Jamie, you seem to miss the basic point that the banks could be fully nationalised tomorrow, if the government determined that was to be the case and there would probably be agreement in the House for it, especially with the Liberals.

Where do you get the idea that governments cannot threaten legislation to back up an instruction? The banking system has effectively bankrupted itself through greed and now has to, in the words of David Cameron 'wake up and smell the coffee'.

The banks would simply be bankrupt without taxpayer intervention. They are living on borrowed time and money and I'm afraid have to be instructed at the moment given the coporate governance failures that have occurred leading to the credit crunch.

The government could withdraw all support to those banks which do not accord with its instructions. The taxpayer owns enough of RBS and some of the other banks to at least pass a special resolution instructing the bank do do as it's told, to be frank.

That would be the bank instructing itself, by the way. That's corporate law, I'm afraid...

If you read (as I did) to the end of the article you will see that if the government were to withdraw the massive amount of public support outlined in the footnote, ALL of the banks would simply fall.

Political will backed up by legislation can intruct any private business to do as it's told. I'm not in favour of this more generally, but frankly the banks have got themselves - and us - into this mess, and seem to be behaving like spolit teenagers at times. They would be BANK-RUPT (Bank of Rupt, Rupt Bank, Banca Rupta etc etc...) without us having bailed them out.

why is this still going on? You couldn't make it up, could you? Bremner, Bird and Fortune would have a field day with this. I heard a piece on the radio the other day about satire... what amazing times we live in. The 'Masters of the Universe' (is that an old phrase?) need to eat humble pie, and lots of it...
We'll probably have to nationalise the banks anyway at this rate...

Jamie, you need a bit more research into corporate law and constitutional Law.

As has been mentioned in some of the comments above, the shareholdings owned by the government will enable it through UKFI to pass ordinary and special resolutions in the limited companies. As Steve points out, in the case of most of the banks, this will, in fact amount to an instruction by the bank to itself. This can be backed up by the the threat of a special resolution to remove the directors who refuse those instructions (so Natwest and Lloyds, HBOS and RBS would be in *big* trouble). Also as the government has taken preference shares, these can be amended overnight, if not already, to give them enhanced voting rights as well.

The government can issue statutory instruments overnight also to regulate the conduct of a bank.

The OFT can indeed instruct a UK business to behave in a particular manner - a fine could be imposed equal to the amount of the bank charges, if necessary, for failure to follow that instruction.

Of course the government could nationalise any bank which fails to do as instructed overnight also, leaving those shareholders who, for example, do not join with the shareholder government in an ordinary or special resolution with worthless shares.

To paraphrase Steve above, political will + legislation or statutory instrument = instructions which will and must be followed.

You have very little faith in democracy! Good job you don't live in United States of Obamaland, where these things are coming to be understood more rapidly than this side of the pond!

As someone else has mentioned, Jamie, in the words of David Cameron, "Wake up and smell the coffee".

''You have very little faith in democracy!''

I've got my head in my hands.

Do you really think it's democratic for the government to rail-road a legally binding litigation agreement it entered into between the OFT (a government department) and the banks to settle the issue in court?

If this is your idea of democracy, try North Korea. It's my faith in democracy that leads me to believe that government should not (and do not) have that kind of power. We'd be living in a very dangerous world if that was the case. Think about it.

And you misunderstand. I'm very much against bank charges and I'm pro-consumer.

Perhpas its time the government behaved like the bank it has become: withdraw its financial support, and let the banks manage on their own.

Well I'm enjoying this exchange - thanks for your comments Jamie.

Let's face it, there was excessive and reckless risk-taking by the banks in order to boost profits and bonuses, with little social benefit - indeed their behaviour has caused huge damage to the economy and society.

And it's not true, as some have suggested, that it was 'only a few people' in the banks who did this. Where was the executive and non-executive oversight? Either they knew what was going on and so were actually part of it, or did not know what was going on, in which case they were incompetent and there has been the mother of all corporate governance failures.

The public have had to bail them out. BIG TIME. Maybe we should withdraw all that support and concentrate it in a new state bank focusing on new loans? We could also have a national housing bank, national infrastructure bank etc as Will Hutton suggests.

Either way, the current court case is a waste of taxpayers' money, and the state is perfectly entitled to say what it likes to a group of bankers who have messed up so spectacularly and have had to take billions of our money to rescue them.

Erm let me get this right. The banks (bailed out by us) are taking an appeal to court (paid by us) to fight a case against the OFT (a government department, paid by us) all for the banks' right not to have to be 'fair'. It sounds like something from Catch 22.

Correct, I believe, Robertson. Thanks for your contribution.

That's why we should take this out of the legal sphere entirely and shut the case down. It needs to be, instead, a matter of government and enforced bank policy, so the lawyers can't contruct the usual doublespeak, obtuseness and blather that always defeats the most obvious and common-sense route. And I write as a lawyer!

If a bank passes an ordinary resolution backed up by a special resolution to accept that it should return all bank charges because they were unfair, that shuts up their own lawyers nicely; as well as their case and its associated gravy train, the tickets to ride for which have been paid for by us!

"That's why we should take this out of the legal sphere entirely and shut the case down"

I see. so let me get this right: Let's bin nearly 2 years of litigation - while we're clearly in front - spend the next 20 trying to convince 350 MPs and the House of Lords to pursue some ''special resolution'' that hasn't any realistic prospect of getting off the ground and then complain about the OFT wasting money on a case.

Get a grip!

Thanks for coming back Jamie! I welcome your comments; very witty!

The OFT's decision on fairness or otherwise is imminent, possibly even next week. So, any persauding as to this will already have been done. (btw, a special resolution doesn't even need a meeting - it's normally a paper exercise). UKFI can simply print it out and sign it. Simple.

We think it is extremely unlikley that the OFT will regard the charges as being fair. we don't have to wait for a further judgement from the Court of Appeal because the existing judgement is currently the Law.

Consequently, OFT's judgement will also be the Law. As we understand it, the OFT is not and does not have to wait for teh Court fo Appeal.

To be put in your words, we've already had a test case and the banks have LOST on the issue of the test of FAIRness. The Law currently says they do not have the right to be unfair.

Jamie, you have a tremendous amount of respect for and seem to be in awe of lawyers. Don't be. Lawyers (and I write as one) want to make us think that we can't proceed on anything without them and their expensive time.

Their time usually tells us that we could do 5 of 6 things but all of them are equally risky, so don't do anything, but we'd better go to higher counsel on the 6th!

Counsel's opinion on whether a company resolution can be passed by a majority shareholder, and one which happens to be a sovereign government? That counsel (perhaps we should go to a Q.C.?) would have to work quite hard for his/her £2000 an hour on that.

While you would expect even an ordinary resolution in a Public company, such as the banks, not to be a written one, the Secretary of State is empowered under the Companies Act 2006 to determine whether or not any company (public or private) can be subject to those provisions.

The effect of this is that if the Secretary of State determines that the Banks as Public companies need not call a general meeting to pass a resolution, the shareholders can indeed simply, just as David suggested of private companies, print and sign an ordinary or special resolution if they hold the majority of shares.

I'm not suggesting Lord Mandelson (for it is he) would or should exercise such a power; but he could, if needed, and overnight, if needed! These are, Jamie, simply ‘in extremis’ solutions, of course. But the fact that the will of a government as shareholder can effectively be enforced is what we are saying. That’s if a board of directors simply refuses the will of the shareholders that a particular lawful course of events should take place (e.g. a bank returning fees deducted to its customers).

Admittedly, if we were removing directors for not playing ball, we'd (for it is we) have to call a meeting of shareholders on 28 days notice.

A director can be removed by an ordinary resolution (passed by 51% of shares owned, not shareholders, determining the majority - just like good old-fashioned trade union block votes!) of the shareholders in a general meeting. Shareholders also have statutory powers to call the meeting necessary to pass the resolution if the directors refuse to call it.

The articles of a company may also allow the dismissal of a director by the shareholders by a much less circuitous route than above. We don't need counsel to look at that.

In fact this stuff is so basic that you could probably find it in the er... Ladybird Book of the Law.

The fact is, the power of the shareholder is ultimately paramount. And the government is a shareholder, and then some. What we are saying is that the government can and should start acting like an ordinary shareholder and ensure through the constitutional procedures of the company that public money is not wasted any further by way of bonuses or extravagent, needless, wasteful legal jaunts.

Lawyers, accountants and bankers got us into this mess: they won't get us out of it.

To repeat: the Test Case has already happened. The Banks lost when trying to prove that they had a right to be unfair.

Again, the lawyers want you to think that until all possible legal avenues have been exhausted, nothing is settled. As of today's date the law is crystal clear: the banks are subject to the test of fairness under the Unfair Terms in Consumer Contracts Regulations. The High Court says so!

As I understand it the government would, in any event, as part of the terms of our investment in the banks be able to appoint special directors at will to the boards of the banks. They could also be appointed the managing directors.

So, the constitutional corporate mechanisms are there to enable the government/UKFI through a resolution of the board and/or the company itself (preferably both) that the payment of any debt be paid immediately by the company. The debt (bank charges deducted) is owed to the bank's customers, just as, for example, interest due to customers is paid. We needn't complicate that any further. The bank is simply deciding as a matter of poicy to offer a particular class of refunds to customers with interest.

Thanks for your latter points, Jamie, on the OFT’s ‘fairness’ arguments in the Test Case and the RBS leaked Memo – really useful contributions, thanks.

that link should be (you maye have to copy and paste):
http://news.bbc.co.uk/go/em/fr/-/1/hi/business/7759054.stm

What concerns me the most is that the banks have threatened that, if they are unsuccesful in their legal claim, there will be no more free banking. The problems this would cause to the low waged in particular.