OFT Test Case

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Investigation and test case update

1. Why has the OFT decided to focus the investigation on three banks?

In order to progress the investigation in the shortest and most efficient way possible, we have decided to concentrate initially on the unarranged overdraft charging terms of Lloyds TSB, HSBC and Clydesdale. We have written to all the banks under investigation to outline this decision. We believe that the terms of the three selected banks provide the best representative selection of all the banks' unarranged overdraft charging terms, and therefore the outcome of this more focused investigation will be relevant to the assessment of other banks' terms. It should not be assumed that the OFT is more or less likely to find the unarranged overdraft charging terms of these selected banks unfair than those of the other banks.

2. What happens to the banks not selected?

The investigation into the other banks' terms is merely on hold. None of the banks' terms have been given a clean bill of health. We are committed to resolving the issue of the fairness of the charges for all consumers as quickly and efficiently as possible.

3. How does the decision to focus on three banks affect the ongoing legal proceedings? Our investigation continues in parallel to any legal proceedings. If our investigation concludes that the banks' unarranged overdraft charging terms are unfair, we will work with banks to identify how any subsequent litigation can be managed sensibly and efficiently.

4. Does the OFT think the banks' terms are unfair?

In August 2008, we wrote to the seven banks and one building society setting out our approach to the assessment of fairness and, for seven of them, our concerns that the unarranged overdraft charging terms may be unfair. Following the banks' responses to that letter, our concerns remain and we are continuing to progress the investigation, in dialogue with the banks, to reach a final decision on fairness.(note 1)

5. What is the next step in the investigation?

On 31 March 2009, we issued the selected banks with a detailed request for financial and operational information relating to their unarranged overdraft charging terms, which we will then need to analyse in some detail.

6. When do you expect this matter to be finally decided?

We expect to reach a final decision on the fairness of the unarranged overdraft charging terms later this year. If this decision is disputed, subsequent litigation may ensue.

7. The investigation appears to be taking a long time. Why is this? We have necessarily adopted a rigorous approach to our investigation. Our timeline is largely dictated by the practical constraints of obtaining and analysing the required information from the banks. By streamlining our investigation to three banks, we will progress it in the shortest possible time. We have strong working relationships with all parties, including the banking industry and regulatory authorities, to ensure continued support for the shared objective of determining the relevant issues as quickly as possible.

8. Does part ownership of some of the banks by the government affect the investigation?

Our investigation is unchanged by the part ownership.

note 1: While Barclays is a signatory to the litigation agreement, it had introduced new terms during the investigation. So as not to delay our investigation unduly, we concentrated on the terms of the remaining seven firms.

Investigation and test case background

9. What have the courts ruled so far?

The OFT launched its investigation in April 2007. The investigation is looking into the fairness of personal current account unarranged overdraft charging terms. In July 2007, the OFT entered into a written litigation agreement with seven banks, one building society(note 2) and the Financial Services Authority (FSA) with a view to bringing a test case to ensure an orderly and efficient process for resolution of the legal issues. The Court of Appeal confirmed on 26 February 2009 the OFT's view that unarranged overdraft charging terms can be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations (UTCCRs). The court found that these terms are not part of the core or essential bargain between a consumer and their bank, and therefore consumers do have protection UTCCRs for these terms. The banks have been granted leave to appeal to the House of Lords.

10. Some banks have changed their terms and conditions, what does this mean for the test case and investigation?

We are giving any changes due consideration.

11. Will the test case have any implications for other financial contracts such as for credit cards and business bank accounts? The OFT's primary concern is whether the unarranged overdraft charging terms in banks' personal current account contracts comply with the UTCCRs. The judgments are important milestones in the process of establishing that. Of course, the extent to which the judgments (including on penalties) provide legal precedent for cases on other matters is something for consideration in relation to the particular circumstances of those cases.

Note 2: Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc, HSBC Bank plc, Lloyds TSB Bank plc, Nationwide Building Society, and the Royal Bank of Scotland Group plc. This selection of banks covers an estimated 90 per cent of the personal current account market.

12. Will the OFT be publishing all the court documents on its website?

Wherever we can, we will seek to publish the court documents. Broadly speaking, the Civil Procedure Rules (CPRs) say that some documents - like particulars of claims - should be freely available publicly. They would usually be freely available from the court, but we will seek to make them available on our website. The CPRs also say that the availability of other documents - such as the witness evidence and the skeleton arguments - is more restricted, and they are only available on specific application to the court. To obtain a quote for copies of transcripts of court hearings, please contact the Case Management Department at Merrill Legal Solutions on (020) 7421 4010. Copies of the documents can be found here at: www.oft.gov.uk/advice_and_resources/resource_base/marketstudies/ current/personal/personal-test-case/personal-documents

Complaints about charges

13. Are County Courts able to proceed with consumer cases?

The decision whether to hear a case or not lies with each individual court. Following the Court of Appeal judgement, Moore-Bick LJ, Deputy Head of Civil Justice, sent a letter to all Designated Civil Judges stating that there is much to be said for continuing the existing stays pending a decision by the House of Lords on whether the banks may appeal to the Court of Appeal decision and / or the outcome of the OFT investigation.

14. Will the FSA lift the Waiver? To facilitate the test case, in July 2007, the FSA granted a number of firms a waiver. This means that firms that were granted the waiver do not have to deal with complaints about charges while the waiver is in force. The waiver does not interfere with the firms' obligations under the Banking Code, which sets out how businesses should deal with cases of financial difficulty. In January 2009, the FSA extended its waiver for a further six months. For further information, please see the FSA website: www.moneymadeclear.fsa.gov.uk/.

15. What does this mean for you?

If you have already made a complaint or are thinking of doing so, the FSA's website www.moneymadeclear.fsa.gov.uk has some guidance to help you. For information about your individual circumstances, speak to your bank or building society.

Overview of the OFT's work relating to personal current accounts

16. What work is the OFT doing relating to personal current accounts? Personal current accounts are a vital gateway to effective participation in the economy. Since April 2007, following an initial review, we have been looking at how well the market as a whole serves consumers, as well as the specific issue of the legality of unarranged overdraft charges. In July 2008, we published a market study into the state of the personal current account market. It established a complete picture of the market. It found that personal current accounts in the UK have many positive features: • high levels of customer satisfaction • many day-to-day services don't incur a charge, and • internet and telephone banking makes it easier to manage accounts. However there are a number of concerns which we believe need addressing: • low levels of transparency over unarranged overdraft charges and costs, coupled with a high proportion of banks' total revenues made on unarranged overdraft charges and costs • the complexity of the charges makes it harder for consumers to control the costs they incur and some pay significant amounts (a significant group of consumers underestimate the level and frequency of banks' charges, and 1.4 million consumers paid over £500 in charges) • a general perception among consumers, not completely unfounded, that switching is complex and risky, contributing to low levels of switching between banks The study can be found, together with an executive summary, on our website at www.oft.gov.uk/pca. The market study also provides additional context for our UTCCRs investigation which is looking into the fairness of unarranged overdraft charging terms.

17. I am happy with my account and don't incur charges, what is OFT doing to protect consumers like me?

The purpose of our investigation is to consider whether the unarranged overdraft charging terms are compliant with the UTCCRs, designed to protect consumers against unfair standard terms in contracts they make with businesses. To reach a view on this we are looking at things like how much banks charge, and how they charge. However we are not saying that banks can't charge people where appropriate. The initial scoping work we did on unarranged overdraft charging terms highlighted a number of concerns about the personal current account market that we decided needed to be considered in the context of the market as a whole. So, for example, the market study has considered the potential consequences for all consumers of any enforcement action in relation to the unarranged overdraft charging terms, to try and avoid any undesirable consequences as far as possible. 18. What if the banks start charging everyone for providing accounts? We are aware of concerns that more banks may change their charging structure, for example by introducing annual/monthly fees for providing accounts that aren't currently charged for in this way. Banks' decisions about how to charge for providing accounts are commercial decisions for them providing, of course, that any charges are clear and transparent and do not contravene consumer protection and competition legislation.

19. Why do you want to see more people switching accounts?

Low switching rates have implications for both competition and efficiency. Where consumers are reluctant to change providers, firms have less incentive to compete vigorously. Also, new banks entering the market, offering potentially better deals, have less opportunity to expand. When people do switch, the process tends to be relatively easy and trouble free, but a significant minority of consumers do have problems, particularly with direct debits and standing orders. What is worrying is that our market study survey found that this was more likely to be the case for those that used bank switching services than those that made their own arrangements.

20. What are the next steps with the market study? The deadline for the consultation exercise has expired. However, should we receive requests from individuals or parties to provide further comments we will consider these in light of our own timetable. We would like to thank those who have responded to our consultation and welcome the contributions that have been made to the development of solutions. All responses we have received from our consultation exercise will be taken into account in developing and evaluating the potential solutions to the concerns we have identified. We would like to see solutions which result in: • greater transparency in current account pricing that will enable active and informed consumers to drive competition amongst banks. This in turn will deliver efficiency in supply and value for consumers, and • banks treating consumers sufficiently fairly and well, within a coherent self-regulatory framework or otherwise, that pre-empts the need for further regulatory intervention. We acknowledge steps the banking industry have taken to work with us to develop solutions to achieve these aims and hope to be able to continue to have an informative debate with them and other interested parties in the coming months. We expect to publish a further report later this year. Our aim is for a final report containing recommendations the banking industry will then take forwards. However we will also be considering other routes to implement remedies should that not happen. Other routes to implement remedies could include: • recommendations to Government • market investigation reference to the Competition Commission, • any action which can be taken under the UTCCRs or other consumer protection legislation, and • changes to the Banking Code.

21. How does your work on personal current accounts affect consumers in Northern Ireland and Scotland?

We expect our work to be relevant for consumers right across the UK. The market study covered the whole of the UK and the main UK banks. We have not specifically focused on NI due to the recent Competition Commission report.(note 3) The UTCCRs apply across the UK. OFT, Financial Services Authority and Financial Ombudsman Service

22. What are the roles of the OFT, Financial Services Authority and Financial Ombudsman Service in all of this? The OFT's role is to make markets work well for consumers. Its responsibilities include enforcement of the UTCCRs, where appropriate. The OFT does not have the power to intervene in individual disputes between consumers and businesses, rather, it is the OFT's duty to consider any complaint that a consumer contract term is unfair and, if appropriate, apply for an injunction from the court to prevent the continued use of that, or a similar, term. The Financial Services Authority (FSA) regulates the financial services industry and in particular deals with how banks handle complaints. Like the OFT, it does not handle individual complaints but it does have an interest in ensuring that complaints about past actions are satisfactorily dealt with. The FSA is a Qualifying Body under the UTCCRs, meaning it too has the power to enforce them, where appropriate. The Financial Ombudsman Service (FOS) has responsibility for dealing with individual complaints by customers.

Note 3: This report found that consumers were not actively searching or switching in the NI personal current account market.

While all three organisations hold different roles, we have been working together to ensure that this process is well coordinated.

The Agreement between The OFT and the Banks

This Agreement is made on 25 July 2007


(1) The Office of Fair Trading of Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX (the OFT);


(2) Abbey National plc of Abbey National House, 2 Triton Square, Regent’s Place, London NW1 3AN;

(3) Barclays Bank plc of 1 Churchill Place, London E14 5HP;

(4) Clydesdale Bank plc of 30 St Vincent Place, Glasgow G1 2HL;

(5) HBOS plc of the Mound, Edinburgh EH1 1YZ;

(6) HSBC Bank plc of 8 Canada Square, London E14 5HQ;

(7) Lloyds TSB Bank plc of 25 Gresham Street, London EC2V 7HN;

(8) Nationwide Building Society of Nationwide House, Pipers Way, Swindon SN38 1NW

(together, the Banks)

(each a Party and together, the Parties)


(9) The Financial Services Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS, (the FSA).


A. The OFT has initiated an investigation under s.224 of the Enterprise Act 2002 (the Investigation) into the fairness or otherwise for the purposes of the Unfair Terms in Consumer Contracts Regulations 1999 (the 1999 Regulations) of certain terms contained in each Bank’s personal current account arrangements providing for charges to be imposed upon customers who seek to make payments for which they do not have available funds (the Relevant Terms and the Relevant Charges).

B. Whilst the Investigation continues, large numbers of individual customers are pursuing claims against the Banks (and other banks) alleging, inter alia, that the Relevant Terms applicable to them are and/or have been unfair within the meaning of the 1999 Regulations and/or the Relevant Charges constitute and/or have constituted unenforceable penalties at common law.

C. The Banks and the OFT believe that, consistently with CPR Part 1 (the overriding objective), the relevant legal issues need to be determined expeditiously and, in light of the complexity and importance of the issues, in a fair and orderly way. The scale of the customer litigation causes increased expense for all litigants as well as the Courts and presents significant administrative problems for the Courts in handling such cases. Further, the risk exists that the issues currently being investigated by the OFT will be brought before the High Court (and/or the Court of Appeal) before the OFT is in a position to adopt a considered position on the fairness of such terms, and in circumstances where the Court will not have all the relevant materials available to it to determine all relevant issues.

D. In the Investigation, the Banks have contended, as a preliminary point, that (1) the Relevant Terms and Relevant Charges fall within Regulation 6(2) of the 1999 Regulations and do not fall to be assessed for fairness,

(2) if the Relevant Terms or Relevant Charges do fall to be assessed for fairness, then the Banks must as a precondition be shown to have contravened the requirement of good faith, and

(3) the Relevant Charges are for services, rather than for breach of contract, and are not capable of amounting to a penalty at common law.

E. Although the OFT would have preferred to issue any proceedings in relation to all relevant issues at the same time, including the Preliminary Issues (as defined in paragraph 1.4 below) and any Substantive Issues (as defined in paragraph 3.1 below), following the conclusion of the Investigation, the Banks and the OFT believe that it is desirable to begin now the process of determining the legal issues. The Banks and the OFT believe that the Preliminary Issues are capable of determination as preliminary issues and that to do so would materially assist with the expeditious and orderly resolution of the issues concerning the Relevant Terms. Both the OFT and Banks seek an outcome to all relevant issues as soon as reasonably practicable.

F. Accordingly, to ensure that matters relating to current and historic and intended Relevant Terms and Relevant Charges are brought before the Courts in accordance with CPR Part 1, in an efficient, expeditious, and orderly way, the OFT and the Banks have agreed that the OFT should commence proceedings against the Banks in the High Court as soon as possible, and notwithstanding the fact that the Investigation is not yet complete, in relation to the Preliminary Issues.

G. The Parties intend that, depending on the outcome of the Investigation and the Court’s determination of the Preliminary Issues, the substantive issues of fairness and penalty will be determined subsequently in these proceedings. The Parties also envisage that other issues flowing from those issues (such as customer restitution and limitation) would come to be determined concurrently with the said substantive issues.

In consideration of the mutual promises contained herein, the Banks, the OFT and the FSA hereby agree as follows:


1.1 The OFT will, by 27 July 2007, file and serve a Claim Form under CPR Part 7 in the Commercial Court (the Proceedings) for a declaration that the Relevant Terms and/or Relevant Charges are not excluded from an assessment for fairness under the 1999 Regulations by reason of Regulation 6(2)(a) and/or (b) thereof.

1.2 The Banks will be cited in the OFT’s Claim Form as Defendants to the Proceedings.

1.3 The Banks and the OFT agree that the Proceedings will encompass:

(a) a representative selection of the historic Relevant Terms and Relevant Charges of each Bank of a kind which are in dispute in the county court claims referred to in paragraph B of the recital;

(b) the Relevant Terms applicable to each Bank’s personal current account arrangements currently in force with its customers and/or each Bank’s current Relevant Charges; and

(c) in cases where any such Relevant Terms or Relevant Charges are due to be replaced, the replacement Relevant Terms and/or Relevant Charges.

1.4 The Banks will counterclaim against the OFT for declarations that:

(a) the Relevant Terms and/or Relevant Charges are in plain intelligible language, and

(i) relate to the definition of the main subject matter of the contract, and/or

(ii) provide for payment of remuneration for services supplied by the Banks in exchange, rather than payment of a sum by the customer for breach of a contractual duty owed to the Banks and accordingly, are excluded from assessment for fairness under the 1999 Regulations by reason of regulations 6(2)(a) and/or (b) thereof, and, by reason of (ii) above, are not capable of amounting to a penalty at common law.

(b) Alternatively, if the Relevant Terms and/or Relevant Charges fall to be assessed for fairness under the 1999 Regulations, a declaration that it is a necessary (but not sufficient) precondition to such terms and/or charges being shown to be unfair within the meaning of regulation 5(1) of the 1999 Regulations that they be shown to be contrary to the requirement of good faith, and a declaration as to the true meaning of "good faith" for the purposes of the 1999 Regulations.

The issues set out in sub-paragraphs 1.4(a) and (b) and paragraph 1.1 above are referred to herein as “the Preliminary Issues”.

1.5 The OFT and the Banks hereby agree on the following proposed timetable, which all Parties will invite the Court to endorse:

(a) Each Bank to file and serve an Acknowledgement of Service within 7 days of service of the OFT’s Claim Form;

(b) Each Bank to provide the OFT, by 1 August 2007, with a copy of its personal current account agreements and price lists in relation to the Relevant Terms and Relevant Charges encompassed within the Proceedings pursuant to clause 1.3 above, together with:

(i) in relation to any historic Relevant Terms or Relevant Charges, a statement of the dates on which such Relevant Terms or Charges applied; and

(ii) in relation to any replacement Relevant Terms or Relevant Charges, a statement of the date of such change;

(c) The OFT to serve one composite set of Particulars of Claim relating to the Relevant Terms or Relevant Charges of each Bank by 31 August 2007;

(d) Each Bank (or, if considered appropriate, the Banks together) to serve a Defence and Counterclaim by 28 September 2007;

(e) The OFT to serve a Reply and Defence to Counterclaim by 26 October 2007;

(f) The first Case Management Conference (CMC) to be held on the first available date after service of the Defence and Counterclaim of the Banks; if the Court permits, the date of the CMC will be arranged through the normal channels as soon as the Claim Form has been issued;

(g) Directions to be sought at the first CMC to deal with the following matters (unless dealt with earlier, if the Court should so decide):

(i) extent and/or timing of evidence by way of witness statements or otherwise;

(ii) extent and/or timing of any disclosure;

(iii) listing of trial, including time estimate, with the Parties aiming for a trial as soon as reasonably practicable;

(iv) if appropriate, intervention by any other banks desiring to join the Proceedings;

(v) if unresolved, the stay of other proceedings in the Courts which raise the Preliminary Issues and related issues.

1.6 The OFT recognises the desirability of achieving a fair and orderly resolution of the relevant issues and will not object to any request or application for a stay of other court proceedings between the Banks and their customers concerning the Relevant Terms and/or Relevant Charges.


2.1 The Investigation will continue unaffected by the commencement of the Proceedings.

2.2 The OFT and the Banks agree to cooperate to ensure that the Investigation is carried out and completed expeditiously.

2.3 The Banks undertake:

(a) not to contend during the course of the Investigation that the Investigation should be suspended and/or not to contest any step therein by reason of the Proceedings being afoot and/or judgment on the Preliminary Issues being awaited; and

(b) to co-operate with the OFT in its conduct of the Investigation and in particular expeditiously to provide documents and information sought by the OFT in so far as practicable and not to contend that such documents or information are only liable to production if the Preliminary Issues are decided in favour of the OFT.


3.1 If, at any time, the OFT (i) concludes the Investigation, and (ii) forms a view which is or includes an assessment that the Relevant Terms or Relevant Charges of any Bank are unfair within the meaning of the 1999 Regulations, and (iii) as a result requires the Banks (or any of them) to do anything which they are not prepared to undertake to do in connection with the Relevant Terms and/or Relevant Charges, then:

(a) the OFT may amend its Statements of Case in the action so as to include a claim against the Banks (or any of them) for a declaration and/or an undertaking to the Court (and/or such other relief as the OFT may consider appropriate, including a final injunction or enforcement order) (and the issues raised by those amendments (and any consequential amendments made by the Banks) are hereafter referred to as the Substantive Issues);

(b) the Banks will not oppose such amendment being made whether or not they could have argued that such amendment is late in the day, or seeks to introduce a claim that was not in existence at the time the original claim form was issued, or that one or more of them have an appeal pending in relation to the Preliminary Issues, or is in any other way inconvenient or undesirable;

(c) if the OFT applies to amend its Statements of Case prior to the trial of the Preliminary Issues the Parties will seek the consent of the Court to the adjournment of the trial so as to permit the proposed amendment to be effected, provided that if the OFT applies to amend its Statements of Case as aforesaid less than 60 days before the date fixed for such trial the Banks may decline to agree to adjourn the trial;

(d) the Parties will seek new directions from the Court for further pleading and as necessary for the preparation for and/or holding of a trial or trials of the Preliminary Issues and/or the Substantive Issues.


4.1 If (i) the Preliminary Issues are determined prior to the Substantive Issues, and (ii) any Bank appeals any part of the Court’s determination, then:

(a) Subject to (b) below, the Bank/s in question will seek to have any such appeal, whether to the Court of Appeal or beyond (including a reference to the European Court of Justice, if any), heard on an expedited basis, and undertake to take all reasonable steps to ensure that the said appeal is conducted and determined on an expedited basis as soon as is reasonably practicable;

(b) but the OFT reserves the right to apply at any stage for the trial of the Substantive Issues to be held before any appeal (at any level) is heard, or for any appeal to be stayed pending the trial of the Substantive Issues.

4.2 If:

(a) the Court holds, in relation to the Preliminary Issues, that the Relevant Terms and/or Relevant Charges are not susceptible to an assessment of fairness under the 1999 Regulations; and

(b) at that time the OFT has not yet concluded the Investigation; and

(c) the OFT appeals that decision, and continues to conduct its Investigation, then the Banks agree to continue to cooperate with the Investigation to enable it to be completed expeditiously notwithstanding the finding of the court of first instance.


Each Party is to pay its own costs of and associated with the Proceedings and of any appeals by any Party, and accordingly no Party will seek an order for costs against any other.

6. FSA

6.1 If, at any time after the completion of the trial at first instance of the Preliminary Issues, the FSA wishes to join in the Proceedings, then the Parties agree not to oppose such joinder and clauses 3.1(b) to (d), 4.1 and 5 above shall apply to the FSA mutatis mutandis.

6.2 In the meantime, the OFT and the Banks will keep the FSA informed of the progress of the Proceedings and, in particular, will serve on the FSA copies of any Statements of Case, evidence and other documents that they serve on each other as if the FSA was a party to the Proceedings.

6.3 The Banks agree that the OFT may share with the FSA any information that the OFT receives from the Banks during the course of the Investigation and the FSA agrees to hold such information subject to section 348, Financial Services and Markets Act 2000.


7.1 Subject to paragraph 7.4, this Agreement comes into effect at 7.00am on 27 July 2007 and not before.

7.2 Nothing in this Agreement shall affect the market study of personal current accounts which the OFT is presently conducting.

7.3 It is intended that this Agreement shall be a public document.

7.4 This Agreement may be executed in any number of counterparts and by the Parties and the FSA on separate counterparts, but is not effective until each of the Parties and the FSA has executed at least one counterpart.

7.5 A copy of the signature page to this Agreement that is sent by facsimile shall constitute adequate proof of the execution of this Agreement by the relevant party.

The Banks Question and Answers

What is happening?

The Office of Fair Trading (OFT) and a number of UK financial service providers, including Nationwide, started a court case on Friday 27 July to decide on the legality of unauthorised overdraft charges.

This case is being called a test case because the decision will clarify the law in this area and is likely to apply to all current and new claims against current account providers about unauthorised overdraft charges.

We will continue to post updates on our website to keep customers informed of progress on the test case as this could run for at least a year.

What will happen to customer requests for charges to be refunded?

Customers who feel they have been asked to pay fees in error should still contact the Society and their request to refund these fees will be handled in our normal way.

What will happen to customer complaints about the level, fairness or legality of unauthorised overdraft charges?

We will not be resolving customer complaints on the level, fairness or legality of unauthorised overdraft charges while the test case is running. If you do complain about your unauthorised overdraft charges, we will write to tell you that we have received your complaint and that we will record it on your file. When a final decision is reached in the test case, we will contact you as soon as possible to tell you how we will resolve your complaint. We will apply the decision in the court case to all complaints we receive.

Why are you allowed to stop dealing with unauthorised overdraft charge complaints during the test case?

We applied to the Financial Services Authority (FSA) for a suspension of the normal timetable for dealing with unauthorised overdraft charge complaints. The FSA decided that, in the circumstances, it was appropriate to grant us a suspension of our obligations under the FSA's complaint handling rules while we sought legal certainty on this issue. The suspension is subject to a series of conditions designed to protect a customer's rights. You can read the form of the FSA suspension (direction) : here

All customers who have made a written complaint on unauthorised overdraft charges but who have not yet had their complaint resolved will receive a letter to explain the position with respect to their complaint.

Can I make a court claim for a refund during the test case?

Yes, but we will apply to the court to put your case on hold while the test case is running. This is because the issues being raised in customer complaints on unauthorised overdraft charges are being considered in the test case.

Can I complain to the Financial Ombudsman Service about my bank charges?

The Financial Ombudsman Service (FOS) has decided not to review complaints while the test case is running. If you do complain to FOS, you will receive a letter explaining that.

What if I have already been made an offer?

We will stand by any offer to settle a complaint or court claim that we have already made to our customers. If you have received an offer to settle from us, we will be writing to you again shortly. Our letter will explain that customers have two months to decide whether to refuse our offer and wait for the decision in the test case. If you do choose to refuse an offer, your complaint or claim will be held and recorded by us until there is a final decision in the test case. We will then contact you again as soon as possible to finally resolve your complaint.

I have already accepted an offer from you. Will my claim be revisited?

If you have accepted a 'full and final settlement', we believe it unlikely you would be awarded a further sum even if the test case indicates a potentially larger amount. However, this does not preclude you from asking for repayment of any new charges incurred if the courts find they are unlawful.

How long will the test case take?

At this time it is too soon to give any exact timescales for a conclusion to the test case but it could go for more than a year. We have agreed with the OFT and the FSA to conduct the test case in an efficient, prompt and orderly way.

Where can I find out more?

You can contact us through your branch or by calling us on 0845 302010.

Alternatively, you can find more information through the following links:

The Financial Service Authority

The Office of Fair Trading

The Financial Ombudsman Service

Financial Obudsman Statement

26 July 2007

In light of the agreement announced today between the Office of Fair Trading (OFT) and a number of representative banks - to take a "test case" to the High Court about unauthorised overdraft charges - the ombudsman service has confirmed it will put on hold its own work on complaints about these charges, pending the outcome of the legal proceedings.

The law is one of the issues that the ombudsman has to take into account when making decisions on individual cases - and this important "test case" involving OFT and the banks is expected to give vital clarity on the key issues of law involved in disputes about unauthorised overdraft charges. Responding to the news about the proposed High Court "test case", Tony Boorman, principal ombudsman, said today:

This year the ombudsman service has been dealing with tens of thousands of enquiries and complaints about bank charges - and county courts across the UK have similarly been coping with significant volumes of bank-charge claims.

In the cases that the ombudsman service has settled so far, all disputed unauthorised overdraft charges have been repaid - but on a voluntary "goodwill" basis, without the ombudsman reaching the stage of investigating the merits of the legal issues. Meanwhile, cases heard in the county courts have so far resulted in a range of outcomes - with inconsistent and unpredictable judgments and no clear legal precedent being set.

So it's in the interests of everyone involved - consumers with current accounts, the courts, the banks and other current-account providers - that the High Court "test case" announced today should settle the legal uncertainties relating to the level, fairness and lawfulness of unauthorised overdraft charges.

We agree that it's also in the general interest for the ombudsman service to suspend its own work on complaints about unauthorised overdraft charges, while waiting for the High Court to make a decision on the significant legal issues involved.

It is expected that the decision by the ombudsman service to suspend further work on complaints about unauthorised overdraft charges will be reflected by a similar response by the county courts. For the county courts and the ombudsman service, the High Court "test case" should mean that very significant volumes of cases can be managed in a fair, cost-effective and orderly way.

The ombudsman service's decision to put complaints on hold - while the key legal questions are answered - does not affect consumers' ability to bring complaints to the ombudsman about other banking-related problems, including financial difficulty or hardship.

To help with the fair and orderly management of consumer complaints about unauthorised overdraft charges, the Financial Services Authority (FSA) has announced today that banks and other current-account providers can also put cases on hold, pending the "test case" decision. Once the law has been clarified, it should then be possible for these cases to be settled in line with what the High Court decides.

There is more information about how today's "test case" announcement affects complaints to the ombudsman service in the ombudsman's consumer factsheet on unauthorised overdraft charges.

FSA Waiver Guidance Document

This gives the banks directions as to how the waiver should be implemented and template letters to send to their customers for various scenarios.

See here

FSA Complaint Form

The FSA has stated they will review the waiver after 2 months. The more complaints they receive about the banks abusing the waiver, the iniquity of banks continuing to impose penalty charges and the financial hardship caused, the more chance there is of having the waiver lifted.

FSA Complaint Form

FSA Waiver Review

See here


Cases Stayed Pending OFT Test Case. See here

Related Pages

OFT v The Banks: Read This If You're Worried

Stays re: OFT Test Case

Application for Removal of Stay: Updated

Application for removal of a stay