26/02/2009 - Bank charges appeal dismissed

On Thursday 26 February, the Court of Appeal unanimously dismissed an appeal by eight of the UK's largest personal current account providers - Abbey National, Barclays Bank, Clydesdale Bank, HBOS, HSBC Bank, Lloyds TSB Bank, Nationwide Building Society and The Royal Bank of Scotland Group (‘the Banks') - against Andrew Smith J's finding that the Banks' terms relating to unarranged overdraft charges could be assessed as to fairness under Regulation 6(2)(b) of the Unfair Terms in Consumer Contracts Regulations 1999.

Sir Anthony Clarke MR, Lord Justice Waller V-P and Lord Justice Lloyd reviewed the House of Lords' judgment in the earlier First National Bank case, the preparatory materials to Directive 93/13/EEC on unfair terms in consumer contracts and the academic commentary. Their Lordships accepted the OFT's submission that the critical question for the purposes of Regulation 6(2)(b) was whether each of the unarranged overdraft charges levied by the Banks was part of the essential bargain between Bank and consumer. Their Lordships also accepted that the perspective of the typical consumer was relevant to this question. They found that the charges in question were not part of the essential bargain between the parties and could thus be assessed for fairness under Regulation 6(2)(b).

The Court of Appeal also refused two of the Banks, Abbey National and HBOS, permission to appeal against Andrew Smith J's finding that their terms were not in plain intelligible language in certain limited respects.

Permission to appeal to the House of Lords was refused.