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
Comments
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How to avoid overdraft charges
29.11.2009 14:40
Helpful Financial Advice
All well and good but...
29.11.2009 14:49
Anyway its not the banks that would be repaying the charges it would be the tax payer who owns the likes of HBOS and Lloyds. Any payouts would simply come from taxes levied on the public and given to the banks.
Over to you mr banker
Over to you mister banker misses the point
29.11.2009 15:16
The Banks are relying on the judgement to get them out of a difficult situation. It does no such thing. The judgement can only be interpreted in the way the Banks will interpret it if customers are allowed to exercises the same rights under contract that the Banks exercise.
It is not about the taxpayer being forced to cough up anything. Not all banks were nationalised. It is about the legitimate sale of services. Such as those with cash selling the service of making deposits. The Banks have chosen to oppose the depositors and have their judgement. It is not the judgement they believed it to be.
Bankers do not benefit from the judgement being widely understood. The judgement means that if bank charges are legitimate then customer charges are legitimate. It is not about interest on an account. It is about selling services.
Cardano
correction
30.11.2009 13:40
"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."
Er... there are Terms and Conditions with each bank account, and the Banks will write into them the right to change the conditions at whim - the only thing you have really going for you is whether they have properly notified you of any changes, etc. Though, they are likely to have them so vague it is going to be of little help. The best thing the OFT could do now is force the banks to tighten up their T&Cs in favour of clarity for customers.
Depositors do have a charge - it's interest rates. And if you do not like the interest rates the bank is giving you, move to another one.
But all this is missing the point. Putting money into a bank, especially the big ones is feeding the capitialist system, and it is hard to have much sympathy from that perspective. Much better to get to a credit union and keep capital within your local community, where it is not going to back property speculation in Dubai or arms deals with Israel. It may not be as convenient as Barclays, but hey if that is the sort of inconvenience you cannot live with then you need to ask questions about priorities.
unnecessary
Dear unnecessary
01.12.2009 14:32
The judgement reinforces the fact that there is a single T&C that the banks cannot enforce. That T&C is words to the effect of, "you must accept all T&C changes we make and we do not need to accept all T&C changes that you make". A significant part of the judgement recognises that the contract must be equitable. That the bank and customer are equals in being able to vary contract terms. The bank cannot forbid the customer to provide them services just as the customer cannot forbid the bank to provide them services.
"Depositors do have a charge - it's interest rates. And if you do not like the interest rates the bank is giving you, move to another one."
Interest rates are not a charge for a specific service rendered. The judgement does not affect interest rates. The Judgement only affects charges for specific services rendered. The dispute is not about interest charges. Being a rate tart is quite another matter.
"But all this is missing the point. Putting money into a bank, especially the big ones is feeding the capitialist system, and it is hard to have much sympathy from that perspective. Much better to get to a credit union and keep capital within your local community, where it is not going to back property speculation in Dubai or arms deals with Israel. It may not be as convenient as Barclays, but hey if that is the sort of inconvenience you cannot live with then you need to ask questions about priorities."
No, insisting that we must all instantly enter into an alternative, preferred state of financial managment misses the point. It is not about asking for sympathy for the millions of people who are obliged to feed their earnings into a bank by an employer (how many people get paid by cash these days? How many computer programmers or journalists? Not a lot, workers are generally obliged to pay direct into a bank account by employers). To object to moderate tactics and insist only radical tactics are acceptable removes 90% of the population from any form of struggle for social justice.
Yes the banks do speculate in Dubai and conduct finance for arms deals in Israel. People writing to them and say, "For the service of providing money for Dubai speculation, charge £35" is just as legitimate as keeping capital within your local community. Banks do not give a rats gonad about anything other than profit. Show people a casual way that they can change banking behaviour that is not percieved as radical and they will do it. It is exactly the same kind of creeping change that the BNP have been undertaking for years.
Ideological "purity" will result in the Banks getting away with a scam of monumental proportions that will take billions out of the "local economy" in bank charges. To actually feed into preferable alternatives such as credit unions or building societies, ordinary bank depositors - who are also part of the financial local community - need to have the cash to Credit Unionise rather than Bank. Telling people to take money out of their bank account is, at the end of the day, far easier said than done.
Cardano