Court of Appeal rules in favour of OFT and refuses permission to appeal
Thousands of county court actions brought by customers against banks are on hold pending a possible appeal in the Office of Fair Trading’s (OFT) bank charges case.
Last week, The Court of Appeal ruled in favour of the OFT in the high-profile row over bank charges. The appeal was brought by seven banks and the Nationwide Building Society, which claimed the OFT was not entitled to assess their unarranged overdraft charging terms for fairness under the Unfair Terms in Consumer Contract Regulations 1999.
The banks argued that such an assessment was excluded by reg 6(2)(b) of the Regulations, since the overdraft charges were the price the customer agreed to pay for the whole package of services provided by the banks.
The Court of Appeal rejected this argument: the charging terms were not core terms of the bank account contracts, and therefore the charges themselves could not be the price or remuneration under the contract.
The case, Abbey National and Ors v OFT, arose following mounting public concern over what were felt to be excessive bank charges where accounts fell into unauthorised overdraft. If the banks lose their claim, they may have to pay out billions of pounds to customers. The court refused permission to appeal to the House of Lords. However, the banks are entitled to apply to the House of Lords itself for permission to appeal.
Peter Clough, Osborne Clarke’s head of dispute resolution, says: “The Court of Appeal’s decision sets an important precedent, although this matter is far from over. The banks will no doubt want to appeal this decision to the House of Lords since the principle at stake is an important one.”
In a note read out in open court, Sir Anthony Clarke, Master of the Rolls, suggested the county court claims remain on hold until the OFT concluded its assessment or the House of Lords determined its appeal.
