Office of Fair Trading v Abbey National Plc and Others
[2009] EWCA Civ 116; [2009] UKSC 6
Supreme Court
Facts:
OFT began investigation of AN under UCTA 1999. Investigating fairness of charges to a current account for going into overdraft.
Legal Facts / Procedural History:
Court of Appeal
Legal Issues:
Whether bank charges were exempt from UCTA as ‘core terms’.
Appellant (Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc, HSBC plc, Lloyds TSB Bank plc, Nationwide Building Society and the Royal Bank of Scotland Group) Arguments:
Charges for unauthorised overdrafts were not paid in exchange for the transaction or default charges to discourage customers from using the overdraft. They are monetary consideration for the package of banking services that the majority of customers didn’t incur.
These terms were in plain, intelligible language.
Therefore, the terms are exempt from UCTA.
Respondent (Office of Fair Trading) Arguments:
The terms were incidental or subsidiary, so not exempt from UCTA:
· D’s ought to highlight terms to customer before conclusion of contract, so that they are aware of the charges.
· Charges not part of the normal performance of the contract.
· Consumer would not regard the charges as part of the price of the account.
· The terms did not relate to goods or services expressly requested by the customer.
· D significantly underenforced the terms.
· Consumers provided other benefits to D.
· Terms not subject to typical consumer’s full, informed and free consent.
Judgement (Clarke MR, Waller LJ, Lloyd LJ, Philips PSC, Walker SCJ, Hale JSC, Mance JSC and Neuberger MR):
Appeal allowed. Bank allowed to charge overdraft.
‘Bank charges levied on personal current account customers in respect of unauthorised overdrafts (including unpaid item charges and other related charges) constituted part of price or remuneration for banking services provided and, in so far as terms giving rise to charges were in plain intelligible language, no assessment under Unfair Terms in Consumer Contracts Regulations 1999 of fairness of those terms might relate to their adequacy as against services supplied .’
Comments