The banks may have won the case before the Supreme Court, but the battle's not over yet. Neil Faulkner explains what has to happen next before you can get your money back.
Since the evening after publishing last week's write-up of the bank charges court case, I've been chomping at the bit for a follow-up. As I read last week's judgment I realised I was rusty on the tactics for reclaiming, because it has been a long while since I wrote my guide to reclaiming charges and almost as long since I've had to refer to it, what with small claims being on hold for two years whilst the Office of Fair Trading battled the banks. That's why I had forgotten something important.
I spoke with Marc Gander of the Consumer Action Group who reminded me that the majority of the small claims that we've been making are not based on the same arguments that the Office of Fair Trading has been using. This means that the Supreme Court's decision doesn't directly affect most claimants.
As I said in my last piece, there were openings left by the judgment that the court emphasised more than once, revealing that, whilst the judges ruled in the banks' favour, they believe there is a case for claimants to argue on other grounds.
Look to different small print
Financial companies get to both write the small print and interpret it in a way that best suits them. This means many deals are usually hugely one-sided. Not any more. Now, with bank charges, consumers are finding different ways to use small print and different regulations to quote in their favour.
The Office of Fair Trading has been focusing on regulation six of a piece of a legislation called the Unfair Terms in Consumer Contracts Regulations. However, the judges strongly hinted in their judgment that regulation five should be the focus.
Regulation five states: 'A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.'
Marc Gander reckons this means that: 'Any clause allowing a bank to impose repressive charges, and increase and change those charges at its own discretion, would be extremely likely to put the bank in a dominant position - and therefore the term should not be allowed to stand.'
This supports a possibility I outlined last week: 'By not allowing the customers to have a say in whether the bank should accept transactions that take them beyond their unauthorised overdraft limit, for example, the banks could be said to be in breach of this regulation.'
That's two possibilities straight off. The good news is that many claimaints are already using regulation five as the basis and those who aren't will have an opportunity to amend their claims.
One more possibility
One point I didn't have space for in my piece last week was also that the judgment (deliberately) gave another hint of an angle that should be explored. The Office of Fair Trading's use of regulation six was faulty, but the judgment hints that if the OFT may be able to get in and provide support on the basis of it, if it expands to further arguments. Whether we really want the OFT to take this case back to court and risk another FSA waiver is a different matter.
How claimants should proceed from here
The campaign has become rather more professional since I, with limited legal training, hammered out my guide with a solicitor's help three and-a-half years ago. Now, some campaigners are hiring senior barristers - QCs - to help them adjust the claims since the judgment. The Consumer Action Group is working with a QC over the next ten days or so to check over the arguments, to re-write the template letters and to work out how those people with claims already on hold in the courts should re-submit their cases.
I'm no longer able to speak with the solicitor who helped me in the first place, but I'm sure she'd advise that we just wait to see what the QCs come up with. We've waited two years for the OFT case, so we can wait two more weeks! I'll report back to you then, after lovemoney.com updates its current guide to reclaiming charges. For now, we wait.
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