HBOS QC Robin Dicker continued his submission from Thursday. He said on fees and charges that the contract requires customers ‘’to promise to pay fees for a service’’ and that ‘’there is no language in the T&Cs that refer to a breech of contract‘’.
Dicker made use of the term ‘’remuneration’’ to which the judge questioned the accuracy of the word but Dicker insisted that ‘remuneration’ and ‘price’ were the same. ‘’We only promise to pay an item if the customer is in credit’’. The judge asked ‘’is this the result of a request or an instruction?’’ to which the QC replied they were effectively the same.
Dicker said that the OFT’s contention that the revenue from these charges was ‘’unorthodox’’ was wrong. ‘’There is no economic (banking) model for just interest only remuneration’’. He said the OFT says no bank tells the customer the price of integrated services and that the price is triggered by specific services and therefore can only be for specific services. ‘’We think that is wrong’’. He countered the OFT’s argument that defining the fees as a service charge were ‘’artificial’ and gave two examples:
You ask the assistant in a shoe shop to look in the stockroom for a particular size and you incur a £10 service charge. ‘’This would be artificial’’. You ask an assistant in a rare book shop to try and track down a book at other branches and the internet. If the assistant makes it clear there will be a £10 service charge whether the book is found or not ‘’this would not be artificial’’.
The judge questioned him about the HBOS T&Cs which state that the charges are for an unarranged overdraft ‘’but you are saying it’s a payment for consideration. This is part of your difficulty’’. Dicker went on to refer to a case involving Independent Insurance and used aspects of it to highlight his argument. ‘’Is this admissible evidence?’’ asked the judge. ‘’ Err no’’ replied Dicker and before he had a chance to explain Justice Smith said ‘’You cannot put inadmissible evidence before this court’’.
The penultimate bank to set out it’s case was Abbey. Ali Malek described the OFT’s approach to ‘’the seven deadly sins’’ as ‘’living in a utopian world’’ and that they needed to see things ‘’in the real world’’. Even if the seven deadly sins approach was right, Abbey would not have committed one of them. Malek made great play of the range and ‘’complexities’’ of the various payment clearing systems that for the average customer to fully understand ‘’we would need to send them on courses’’. But the judge said that the complexity of the subject matter of terms and conditions should be no bar to plain intelligible language ‘’if it’s ‘too complicated’ you can’t get out of the regulation’’.
Justice Smith pointed out that the T&Cs stated that if a payment was declined you wouldn’t incur a monthly overdraft charge but the reality was that the unpaid item fee would put you in overdraft and therefore the monthly charge would apply. For the second time in the hearing the judge used the C word. ‘’so you get clobbered again!’’. But this time he made no apology for using it.
Malek finished by rubbishing the OFT’s stance that the banks never ‘market’ the unauthorised overdraft service and that this was ‘revealing’’ and indicative that it is not a core part of the service. Malek said this was ‘’irrelevant’’.
Last, and probably least, the Clydesdale bank took to the stand in the shape of Richard Salter QC. His was the shortest submission as he admitted his was the smallest bank but none the less he described their ranking as ‘special’.
He didn’t endorse the other banks christening of the OFT‘s ‘ seven deadly sins’ but preferred to call the ‘’the seven ambiguities’’. On PIL only the language itself is relevant ‘’even if it is in tiny text’’. He guided the judge through the French and German versions of the European directives on PIL which he translated as having exactly the same meaning as the English version that he claimed was solely about the language used and not the presentation.
He said that the OFT’s real reason for the attack on the banks was the level of the charges and that the PIL issue was merely adopted. He referred the judge to an OFT survey in March 2006 that asked account holders for the reasons they went into debit by ticking various boxes. ‘’There was no box for not understanding the contract’’.
Finally he wanted to assure all his Clydesdale and Yorkshire bank customers that his bank ‘’didn’t relish any litigation with our customers’’ and that they are taking part in the test case ‘’with our customers interests at heart’’. So there you go.
The game of PIL ping pong continues apace between the OFT’s Brian Doctor and lead QC Laurence Rabinowitz - who incidentally has represented HM Customs & Revenue in the past. Not a day passes without documents being thrown back at the other party for clarification on the contentious and unresolved issue of the OFT’s stance on plain intelligible language. The judge has intimated that if the ground rules are not resolved before the hearing finishes it may be that an adjournment will be necessary ‘’for a few days’’ before the issue is finally thrashed out.
For the first time during the hearing the Banking Code was discussed. Clydesdale’s Richard Salter was keen to fill in the judge - who had little knowledge of it - in on just how ‘’independent’’ the Banking Code Standards Board are and that most of the board come from outside the banking industry. The judge, curious of their ‘independence’ asked Salter who appoints the board members. Salter’s reply? ‘’The banking industry my lord’’.
The usher told me that before the afternoon session began the judge, not for the first time, warned the banks legal teams to keep their mobiles swicthed off as several had rung during the morning session. He reminded them they can be in contempt of court.
Again a massive thanks to EXC for posting up his diary of events.