NEWS BULLETIN
25th June 2008
The Office of Fair Trading’s case against 8 major banks
OFT Vs BANKS - HEARING ON 7th JULY
On 7th July, Mr Justice Andrew Smith will preside over a 3 day hearing to decide whether default charges made by banks in respect of returned cheques and direct debits, exceeding overdraft facilities or honouring guaranteed cheques for which there are no funds are in fact penalty charges according to the banks historic terms and conditions.
Some commentators following the case were of the opinion that his ruling in April had decided that they were not penalty charges, as well as deciding that no service was being provided for the actions to which those charges related. In fact his decision was only based on the current terms and conditions which the banks had offered as evidence, all of which had been rewritten in the last year. Effectively the Judge had decided that since the consumer revolt had started the banks had successfully rewritten their terms and conditions so that future default charges could no longer be considered to be penalties. However the banks failed to demonstrate to the Judge that they were offering a recognisable service for these charges.
During the hearing in February the Judge had expressed surprise that the historic terms and conditions had not been offered as evidence given the huge amount of claims that are currently being held up as a result of this hearing and the importance of the historic terms and conditions. We anticipate that the Judge will not make his ruling until the Autumn. Whatever the decision is it is probable that the losing side will appeal, as a consequence of which these issues won’t be resolved until the beginning of next year.
In the meantime we are still waiting for the results of the OFT’s investigation into bank charges which were originally scheduled to be released in March 2007. The Judge has urged the OFT to conclude its investigations as quickly as possible so that the public will know where they stand.
We are aware that many of our clients are continuing to incur penalty charges. We have extended our service to allow our clients to submit further bank statements and details of charges which we will add on to the original claim as part of the original contract. Clients can use our Freepost service to send in details of any additional charges.
The Freepost address is:
Financialclaimsuk.com
Freepost BS7545
Bristol
BS2 0BR
We are continuing to monitor the OFT case closely, and will keep you updated via this website.
What you should do now:
If you have a claim with us you need do nothing at this stage as we will have advised your bank of the claim and protected your position. If you are continuing to incur charges, you should continue to send your statements to us so that we can add those additional charges to your claim.
If you are considering making a claim for the recovery of default charges applied to your bank mortgage or credit card account you should make that claim as soon as possible. Under the Statute of Limitations a claim can be brought in respect of charges levied in the six years immediately prior to the lodging of a claim (save in respect of matters that relate to deeds, where a 12 year limit applies). Please ask us for an application pack or apply on line on this website.
If you receive an offer from your bank:
We do not expect the banks to start making “goodwill” offers to customers yet but as we approach the conclusion of these proceedings they may well do so. The banks may well adopt the tactics of the credit card companies – see below.
If you receive an offer from your credit card company:
Credit card companies offer customers that are making claims against them “goodwill” gestures which are often woefully low in comparison to the eventual settlements that are achieved. “Goodwill” offers are made with the condition that clients accept full and final settlement of their claims. Clients who are suffering financially are often tempted to accept offers in order to alleviate their immediate problems but risk losing significantly more compensation. It should be remembered that were you to take your case to court you would be entitled to a full refund of your charges, plus any commercial interest attributed to those charges and in addition the 8% statutory interest allowed under the County Courts Act. The credit card companies might be entitled to make a counter claim based on, but probably not equal to the £12 charge, which the OFT said was a fair charge to remedy a breach of contract from 2006 onwards-so far when pressed none of the credit card companies have pushed this point. Whilst we give the credit card companies the opportunity to settle claims without recourse to the courts they are aware that we are just as happy to go to the courts on your behalf and we are achieving good settlements for our clients as a result
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