Office of Fair Trading v Abbey National Plc & 7 Ors

Office of Fair Trading v Abbey National Plc & 7 Ors

The relevant bank charges are not exempt from assessment for fairness under Regulation 6(2) of the 1999 Regulations because they do not constitute the price or remuneration for the main subject matter of the contract or for services supplied in exchange; rather, they are contingent charges levied in specific circumstances and not recognisable as the price or remuneration by the typical consumer. The terms of HSBC, Lloyds TSB, Nationwide, and RBSG are in plain intelligible language; those of Abbey, Barclays, Clydesdale, and HBOS are not in plain intelligible language in certain minor respects. None of the terms considered are penalties at common law as they are not payable upon breach. The...

Parties
Claimant: The Office of Fair Trading; Defendant: Abbey National PLC; Defendant: Barclays Bank plc; Defendant: Clydesdale Bank plc; Defendant: HBOS plc; Defendant: HSBC Bank plc; Defendant: Lloyds TSB Bank plc; Defendant: Nationwide Building Society; Defendant: The Royal Bank of Scotland Group plc
Jurisdiction
England and Wales
Judgment Date
24 April 2008
Procedural Posture
Civil (commercial Court) / Judgment on Preliminary Issues
Outcome
Declaration granted in favour of the OFT: the relevant bank charges and terms are not exempt from assessment for fairness under the 1999 Regulations; no declaration as to good faith granted; terms not penalties at common law.
Legal Topics
Unfair Terms in Consumer Contracts, Bank Charges, Penalties in Contract, Interpretation of EU Directives, Plain Intelligible Language, Good Faith in Contracts
Consumer Protection Law Contract Law Banking Law European Union Law Unfair Terms in Consumer Contracts Bank Charges Penalties in Contract Interpretation of EU Directives +2 more

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Parties

The Office of Fair Trading

Claimant

Abbey National PLC

Defendant

Barclays Bank plc

Defendant

Clydesdale Bank plc

Defendant

HBOS plc

Defendant

HSBC Bank plc

Defendant

Lloyds TSB Bank plc

Defendant

Nationwide Building Society

Defendant

The Royal Bank of Scotland Group plc

Defendant

Procedural Posture

Civil (commercial Court) / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether bank charges for unauthorised overdrafts and related services are exempt from fairness assessment under the Unfair Terms in Consumer Contracts Regulations 1999 (Regulation 6(2))
  2. 2 Whether such charges are penalties and unenforceable at common law
  3. 3 Whether the relevant contractual terms are in plain intelligible language

Ratio Decidendi

The relevant bank charges are not exempt from assessment for fairness under Regulation 6(2) of the 1999 Regulations because they do not constitute the price or remuneration for the main subject matter of the contract or for services supplied in exchange; rather, they are contingent charges levied in specific circumstances and not recognisable as the price or remuneration by the typical consumer. The terms of HSBC, Lloyds TSB, Nationwide, and RBSG are in plain intelligible language; those of Abbey, Barclays, Clydesdale, and HBOS are not in plain intelligible language in certain minor respects. None of the terms considered are penalties at common law as they are not payable upon breach. The...

Court Disposition

Declaration granted in favour of the OFT: the relevant bank charges and terms are not exempt from assessment for fairness under the 1999 Regulations; no declaration as to good faith granted; terms not penalties at common law.

Orders

  • The relevant terms and charges are not excluded from assessment for fairness under Regulation 6(2) of the Unfair Terms in Consumer Contracts Regulations 1999.
  • No declaration as to the meaning of 'good faith' under Regulation 5(1) is granted.