Office of Fair Trading v Abbey National Plc & Ors

Office of Fair Trading v Abbey National Plc & Ors

Most bank terms considered do not impose contractual obligations or prohibitions on customers, but define the limits of customer rights. Charges are not levied upon breach but upon other events. Therefore, the terms and charges are not capable of being penalty clauses at common law. Declarations are appropriate for Barclays, Clydesdale, HSBC, Abbey (except May 2005 conditions), HBOS (except Intelligent Finance accounts); further submissions are invited for Lloyds TSB and RBSG.

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
08 October 2008
Procedural Posture
Civil / Judgment
Outcome
Declarations granted in favour of Barclays, Clydesdale, HSBC, Abbey (except May 2005 conditions), HBOS (except Intelligent Finance accounts); further submissions invited for Lloyds TSB and RBSG.
Legal Topics
Penalty Clauses, Current Account Terms, Unauthorised Overdraft Charges, Declaratory Relief
Contract Law Banking Law Consumer Protection Penalty Clauses Current Account Terms Unauthorised Overdraft Charges Declaratory Relief

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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 / Judgment

Legal Issues

  1. 1 Are certain bank terms and charges capable of being penalty clauses at common law?
  2. 2 Do contractual terms impose obligations or prohibitions on customers, triggering penalty charges upon breach?
  3. 3 Is a charge levied upon breach or upon other events?

Ratio Decidendi

Most bank terms considered do not impose contractual obligations or prohibitions on customers, but define the limits of customer rights. Charges are not levied upon breach but upon other events. Therefore, the terms and charges are not capable of being penalty clauses at common law. Declarations are appropriate for Barclays, Clydesdale, HSBC, Abbey (except May 2005 conditions), HBOS (except Intelligent Finance accounts); further submissions are invited for Lloyds TSB and RBSG.

Court Disposition

Declarations granted in favour of Barclays, Clydesdale, HSBC, Abbey (except May 2005 conditions), HBOS (except Intelligent Finance accounts); further submissions invited for Lloyds TSB and RBSG.

Orders

  • Declarations as to non-penal nature of terms and charges for Barclays, Clydesdale, HSBC, Abbey (except May 2005 conditions), HBOS (except Intelligent Finance accounts).
  • Further submissions invited for Abbey's May 2005 conditions, Lloyds TSB, RBSG, and other terms not contended to be penal by OFT.