JUDGEMENT ON NEXT STAGE OF OFT TEST CASE – October 28 2008
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. 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 current charges cannot be penalties, but that they can be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCRs”).
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 make a ruling on whether terms and conditions previously used by the Banks are assessable for fairness.
On 8 October 2008 the Court issued its judgment in relation to the July hearing.
The Court has found that the charges levied by Abbey under its current account terms and conditions between 2001 and September 2007 are not capable of being penalties, and the Judge will make a declaration to this effect in due course. The Court has invited Abbey to make further submissions to it in respect of the charges levied by Abbey under its Instant Plus Account terms and conditions between 2001 and September 2007 before reaching its conclusion on these terms.
Unfair Terms in Consumer Contracts Regulations 1999
As with Abbey's current terms and conditions the Court has found that their previously used terms and conditions are assessable for fairness under the UTCCRs. This does not mean that the Court has found that these terms are unfair. Subject to Abbey's appeal (the hearing of which begins on 28 October 2008), this question will be decided by the Court in due course.
Further Court hearings will be required before the test case process is concluded, including an appeal of the first stage judgment by the Banks on the question of whether the current charges can be assessed for fairness, which starts on 28 October 2008.
The court hearing on this is due to start in the Court of Appeal on Tuesday 28 October 2008 and is expected to continue until 6 November 2008. The Court of Appeal will give its Judgement some time after the Court hearing although it is not possible to confirm when this will be. We will update you about what is decided 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.