On 27 July 2007, the Office of Fair Trading (OFT) and a number of UK banks and building societies started a court case to decide on the legality of unauthorised borrowing charges.
We promised to keep you updated on these proceedings and have listed below some frequently asked questions for your information.
What stage is the test case at?
At the first hearing that ended in February 2008, the court decided (subject to appeals) that the banks’ current terms and conditions relating to unarranged overdraft charges:
- Are not unenforceable penalties; but
- Are assessable for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).
On 23 May 2008, the Judge made the following decisions in relation to the next steps:
- The Banks are allowed to appeal the Judge's decision in relation to the UTCCRs. It is expected that this appeal will be heard in the Autumn 2008.
In the meantime, the Court was asked to consider whether terms and conditions previously used by the Banks are capable of being penalties. A short hearing to decide this took place in the High Court in July 2008. We are still waiting for the judgement.
On 9th October 2008, pursuant to the July 2008 Hearing, the High Court Judge ruled that historic bank terms and conditions are generally not capable of being penalties at common law but that they are assessable for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).
On 28 October 2008 the litigant banks' appeal commenced in the Court of Appeal against the High Court's earlier decision that current terms and conditions can be assessed for fairness under the UTCCRs. The hearing is likely to last 6 days and the Judge will make his ruling at some point in the future.
When will the test case be concluded?
The Banks and the OFT agreed that the case should move forward as quickly as possible. At this stage it is not possible to predict when the test case will be finally concluded.
What does this mean for my complaint?
As previously agreed with the Financial Ombudsman Service (FOS) and Financial Services Authority (FSA), customer complaints relating to unarranged overdraft charges for personal customers will continue to remain on hold until 26 January 2009 or on resolution of the test case, whichever is sooner. The FSA agreed to this subject to conditions that protect your rights.
Can I make a court claim for a refund during the test case?
Yes, but we will apply to the court to put your case on hold while the test case is running. This is because the issues being raised in customer complaints on unauthorised overdraft charges are being considered in the test case.
Can I complain to the Financial Ombudsman Service about my bank charges?
Yes, you can make a complaint to FOS but it will not be reviewed while the test case is running.
Where can I find out more?
You can contact us by telephoning or calling in to your Northern Bank branch.
Alternatively, you can find more information through the following links:
The Financial Services Authority
www.fsa.gov.uk
The Office of Fair Trading:
www.oft.gov.uk
The Financial Ombudsman Service:
www.financial-ombudsman.org.uk