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On the 25 November 2009 the Supreme Court ruled that the level of the bank's current unarranged overdraft fees are not assessable for fairness under the Unfair Terms in Consumer Contracts Regulations (UTCCR).
On the 22 December 2009 the Office of Fair Trading (OFT) announced that it is ending its investigation into the fairness of overdraft charges under the UTCCR. The bank will continue to work with the OFT, as it has done throughout the court case, in relation to the concerns the OFT has raised as part of its Market Study.
The Financial Services Authority (FSA) waiver came to an end on the 25 November 2009 following the Supreme Court ruling. We have therefore written to everyone who had lodged a complaint relating to unarranged overdraft fees advising them of the outcome of the court case and dealing with their complaint. We will continue to apply normal processes to any new complaints that are received.
Q: What does this decision by the Supreme Court mean?
A: Legally, it means the level of unarranged overdraft charges is not assessable for fairness and, therefore, the OFT has confirmed it has ended its investigation into this issue.
Q: Does this mean the banks won't be refunding charges?
A: The ruling means that those customers who have complained that the charges are unfair or penalties at common law will not be receiving a refund of charges.
Q: What if I am experiencing Financial Difficulty?
A: We are committed to dealing with customers who are in financial difficulty in a positive and sympathetic manner. If you have advised us you are in financial difficulty we will be contacting you, separately to any complaint that has been raised, to ensure we assist where we are able to do so.
Q: When will the case be concluded?
A: The court case is now concluded.
Q: Can I complain to the Financial Ombudsman Service about my overdraft charges?
A: Ultimately, you have the right to refer your complaint to the Financial Ombudsman Service. Before you decide whether or not to take your complaint to the Financial Ombudsman Service, we strongly recommend that you consider the information about this subject on the Financial Ombudsman Service's website at
http://www.financial-ombudsman.org.uk/faq/bank-charges.html
The Supreme Court has ruled that the level of the bank's current unarranged overdraft fees are not assessable for fairness under the Unfair Terms in Consumer Contracts Regulations (UTCCR).
House of Lords Appeal
Court judgments given in the bank charges test case have confirmed that current and historic charges made by HSBC and first direct are capable of being tested for fairness but are not capable of being penalties. HSBC (and all the other financial institutions involved in the test case) has appealed the finding that the unauthorised overdraft charges are capable of being tested for fairness to the House of Lords. The appeal took place from 23 to 25 June 2009.
FSA Waiver
A new waiver has been granted to HSBC (including first direct and all other financial institutions involved in the test case) because, although considerable progress had been made in the test case, it is not yet clear how firms should be responding to complaints about unauthorised overdraft charges so that customers are treated consistently and fairly. The new waiver has been granted for six months.
The OFT has announced the next phase of its ongoing enquiry into overdraft fees. To streamline and potentially shorten the enquiry, which was commenced in March 2007, the OFT has decided to look at a representative sample of three UK banks current account terms and conditions, including those of HSBC.
The OFT has made it clear that the selection of the three banks is not to be seen as an indictment of these banks - they are purely representative of the different terms and conditions that exist among the many banks and building societies that offer current accounts and overdrafts in the UK.
HSBC welcomes this initiative and we will continue to cooperate fully and constructively to the ongoing enquiry. The OFT enquiry investigation is running in parallel with the high court test case. Within this the banks have just been granted leave to appeal to the House of Lords regarding assessing terms and conditions for fairness, and will progress the appeal as quickly as possible.
The Court of Appeal has today issued a judgment in the test case relating to unarranged overdraft charges. The test case process was initiated by the Banks and the OFT, to bring clarity to an issue which is of concern to a large number of bank customers.
The Banks had appealed Mr Justice Andrew Smith's decision that their Terms and Conditions were assessable for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCRs"). His decision that the Banks' Terms and Conditions relating to unarranged overdraft charges were not capable of being penalties (except for one term relating to one bank) was not appealed.
The Court of Appeal has today ruled that the Banks' terms are assessable for fairness. The bank is considering the judgment and the next steps in the process.
The Banks remain committed to resolving, through the Courts, the legal issues concerning unarranged overdraft charges. The Banks and the OFT agreed that the case should move forward as quickly as possible and this has been achieved, with assistance from the Court. The Banks expect that the case will continue to progress as quickly as possible and will work with the OFT to achieve that.
Progress of the test case?
In April and October 2008 the Court confirmed that HSBC's current and historic Personal Current Account Terms and Conditions relating to unarranged overdraft fees were not capable of being penalties.
The Court also decided that our current and historic Personal Current Account Terms relating to unarranged overdraft fees are capable of being assessed for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCRs").
The Court gave permission to the Banks to appeal this judgment as the Banks continue to believe that the UTCCRs do not apply to these types of fees. There is limited guidance from case law on whether and how the UTCCRs apply in these circumstances and as the Test Case process is of considerable public interest, it is important for the issues to be fully tested.
The appeal hearing took place between 28 October and 6 November 2008 at the Court of Appeal.
Where can I find out more?
You can find more information through the following links:
The British Bankers' Association
The Financial Service Authority
The Financial Ombudsman Service
first direct is a division of HSBC Bank plc. © HSBC Bank plc 2008. All Rights Reserved. Member HSBC 
Group.
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