(786) FAIRNESS OF BANK CHARGES: AN ENGLISH DECISION
Regular readers will recall our reports on Sheriff Derek Pyle’s resistance to sists of cases before him in Inverness sheriff court to await the outcome of a test case in the English High Court about the alleged unfairness of bank unauthorized overdraft charges (Nos 675, 745). The decision of Andrew Smith J was published on 24 April 2008: Office of Fair Trading v Abbey National plc  EWHC 875 (Comm), accessible at http://www.bailii.org/ew/cases/EWHC/Comm/2008/875.html. The OFT challenge to the banks’ contracts was made under the Unfair Terms in Consumer Contracts Regulations 1999 (the UK implementation of Council Directive (EC) 93/13 – see further MacQueen & Thomson, Contract Law in Scotland (2nd edn, 2007) ch 7.71 et seq). There were also issues about whether the clauses in dispute were unenforceable penalties under the common law (ibid, ch 6.46 et seq). After 448 paragraphs, Andrew Smith J concludes as follows:
As for the position at common law, I accept the Banks' submission that none of the terms which I have considered (the terms now generally used by the Banks for personal current accounts other than basic accounts and also certain of the terms used until recently by Clydesdale and RBSG) could be unenforceable on the grounds that they are penal (paragraph 323 above). With regard to the 1999 Regulations, I conclude that, of the terms now generally used by the Banks for personal current accounts (other than basic accounts), those of HSBC, Lloyds TSB, Nationwide and RBSG are in plain intelligible language, and those of Abbey, Barclays, Clydesdale and HBOS are largely in plain intelligible language but not so in certain specific and relatively minor respects (paragraph 293 above). However, I reject the Banks' contention that the Relevant Terms are exempt from assessment as to fairness under Regulation 6(2) of the 1999 Regulations (paragraph 421 above). This does not mean that the Relevant Terms are necessarily to be regarded as unfair under Regulation 5(1) or that they are not binding upon consumers under Regulation 8(1): those are not questions for me to decide in this judgment. For the reasons that I have explained, I decline to make any declaration as to the meaning and effect of the requirement of good faith in Regulation 5(1) of the 1999 Regulations
The effect of the decision is to allow OFT to conduct an investigation of, and make a ruling on the fairness question unless the banks enter any appeal. The Govan Law Centre (http://www.govanlc.com) is reported as saying, however, that there is now no reason for those sists that have been granted in sheriff court actions on the matter to remain in place and that their recall should be sought.