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Bank Charge Claims Update
Bank charge claims have been on hold since the Office of Fair Trading (OFT) decided to take legal action against the banks to establish whether bank charges were fair on the 27th July 2007. Since then, the painful legal process has been grinding its way to a conclusion. The time is now upon us that due to the test case and because of the world financial events we could be at a stage where the end is in sight. It was therefore important to write at this time to reflect on what has happened and what could well happen over the coming couple of months.
In the first instance I am delighted to confirm our address and contact details as detailed at the head of this letter, which have recently altered, all of which has been logged and confirmed by the Ministry of Justice with whom we are regulated. Our website www.bankcomplaints.co.uk is still in full swing and we are please that the move and investment in new premises seems to have come at a time before the claims may well be settled so that there will be no delays at our end when they are rectified.
Claims on hold.
All bank charge claims regarding personal customers remain on hold, where the FSA is protecting the banks by way of a waiver so that the claims do not have to be concluded until the conclusion of the test case. The details of all claims are stored with us. When concluded the bank will confirm the details of the settlement. This will include all charges for a period of up to 6 years prior to when the claim commenced until the date of conclusion, without the need to submit fresh claim documentation.
Over the next few weeks we will find out information on when the claims are likely to be settled. The court has so far ruled that the OFT can look at these charges which is exactly what we would hope. The OFT has been in discussion with the banks following its findings which began in the middle of July 2008, which is due to conclude at the end of October. In addition the banks appeal of the judges decision concerning the assessment of the charges for fairness is to start on the 28th October.
In addition to this, although not publicised the actual court hearing for the courts to decide whether and how much these charges should be, is scheduled to begin by the end of the year. We have always believed, and the evidence to date proves, that the banks will not allow the courts to decide upon this. Only recently, the banks would only allow a short exert of the OFT’s findings into the charges to be provided to the judge in charge of this case, without detailing any specific information. If this part of the case is heard in the courts they will have to provide a full disclosure into the costs attached to these charges. They have never provided this information and in our opinion never will provide this. The only way that they can avoid this is to resolve the claims.
So that I can bring you up to date with all of the events I have taken the opportunity of detailing below the events to date.
The detail below is regarding the update and timeframe to date.
Following the events of the test case it is worth reflecting on what has happened to date.
1) April 2007 - The OFT begins a study into the fairness of bank charges.
2) 27th July 2007 - All claims are put on hold as the OFT and banks begin a test case
3) January – February 2008 - Test Case takes place.
4) April 24th - Judgement handed down to confirm that the OFT have the right to assess bank charges as to whether they are fair.
5) May 22nd - 23rd ;-
i) The judge allows the banks to appeal against the decision of the 24th April.
ii) The banks were informed that the legal process could not be used to delay the conclusion of the fairness of bank charges.
6) Court Hearing 7-9th July- To assess historical bank charges terms for fairness
7) Mid July-Oft publishes damning report regarding bank practices and fairness to customers.
8) October 8th – The judge provided his ruling as to historical charges. (those charges prior to November 2007). The judge found that the historical charges could not be deemed as penalties. However, his ruling regarding the assessment for their fairness was not given due to a delay in finishing the penalties judgement.
9) October 10th - OFT confirm on their website that they will be allowed by the courts to rule for fairness on historical charges.
Opinion.
It is still our belief that the bank charges case is likely to follow that of the credit card charges investigation. The OFT investigated credit card charges in a similar way to the investigation that is being undertaken against the banks of which the test case is part. The investigation led to a ceiling of £12 per charges being instigated.
The current financial problems that have made such significant headlines recently may well be causing concern. I certainly do not profess to know how they will affect the world around us. However regarding claims there are probably 2 questions on everyone’s lips. Have the banks the money to settle claims? And will the government help the banks by finding in their favour as the banks have had a lot of bad news recently?
In the answer to question 1 the answer is yes. At present the government is to take ownership through taxpayer’s money a majority of the banking system. The government has confirmed that banks will not be allowed to fall. In other words they will pay the bills of the banks. In addition it is worth looking at the total claims the banks have to administer and their potential loss. It is likely that if the claims are settled the total figure that will be refunded will be no more than £1.5 Billion pounds between all of the banks. As a group the banks have earned from charges that are in question since the test case began approximately £4 Billion. The settling of claims will end free banking for all, which will mean that the banks will certainly not lose and probably gain in the long run.
The reason why the banks are in such a mess is due to greed. They wanted to make as much money as possible. In doing so they forgot that they were bankers and how to run their banking business. The banking police (the FSA and in part the OFT) also failed in their duty to monitor and pull in line the banks and the way they were presenting their financial position.
Gordon Brown has stated clearly that the banks will not be allowed to step out of line in future, and for one I believe him, at least over the next couple of years. He is introducing considerable regulation and control and any weakness now will not just embarrass the government and Gordon Brown it will undermine them. If this is correct then how can the OFT lose this case against the banks (which we will as taxpayers largely own) in a case of fairness. I would say that this is unlikely.
The banks are also approaching their financial year end, which for the vast majority is on the 31st of December. With the bad news this year for the banks have had they can hide these charges claims in their accounts against the other far more significant problems that they have faced.
This is in addition to the fear the banks have in approaching the court to adjudicate on whether these charges are fair and as detailed above the banks reluctance to provide information that has never been made available to the public domain.
Bank Charges Update November 28th
Appeal Decision
There is some confusion as to whether the Appeal court ruling will be held this month. A court hearing is scheduled to take place on the 9th of December; this should cover a number of areas. Unfortunately there is so little information available at present, which I cover later in this update, that the details and importance of this hearing are unclear.
Gordon Brown
Before the economic crisis I was certainly not a fan of Gordon Brown, but I have changed my opinion due to his strong UK and Global handling of the financial crisis and how this will positively affect claims. The banks are now under extreme scrutiny and must now start to play fair. This is in terms of lending and importantly charges. RBS have already agreed to suspend account charges for business accounts over the next 12 months.
Fairness is a core belief of Gordon Browns and from his actions to date I have no doubt that he is fully aware of this case and the OFTs investigation and for one, would be surprised if he has not given instruction on how he believes it should conclude. I genuinely feel that he is now hammering the final nails in the banks coffers (sorry coffin, slip of the keys).
The government through the tax payers money have control of the banks and the UK’s financial system and their view will be final!
Next update
Justice Andrew Smith the judge heading the hearings stated and received agreement from the banks and OFT that the court hearing regarding the level of charges would begin by the end of this year, regardless of the Appeal. To date there is no information regarding this hearing. Details may well become clear on December the 9th. The lack of information is unusual as earlier in the year there was a wealth of detail from both sides, but since July this has all but dried up.
Is it a coincidence that this has coincided with the investigation by the OFT against the banks concluding in July, beginning a 3 month consultation, which has also finished, where a final report from the OFT is expected in January.
In short the hearing of the 9th December should bring some answers and a date of when the OFT report will be published. A further update will be forwarded as soon as this hearing has concluded.
For more information on the Office of Fair Trading statement click here
For more information on the Financial Services statement click here
For more information on the Ombudsman statement click here
