Banks win charges appeal

Supreme Court overturns lower courts

The Supreme Court has handed down its judgment in Office of Fair Trading (Respondents) v Abbey National plc & others (Appellants) [2009]
UKSC 6.  The OFT has power to assess the fairness of terms in consumer contracts but this is subject to the limits laid down in the Unfair Contract Terms in Consumer Contracts Regulations 1999, which implemented European Council Directive 93/13/EEC.

 

Regulation 6(2)(b) states that the assessment of the fairness of a term in a contract “shall not relate . . . to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”.  In other words, the “value for money” equation is excluded.

The Court of Appeal held that this exclusion applied only to the “core terms” of the contract and not to ancillary terms such as the charges for unauthorised overdrafts. The Supreme Court unanimously held that the charges for unauthorised overdrafts fell within this exclusion. They were part of the price
paid by the customer for the banking services provided.

 

However, the charges might still be open to assessment by the OFT on other grounds under Regulation 5.

 

Click here for the official Supreme Court press summary

Date Added: 25th November 2009