GLC had instructed a senior team of London barristers with expertise in UK banking law on behalf of Martin Lewis of MoneySavingExpert.com (MSE) with a view to identifying stateable legal routes forward, following the Supreme Court's ruling last month. That initial work is complete. There are two possible ways forward.
First, as the Supreme Court itself noted, it remains open to the OFT (and indeed individual consumers) to challenge the legal fairness of bank charges under regulation 5(1) of the Unfair Terms in Consumer Contract Regulations 1999 (UTCCR). Secondly, some consumers may be able to found upon sections 140A and 140B of the Consumer Credit Act 1974 and argue that the terms of contract which permit their bank to levy charges are an 'unfair relationship'due to excessive cost, among other arguments. The onus of proof under s.140B of the CCA is upon the banks to prove otherwise.
A good summary of these arguments has been posted on MSE here.
No amended template documents have been produced at this stage, because it has become apparent that the best solution in the public interest, is for the OFT to raise fresh proceedings against the banks and take further enforcement action. Why?
There are various reasons, including (a) an estimated 12 million UK consumers have paid bank charges in the past and it is unrealistic, unreasonable and impractical to expect all of them to be able to take personal action to reclaim these charges, (b) if the OFT does not take action, there will be widespread scope for claims management companies and 'claims farmers' who operate in a parasitical, viral way, to make a lot of money (e.g. a 40% take of your award, with upfront costs on top)by exploiting vulnerable members of the public.
And finally,(c)the skill and arguments necessary to present claims in adversarial court proceedings is likely to be beyond most party litigants (we saw this in the Hull strike-out cases, where GLC as part of the UK unfair bank charges legal team had to undertake a huge amount of amendment work, with Mr Raymond Cox QC appearing on our clients behalf, in order to stop 44 cases being struck out - we won, but it was a massive amount of work).
If the OFT did decide to take up the new legal challenge(s), and subsequently won, then consumers would be able to seek a refund without the need to pay anyone at all. Furthermore, if the OFT continued its legal challenge this should prevent one million current claims being rejected. If the OFT ultimately, decide not to take this issue forward then we will need to carefully consider our strategy. The OFT are expected to make a decision in the next few days - so watch this space.
Meantime, in Scotland, GLC has enrolled applications to recall sists (stays) in bank charges cases with a view to obtaining compensation for some of our clients in the South West of Glasgow. This is a completely free service, as we are charitable, community law centre. At this stage, we cannot offer this service to non-existing clients or clients outwith the South of Glasgow given resource implications, and the fact a large proportion of our resources are currently dedicated to preventing homelessness, defending eviction and repossession cases across Scotland.
However, we will report on any progress that we can make, with a view to helping consumers strategically in Scotland and in the UK generally.