The Office of Fair Trading (OFT) and several major UK banks plus one major Building Society started a court case on Friday 27 July 2007 to decide on the legality of unauthorised overdraft charges, including charges incurred where customers do not have sufficient money in their accounts to meet direct debits and standing orders.
This is 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 and other investment account providers about such charges. We will continue to post updates on our website to keep customers informed of progress on the test case.
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.
We will not be resolving customer complaints on the level, fairness or legality of these charges while the test case is running. If you do complain about these 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 applied to the Financial Services Authority (FSA) for a suspension of the normal timetable for dealing with these 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) on the FSA website.
All customers who have made a complaint on the legality of direct debit/standing order charges but who have not yet had their complaint resolved will receive a letter to explain the position with respect to their complaint.
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 these charges are being considered in the test case.
Yes you can but there’s little point as 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.
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 send you a letter explaining that customers have two months to decide whether or not 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 after the final decision to finally resolve your complaint.
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.
The first stage of the test case process was heard by the High Court between 16 January and 8 February 2008, and dealt with certain preliminary legal points.
On 24 April 2008, the Court issued its judgment on the first stage of the test case process. The judgment is complex and all the parties involved are currently considering its implications.
The judgment considered the current charges imposed by the banks and building societies involved in the test case. These included charges similar to those imposed by us when customers don’t have sufficient money in their accounts to meet direct debits and standing orders. The judgment decided the following points:-
This judgment covered only the first stage in the test case process. On 22 May 2008, the judge gave further directions and a timetable for the conduct of the case and we understand that the banks have lodged appeals against parts of the first judgment.
On 8th October 2008, the Court issued a second judgment dealing with the previous charges applied by the banks in the past and whether they could amount to penalties. The Court found that most of the previous charges were not penalties. However, some banks have been asked to provide further information about their previous charges before a final ruling is made.
As previously agreed with the Financial Ombudsman Service and the FSA, customer complaints relating to charges for unpaid direct debits and standing orders will currently remain on hold. We will continue to ask Courts to keep cases relating to charges for unpaid direct debits and standing orders on hold until the test case process has concluded.
At this time it is still difficult to give any exact timescales for a conclusion to the test case but many important issues still need to be decided and it could go on for more several months yet. The institutions involved have agreed with the OFT and the FSA to conduct the test case in an efficient, prompt and orderly way.
You can contact us through your branch or by calling us on 0845 1200 100.
Alternatively, you can find more information through the following links:
The Financial Service Authority
www.fsa.gov.uk
The Office of Fair Trading:
www.oft.gov.uk
The Financial Ombudsman Service:
www.financial-ombudsman.org.uk
Yorkshire Building Society is one of the largest building societies in the UK. We offer a range of financial products and services including: savings & investment accounts, insurance products, credit cards, loans, mortgages and more.
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Yorkshire Building Society is authorised and regulated by the Financial Services Authority (FSA).
