In the Media

County courts must tackle thousands of banks charges claims

PUBLISHED December 2, 2009

County courts have been told they must consider thousands of bank charges claims individually following the Supreme Court?s ruling in favour of the banks in their legal battle with the OFT.

County court actions across the country were staying pending the ruling. Following the Court of Appeal decision on the issue in March, now overturned, Sir Anthony Clarke, Master of the Rolls, advised the county courts to keep cases on hold.

Giving judgment in Abbey National and others v The OFT [2009] UKSC 6, Lord Walker referred to the ?many thousands of individual claims? in the county courts, but the Supreme Court gave no advice on how they should be handled.

Peter Vicary-Smith, chief executive of consumer group Which?, said: ?The outlook is bleak for anyone with an outstanding claim and we?re concerned that the ruling could drive people into the arms of unscrupulous claims handlers.?

Vicary-Smith advised consumers to beware of claims management companies which promised to get their bank charges back without asking for an upfront fee.

A spokeswoman for the Judicial Communications Office said: ?Now that the legal position has been clarified it may be that the parties can reach agreement on what steps should be taken. If they cannot, applications will have to be made to the court.

?Judges will consider such applications individually and make whatever orders they consider are appropriate in the case before them.?

The Supreme Court unanimously held that the OFT was not entitled to challenge the current account terms of banks, including unauthorised overdraft charges, on the grounds of unfairness based simply on cost.

The ruling overturned previous judgments in favour of the OFT at the Court of Appeal and High Court.

Lord Walker said the outcome depended on the correct interpretation of the Unfair Contract Terms in Consumer Contracts Regulations 1999, which implemented a European directive.

Regulation 6(2)(b) states that the assessment of fairness of a term in a contract should not relate ?to the adequacy of price or remuneration, as against the goods or services supplied in exchange?.

Lord Walker said regulation 6(2) was expressed in ?fairly simple and non-technical language? and represented ?a compromise between consumer protection and freedom of contract?.

He went on: ?Charges for unauthorised overdrafts are monetary consideration for the package of banking services supplied to personal current account customers.?

Lord Walker added that even if fewer customers paid the overdraft charges, their fairness would be exempt from review under regulation 6(2).

Lord Mance said the Court of Appeal had erred in introducing a further restriction on regulation 6(2), so that it applied only to ?core terms?.

He said that the identification of price for the purposes of regulation 6(2) was ?a matter of objective interpretation? for the court.

?The court should no doubt read and interpret the contract in the usual manner, that is having regard to the view which the hypothetical reasonable person would take of its nature and terms.

?But there is no basis for requiring it to do so by attempting to identify a ?typical consumer? or by confining the focus to matters on which it might conjecture that he or she would be likely to focus?.

All five justices ? Lords Walker, Phillips, Mance and Neuberger and Lady Hale ? allowed the appeal by the banks. All five, for difference reasons, concluded that a reference to the ECJ for interpretation of the directive behind the regulations was unnecessary.