JUDGMENT ON NEXT STAGE OF OFT TEST CASE – January 22 2009
Abbey and six other banks and one building society (the "Banks") are engaged in a High Court test case with the Office of Fair Trading ("OFT") to decide the legality of unarranged overdraft charges.
First stage of the test case process
The first stage of the test case process was heard by the Court between 16 January and 8 February 2008 and dealt with certain preliminary issues of legal principle in relation to the terms and conditions used by the Banks at that time. On 24 April 2008 the Court issued its judgment on this first stage of the test case process. It decided that the charges it examined cannot be penalties, but that they can be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCRs”).
Second stage of the test case process
A further Court hearing took place on 7, 8 and 9 July 2008 when the Court was asked to consider whether terms and conditions previously used by the Banks are capable of being penalties. The Court was also asked to decide whether terms and conditions previously used by the Banks are assessable for fairness under the UTCCRs.
On 8 October 2008 the Court issued its judgment on this second stage of the test case process.
UTCCRs
As with Abbey's current terms and conditions, the Court found that Abbey’s previously used terms and conditions are assessable for fairness under the UTCCRs. This does not mean that the Court found that these terms are unfair. This question will be decided by the Court in due course subject to the outcome of Abbey's appeal (the hearing of which took place between 28 October and 5 November 2008. Judgment is currently awaited).
Penalties
The Court found that the charges levied by Abbey under its current account terms and conditions between 2001and September 2007 are not capable of being penalties. However, the Court invited Abbey to make further submissions to it in respect of the charges levied by Abbey under its May 2005 Instant Plus Account terms and conditions before reaching its conclusion on these terms.
The court heard the further submissions on 9 December 2008 and issued its judgment on 21 January 2009. The Judge agreed with Abbey that these terms were not capable of being penalties and struck out the part of the OFT's claim alleging that they were capable of being penalties.
Further Court hearings will be required before the test case process is concluded and Abbey is keen to move onto the next phase of the test case as soon as possible.
As previously agreed with the FSA and the Financial Ombudsman Service, customer complaints relating to unarranged overdraft charges will currently remain on hold. Abbey and the other Banks will continue to ask County and Sheriff Courts to keep cases relating to unarranged overdraft charges on hold until the test case process is concluded.
Please continue to refer to our website for further information. We will continue to post updates to keep customers informed of progress on the test case.