It's payback time, Mr. Banker!

Let me predict a few things and clarify some matters today before the banks start spinning like tops tomorrow:
1. The OFT decided (to my mind completely without reason) not to appeal on the point that the charges were penalty charges at common law, thus rendering them in whole as unenforceable and therefore recoverable in full. The Court of Appeal decided that they were not, OFT accepted it, so we'll never know what the Supreme Court would have decided on that matter.
2. The only decision that matters, then, is whether the Supreme Court decides Consumer Legislation on Fairness (The Unfair Terms in Consumer Contracts Regulations 1999) applies to the Banks' charges for Overdrafts and Returned Item fees (bounced cheques, returned direct debits and standing orders).
3. If the Supreme Court decides they do apply, then effectively that means the OFT must decide whether the Fees are actually fair or not. The indications from the OFT are pretty clear that they will decide they are not. They have said that their judgement on that will be by the end of the year - they may have it up their sleeves straight away.
4. If there is a delay in the OFT's decision, and even if the OFT decides that the fees are unfair, then every case in court (they are currently 'stayed', put on hold) or any future case should still proceed and the claimants entitled to have a decision based on how much should be returned (and possibly, and worryingly for the banks, consequential losses). The OFT decided that Credit Card charges were unfair above £12, that doesn't stop you taking a credit card case to court now to get the whole amount back. I suspect the same will happen should the OFT decide the maximum fair charge should have been, say, £10.
5. The banks could decide, once the OFT decides that they were/are unfair, to start a case back at square one to challenge the OFT's ruling. They would then hope to delay everything again and pray that the cases on hold have to stay on hold.
6. If the OFT decides on a figure that is 'fair' then while it might have some application for the future, it really has little resonance in the real world of the cases before court and those to come. As I said above, individual cases can still proceed and a County Court can decide only with reference to the OFT figure - it doesn't bind them.
7. The OFT 'fair' level is pretty much irrelevant, in reality. The cumulative impact of chronologically earlier charges usually means that, had they been applied at the fair level (say £10) the later fees would not have been payable at all and so become recoverable in their entirety. The banks simply won't get away with simply deducting the 'fair' level from what was actually charged and giving you the balance. Consequently, everyone should simply ask for every single penny charged back and they will almost certainly be able to claim the lot. The banks will spin furiously tomorrow if it goes against them hoping that people will in future simply claim the difference.
8. There is a forceful legal argument that if a term is deemed 'unfair' under the regulations then, in any event, the whole charge is unfair and reclaimable in its entirety.
9. The government should order, through UKFI, that the Banks we have shares in at least accept the decision tomorrow and repay in their entirety (and without request from the customer) all bank charges deducted from their 'customers' without delay for at least 6 years before the stay on bank charges cases started earlier this year. And where customers have felt compelled to settle a case for less than the whole amount which would have become due following the Supreme Court decision, the balance should also be paid to them.
10. All of the banks who don't happen to have shares owned directly by the taxpayer should be directed to pay up too, because they wouldn't be here without the system itself, within which they fortunately survived, being bailed out.
11. The Prime Minister, the Leader of the Opposition and the other political parties' leaders should join together to direct the banks to begin the payout immediately, and without customer request, in its entirety (no half measures, no grubby deals). They have all indicated previously that they favour a swift payout. The vast amounts of money pumped by the taxpayer into the banks and the banking system through bailout and Quantitative Easing have not found their way into the real economy as intended. Here's one way of ensuring that it does.
12. The same should apply to business accounts, another way of finally getting money from the banks into small and medium sized businesses.
13. As night follows day, the representatives of the British Banking system will try to play one consumer off, one customer off, the other tomorrow. They will try to persuade those who have not had unlawful deductions from their accounts over the last 7 years that they are being penalised and are hard done by people who should have kept enough money in their accounts at the end of the month. They will say that free banking is at an end as a result of this, that the feckless types are causing the 'decent, solvent' customer to have to pay.
14. They will do this because they are incapable of providing a service to us all without themselves being feckless and lazy. As I mentioned in my previous blog, had the many £billions which had been deducted through unlawful charges to one set of customers been reinvested in current accounts and loans services instead of in the international casinos of money markets and dodgy assets, then all of us would have been receiving (amongst other basic things) proper interest on our current accounts and savings and lower interest rates on our loans and authorised overdrafts.
15. If the banks as a whole try to start charging for basic banking services then the OFT should regard it as anti-competitive amounting to a cartel and ban them from doing so.
16. If necessary the government should itself (as I think it should have done earlier) institute a state retail bank (where, by the way, you shouldn't physically be able to have an unauthorised overdraft or have deductions attempted when there's no money) to compete with the other lazy banks to ensure they don't fleece the basic bank customer. Let them concentrate instead on non-retail.
17. Remember, when you pay money into a bank, you are lending the bank money. You should be charging them for having it. Any charges for, say, cash machine withdrawals should be subsumed with what you should charge them for having the cash which you own in the first place.

So, fasten your seatbelts tomorrow morning: it's going to be a bumpy ride.

Picture Credit: Creative Commons Attribution ShareAlike 3.
02006-12-07 20:43 Author - Oosoom