banks for deposits. It is a service. If the banks are correct in their claim that bank charges are legalised by this decision then customer charges are too. The reason being that it would be an unfair contract if only one party could vary the terms and conditions. The banks know this. Which is why they need the public to simply accept their "advice" when it drops through the door.
The banks advice is not impartial. It does not spell out the other consequences of accpeting their viewpoint. It does not spell out that the contract needs to be fair: that both parties can write to the other and vary contractual conditions because the Judgement reaffirms the principle of contract making.
For those who cannot see the implication of this, here it is in plain language. The banks pay interest on an account and charge interest on an overdraft. This is not part of the judgement. The judgement is about payment for specific services and the banks will interpret it in a specific way in the near future. This interpretation will be to avoid paying back all the bank charges. There argument being that the Supreme Court Judgement settles all of those cases. However, that bankers opinion, use of my deposits to invest in Malaya, charge £35; use of my deposits to invest in the arms trade, charge £500; and, so on. The onus is on the Banks to prove that they did not use your deposits for those purposes - according to the Banks interpretation of the Judgement. It is really not sufficient for them to say: no, refuse to pay. They must show that they did not avail themselves of your deposits for purposes other than those to which you explicitly permit them access to your deposits.
The banks are just about to dispense a large amount of "legal" advice to their customers. It is not legal advice, it is wishful thinking. They wish the overdraft cases to go away. They will say that the Supreme Court Judgement has made them go away. However, it has not. In fact, it digs a deeper hole for the Banks. If the Banks take the decision to mean they are right to charge in the arbitrary way that they now do then customers also have that right. Fairness in the Banks terms must be open to both sides of the contract.
Except that is not what the Supreme Court Judgement means. The Supreme Court was not judging those cases. the Supreme Court was only answering a narrow and technical question. This question was not about fairness:
"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."
(The Office of Fair Trading (Respondents) v Abbey National plc & Others (Appellants) para 1).
This question was not about if the charges could be levied. The question was about when the charges are levied are they excessive in relation to the service supplied to the customer:
"The question for the Court is much more limited, and more technical. It is whether as a matter of law the fairness of bank charges levied on personal current account customers in respect of unauthorised overdrafts (including unpaid item charges and other related charges as described below) can be challenged by the respondent the Office of Fair Trading (the “OFT”) as excessive in relation to the services supplied to the
customers."
(The Office of Fair Trading (Respondents) v Abbey National plc & Others (Appellants) para 3).
The Judgement does not settle the outstanding court cases, yet, the banks will write to customers and advise them that the SUpreme Court Judgement does settle their claim. The truth is, the Banks are running scared.
If the Banks interpretation of the Decision is correct, then there is nothing stopping any Depositor from charging banks for deposits. It is a service. If the banks are correct in their claim that bank charges are legalised by this decision then customer charges are too. The reason being that it would be an unfair contract if only one party could vary the terms and conditions. The banks know this. Which is why they need the public to simply accept their "advice" when it drops through the door.
The banks advice is not impartial. It does not spell out the other consequences of accpeting their viewpoint. It does not spell out that the contract needs to be fair: that both parties can write to the other and vary contractual conditions because the Judgement reaffirms the principle of contract making.
For those who cannot see the implication of this, here it is in plain language. The banks pay interest on an account and charge interest on an overdraft. This is not part of the judgement. The judgement is about payment for specific services and the banks will interpret it in a specific way in the near future. This interpretation will be to avoid paying back all the bank charges. There argument being that the Supreme Court Judgement settles all of those cases. However, that bankers opinion, use of my deposits to invest in Malaya, charge £35; use of my deposits to invest in the arms trade, charge £500; and, so on. The onus is on the Banks to prove that they did not use your deposits for those purposes - according to the Banks interpretation of the Judgement. It is really not sufficient for them to say: no, refuse to pay. They must show that they did not avail themselves of your deposits for purposes other than those to which you explicitly permit them access to your deposits.
The banks are just about to dispense a large amount of "legal" advice to their customers. It is not legal advice, it is wishful thinking. They wish the overdraft cases to go away. They will say that the Supreme Court Judgement has made them go away. However, it has not. In fact, it digs a deeper hole for the Banks. If the Banks take the decision to mean they are right to charge in the arbitrary way that they now do then customers also have that right. Fairness in the Banks terms must be open to both sides of the contract.
Cardano
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