Bank Charges - OFT Test Case

In late July, the Office of Fair Trading started a High Court action for a declaration on the application of the law in respect of unauthorised overdraft charges. Many local people have been seeking to reclaim what they regard as charges that were too high when they went overdrawn, in breach of their agreement with the bank, and incurred charges as a result. In some places, the courts have been overwhelmed with small claims being litigated and many banks have settled and repaid charges to customers. In the first half of the year £1 billion was paid back to customers and HSBC alone has refunded £116m. Whether they should have waited for a definitive court decision remains to be seen.

Matthew Bailey a partner says

”Tens of thousands of complaints that these charges are unfair have been received by the County Courts and the Financial Ombudsman Service. The banks do not accept that the unfairness rules of the Unfair Terms in Consumer Contract Regulations 1999 apply. The OFT believes that they do and is seeking to establish this legal principle clearly in the court. It would be helpful to have a binding precedent in this area of law rather than non-binding county court judgments and lots of ‘out of court’ settlements. The OFT is also undertaking a market study into personal current accounts, which addresses wider questions about competition and price transparency in the provision of personal current accounts. Banking did not used to be free in the UK. Some people will remember when every cheque was paid for by the customer. Those who do not overdraw their accounts unlawfully may find they pay for those in breach of contract if free banking goes as a result of the study.”

”If you need information on this area of law or even as a business are concerned about whether your own terms might breach the 1999 regulations, contact Matthew for advice on 01329 822333”

Fair Competition

The Office of Fair Trading’s Annual Report, published in July, highlights the importance for local business clients of avoiding a breach of the Competition Act 1998. Fines can be heavy in this area of up to 10% of worldwide group turnover:

Andrew Bryan says “Businesses may not realise that they cannot even exchange price information with competitors, never mind fix prices and any arrangements that might amount to bid rigging or horizontal price fixing can land you in jail or even extradited to the US for prosecution there, where there is a US element to the arrangement.

The report points out that, as a result of the OFT’s investigation into collusive tendering by construction companies in England, it has uncovered evidence of bid-rigging in thousands of tenders with a combined estimated value approaching £3bn. At the end of March 2007, the OFT announced its intention to fast track the investigation by making an offer of reduced financial penalties.

Even companies acting alone can breach the UK competition rules if they enjoy a dominant market position and then engage in practices such as excessive or predatory pricing or refusal to supply customers in some cases. Many commercial agreements have to be carefully drafted to avoid infringement of the rules, even provisions such as non-competition clauses in distribution agreements. Anyone exporting or importing goods within the 27 EU States also needs to be aware of the single market rules – that once goods are put on the market by the owner of any trademark or other intellectual property right that protects the goods, they must be allowed to circulate freely.

Call Andrew on 029 9221 0170 for further information.

Home Information Packs and Energy Performance Certificates

1st August sees the launch of the long awaited Home Information Packs, or HIPs as they are known, and Energy Performance Certificates (EPCs) for houses with 4 or more bedrooms. This is a staggered start to the new scheme but all houses of that size put on the market from that date are subject to the rules and must have a HIP and EPC.
John Guest a partner says:

“Many of our local conveyancing clients will be affected by HIPs and we can provide advice on what is required. Until the end of 2007, homeowners may market their properties as soon as they have commissioned a pack, rather than having to wait until one is received. HIPs had a shaky start when the Government was taken to court by the Royal Institution of Chartered Surveyors over the plans which delayed the 1st June launch and led to a negotiated compromise with RICS and the initial 4 bedroom house implementation.

The principle is to ensure buyers know how energy efficient a house is before they buy it and also so that some legal work is deal with in advance.

The following compulsory documents must be included in a Home Information Pack.

• Home Information Pack Index
• Energy Performance Certificate
• Sale statement
• Standard searches
• Evidence of title
• Additional information for leasehold and commonhold sales, where appropriate.

However, up until 31 December 2007 it is possible to market a property without all of the compulsory documents. If you want any advice on HIPs do contact John on 01329 822333. We carry out a wide range of property work and can advise you on all relevant areas.