The recent wave of publicity surrounding consumers' attempts to recover excess charges and fees from retail banks and credit card companies in the UK has highlighted a number of legal issues. One of the more intriguing is the lack of any precedent which appears to be causing a certain amount of confusion.
What's happened is that a County Court Judge in Birmingham (a County Court is the lowest form of civil court in England) made a decision in two cases, in both of which he found in favour of Lloyds TSB. Curiously, because it hardly ever happens, that Judgement has been made publicly available and can be found on the BBC website. However, because it is "just" a decision of a district judge sitting in a county court, it doesn't mean that all other judges are bound by that decision. Each case has to be judged on its facts.
Reading the judgement, it's clear that neither claim was fully presented or even defended and there are inferences to be drawn from that. One of the claimants didn't bother to attend and didn't present any evidence at all. The other claimant, Mr Berwick, attended and presented evidence, but the evidence was lacking in certain aspects. In particular, he didn't present any evidence as to why the actual charges for an unauthorised overdraft made by the bank exceeded the cost to the bank caused by the overdraft. Without going into a detailed analysis of the claims, this is the sort of evidence that a court would need to be able to take a view on what a "reasonable" charge was.
BBC Radio 4's Money Box programme highlighted how a Judge in Hull has written to various claimants telling them that they are at risk of having their cases thrown out based on the Birmingham judgement. The obvious response is that he can't do that, but the fact is he did. There are also reports that the legal departments for some of the banks have been writing to claimants emphasising the Birmingham judgement as if it was some form of binding precedent. I can see why other lawyers would write such letters - even knowing full well that there's no precedent - because at the very least it highlights the need to have evidence in support of a claim. That isn't to say that such evidence doesn't exist. It's just that claimants will need to work hard to ensure that they are fully prepared for any hearing.
District Judge Stephen Gerlis has called for the matter to be referred to a higher court in order to get some clarity, but that appears unlikely to happen because the banks do not want to risk a precedent which goes against them, and no consumer can afford it. It also begs the question whether a precedent will actually help anyone. It may provide some clarity as to the nature of a penalty in relation to charges made by a bank based on its standard terms and conditions, but it is unlikely to provide wholesale panacea for all claims - which apparently number in their thousands.
Precedents do not always give "once and for all clarity" and lawyers will always find way to argue that they don't apply. What is actually needed is evidence about whether the charges made by banks and credit card companies bear any relation to the commercial reality of the administration involved. Once that is available, then consumers will have a far better idea of whether their claims will succeed.
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