Update – overdraft bank charges court case

On 27 July 2007, the Office of Fair Trading (OFT), 7 UK banks (including HBOS) and Nationwide Building Society, started a court case to decide on the legality of unarranged overdraft bank charges.

Full details of the announcement

The case has been called a "test case" because the decision will clarify the law in this area. It is likely to apply to all current and new claims against current account providers about unarranged overdraft bank charges.

We believe that unarranged overdraft fees are fair and reflect the service customers enjoy and that legal certainty over unarranged overdraft bank charges is in the interests of all concerned.

The first step in this process was a trial of certain 'preliminary' issues. This preliminary trial concluded on 8 February 2008.

The Court has issued its judgment on this first stage of the test case process. The judgment is complex and the Banks are currently considering its implications.

Further Court hearings will be required before the test case process is concluded. The likely timetable for the next steps in the test case process will be decided by the Court on 22 May 2008.

As previously agreed with the Financial Ombudsman Service and the FSA, customer complaints relating to unarranged overdraft charges will currently remain on hold. The Banks will continue to ask County (England & Wales) and Sheriff (Scotland) Courts to keep cases relating to unarranged overdraft charges on hold until the test case process is concluded.

Why are you doing this?

The OFT and the banks and building society involved in the 'test case' believe that legal certainty over unarranged overdraft bank charges is in the interests of all concerned. Examining the legality of charges will make sure any conclusions drawn by the OFT's ongoing investigation into unarranged overdraft bank charges will not be open to challenge at a later date.

The court's final decision will apply to all UK customers who have incurred unarranged overdraft charges on a UK current account. Although not all UK banks and building societies that offer current accounts are party to the test case, they've all agreed to apply the court's decision when it's reached.

What will happen to customer complaints about unarranged overdraft bank charges?

Most banks and building societies will not be dealing with or resolving customer complaints on unarranged overdraft bank charges while the test case is running.

If you do complain about your unarranged overdraft bank charges, we will write to tell you that we have received your complaint and 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 will apply the decision in the court case to all complaints we receive.

Why are the banks allowed to stop dealing with unarranged overdraft bank charge complaints during the test case?

We applied to the Financial Services Authority (FSA) for a suspension of the normal timetable for dealing with unarranged overdraft bank charge complaints. The FSA decided 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 customers' rights.

The FSA's suspension direction can be found on the FSA's website: www.fsa.gov.uk

Can I make a court claim for a refund during the test case?

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 unarranged overdraft bank charges are being considered in the test case.

Can I complain to the Financial Ombudsman Service about my unarranged overdraft bank charges?

The Financial Ombudsman Service (FOS) has decided not to review complaints while the test case is running. If you do complain to FOS, they will respond to you confirming their position directly.

What if I have already been made an offer?

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 within the last two months, we will be writing to you again shortly.

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 to finally resolve your complaint.

I have already accepted an offer from you. Will my claim be revisited?

No. The offer we made and you accepted was in full and final settlement of your claim.

How long will the "test case" take?

At this time it is too soon to give exact timescales for a conclusion to the "test case" but it could go for more than a year. We have agreed with the OFT and the FSA to conduct the test case in an efficient, prompt and orderly way.

Will I be compensated for this delay?

Should the test case resolve that the bank is due to pay money to you, any amounts will include an element of interest to compensate for the delay.

Why hasn't a case been taken to court before now?

We've been working closely with the OFT as part of its enquiry. Within this we've discussed the option of taking a 'test case' to court and a decision has now been made by the parties to take this forward.

Why wasn't a "test case" on credit card charges taken to court?

The OFT made a ruling based on its interpretation and understanding of the law. This has not been tested in the courts and remains open to legal challenge.

Is the OFT suing you?

This action has been mutually agreed by the banks and the OFT in order to provide legal certainty over the issue of unarranged overdraft bank charges.

Will I still incur charges while the test case is on-going?

Yes, your account is still subject to the usual terms and conditions whilst the case is on-going.

Will my bank account be frozen while the test case is ongoing?

No, your account can be operated as normal and is still subject to the usual terms and conditions whilst the case is on-going.

I live in/have an account in Scotland, how does this affect me?

If you choose to raise a claim against the bank in the Scottish Courts the bank will immediately apply to the Court to put your action on hold until the resolution of the bank's legal proceedings with the OFT.

Should you choose not to raise a claim against the bank in the Scottish Courts now, you should be aware that under Scots Law the timing of when you raise a claim against us may be important. The court may decide that we have no obligation to make repayment of the unarranged overdraft bank charges that were applied to your account more than 5 years before the date on which you raised a claim against us. You may therefore wish to seek independent legal advice as to what steps you need to take in order to protect your right to claim repayment of unarranged overdraft bank charges from us in the future (e.g. when the legal proceedings with the OFT are resolved).

Where can I find out more?

You can find more information from the following websites:

The Financial Service Authority: The Financial Service Authority

The Office of Fair Trading: The Office of Fair Trading

The Financial Ombudsman Service: The Financial Ombudsman Service

You can also obtain a copy of the consumer fact sheet from the Financial Ombudsman Service website.

Complaints

At Intelligent Finance, we aim to provide you with the highest standards of service, however, there may be an occasion when you feel you have cause for complaint. If so, our staff will do all they can to resolve the problem and ensure that you receive a quick and fair response to any complaints you may have.

We have a complaints handling procedure in place. Our procedures meet the standards set by the Financial Services Authority (FSA). The FSA have published consumer guidance on how to make a complaint. Copies can be downloaded from the FSA website Or you can contact them on 0845 606 1234 ¹.

Phone Us

Our Contact Centre staff are available to speak to you seven days a week on 0845 609 4343 ¹. Most customers' concerns can be resolved by our Contact Centre staff, who will do all they can to help. If they are unable to do so the complaint will be passed to a specialist team for investigation.

Write to us

If you prefer, write to us at:

Intelligent Finance
Customer Relations
PO Box 17316
Edinburgh
EH12 1AY

E-mail us

If you are an existing customer and are registered online with us you can use our secure e-mail facility to send us your complaint. To do this you must log in to your plan and select the 'Contact Us' function. You will receive an automatic response to confirm we have received your e-mail, which will then be passed to the Complaints Team for investigation.

OUR PROMISE TO YOU

Our complaints procedure is designed to ensure that each complaint is dealt with fairly and to your satisfaction. We will send you an acknowledgement letter within 5 working days of your complaint being received by us. If our investigations are not completed within 4 weeks, we will confirm by letter the reasons for the delay.

If our investigations have not been completed within 8 weeks, we will outline our findings to you by letter, explain why we have been unable to resolve the issue and highlight your referral rights to the Financial Ombudsman Service. We will be pleased to deal with all your concerns, however if your complaint relates to additional services offered to Intelligent Finance customers via a third party, you may wish to contact them direct.

For matters relating to Pinnacle Insurance plc:

Pinnacle Insurance plc
Pinnacle House
A1 Barnet Way
Borehamwood
Hertfordshire
WD6 2XX

Telephone: 0208 207 9005

For matters relating to Halifax General Insurance Services Limited:

Halifax General Insurance Services Limited
Trinity Road
Halifax
HX1 2RG

Telephone: 01422 439 901

For matters relating to Legal & General Group:

Legal & General Assurance Society Limited
PO Box 1186
Hove
East Sussex
BN3 1SD

Telephone: 0870 010 4080 ³

The Total Mortgage Protection Plan (TMPP):

The TMPP Administration Unit
PO Box 534
Uxbridge
UB8 1WF

Telephone: 0845 600 6007 ¹

REFERRAL TO AN OMBUDSMAN

We are committed to resolving complaints whenever possible through our complaints procedure. If we are unable to resolve your complaint we will provide you with details of how to refer your complaint to the Financial Ombudsman Service. The Financial Ombudsman Service is an independent service for consumers with unresolved complaints about financial firms and offers a flexible and informal dispute resolution service.

You can contact them at:

The Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London
E14 9SR

Telephone: 0845 080 1800 ¹
Email: enquiries@financial-ombudsman.org.uk
Website: www.financial-ombudsman.org.uk

¹ Calls to 0845 numbers from BT landlines will cost a maximum of 4p per minute. The price of calls from other telephone companies will vary. The call price is correct at September 2007.

³ Calls to 0870 numbers from BT landlines will cost a maximum of 8p per minute. The price of calls from other telephone companies will vary. The call price is correct at September 2007.

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