Scottish bank charge cases: amended pleadings

If you have a small claims action seeking a refund of unfair bank charges sisted at the sheriff court then chances are it will be dismissed unless you amend the basis of your claim, in light of the Supreme Court's decision in OFT v. Abbey National plc and others [2009] UKSC 6.

MoneySavingExpert.com have produced a detailed guide on bank charges here. Disclaimer: If you decide to amend, and your case is before a sheriff court in Scotland, GLC is providing some example court documents - however, please note these are illustrative and are used at your own risk; also please bear in mind you must amend these to suit your personal circumstances, and you should obtain independent legal advice before using same.

In order to amend a small claims Statement of Claim an 'Incidental Application' must be submitted to the court; if you are a party litigant (i.e. without a solicitor) the sheriff clerk will help you serve this. No court dues are payable to amend. You can attach your proposed Amended Statement of Claim to the Incidental Application, so that all of this is served on the bank.

> Example AMENDED STATEMENT OF CLAIM
> Example INCIDENTAL APPLICATION

Can I use the new CCA unfair relationship test for past charges?
Sections 140A and B of the Consumer Credit Act (CCA) came into force in April 2007. In summary, you won't be able to use the CCA for charges before 6 April 2007 if your account became a 'completed agreement' before 6 April 2007 or between 6 April 2007 and 5 April 2008. In other words if you were still in unauthorised overdraft, incurring charges or owing money to the bank, before 6 April 2007 and after 5 April 2008 then you should be fine (and you should be able to go back as far as you like). These transitional rules come from para 14 et seq., schedule 3 of the Consumer Credit Act 2006.

What happens next?
Once the Incidental Application and Amended Statement of Claim are served on the bank, the case will then call at the date and time allocated to you by the sheriff clerk. You must appear (or be represented in court) at this time in order to 'move' the application i.e. to ask the sheriff to grant the things you are asking the court to do in the Incidental Application.

What am I asking the court to do?
You need to ask the court to allow you to amend the Statement of Claim (as proposed in your Amended Statement of Claim)and the 'crave' (if you want to ask the court to prohibit future charges), ordain the defenders to lodge defences/amended defences, and to fix a diet of proof (an evidential hearing).

Can the bank object to my amendments?
Yes, the bank can object. However, it is entirely a matter of discretion on the part of the sheriff whether to allow you to amend. You would want to point out that these changes have been made necessary because of the Supreme Court's decision in the OFT test case, and this requires you to refine the regulation 5, UTCCR case. You can note that the President of the Supreme Court, Lord Phillips, made it clear that “it remained open to question whether bank charges were fair” in relation to regulation 5(1) of the UTCCR (para 80 of the Supreme Court’s judgment). And that the insertion of a CCA case supplements your case; so it is reasonable to amend. The relevant rule of court which is important here is SmCR 12.1, which provides as follows:

12.1. — (1) The sheriff may, on the incidental application of a party allow amendment of the summons, form of response or any counterclaim, and adjust the note of disputed issues at any time before final judgment is pronounced on the merits.

What happens if I am permitted to amend?
Hopefully, a diet of proof (evidential hearing) will be fixed. As regards the CCA part of any claim, section 140B(9) makes it expressly clear that the onus of proof will be on the bank to show that charges were 'fair'. However, you would still want to lodge evidence to show that charges were excessive to you as an individual customer. One could argue, the banks conceded before the Supreme Court that their charges significantly cross-subsidised 'free if in credit' banking for 42m customers. There are 54m current account customers in the UK, but only 12m customers ever pay overdraft charges. If one were to interrogate that data, it would become apparent that at the bottom of that 12m cohort will be people who incur regular multiple charges (and at the top there will be customers who incur one or two per annum); thus the more charges you incur the more you will be disproportionately contributing to free services for other customers, and the more you will be in finanacial difficulty (with charges on charges, and interest on top). Is that a fair relationship as regards the customer in penury? Or is that a fair balance between the rights of the bank and the position of the customer in penury? Only the court can decide these questions, and it will be important, we think, to lodge evidence to show the impact bank charges have had on the customer's day to day life.

What happens if I do nothing?
Your small claim may be dismissed. Be careful, because the bank may seek an award of expenses. If you do not proceed with a small claim to a proof (in good faith) the restricted expenses protection flies off and you could be liable to summary cause scale expenses. If you want to give up and drop your case it would be wise to ask the bank to agree to this on a 'no expenses due to or by' basis. If you decide to proceed you may be able to get support from one of the free online UK consumer forums such as the Consumer Action Group, MSE, LegalBeagles, or PenaltyCharges.