Thousands face extra bills as court ruling hits property sales

The Herald reports that "A landmark ruling on repossessions is resulting in the suspension of property sales at the last minute and thousands of Scots facing large bills from banks on top of losing their homes. Almost a week after the decision by the UK Supreme Court effectively ground all Scottish repossession cases to a halt, there are concerns that hundreds of property deals could be halted as a result.

There are also warnings of the impact of the judgment on the cash-strapped courts service, with thousands of cases scrapped and having to come back into the system.  Last night, the Law Society of Scotland called on solicitors to put the brakes on all purchases of repossessed homes until it can be proven it is compliant with last week’s “earthquake” judgment.

Bruce Ritchie, director of professional practice at the Law Society of Scotland, said: “The society’s conveyancing and civil justice committee will be looking at this in detail but our preliminary view on current transactions that have not yet settled is that buyers’ solicitors should be firm about declining to settle the transaction until selling creditors can produce evidence of having followed correct procedure.”

Mike Dailly, of the Govan Law Centre, said he would pursue legal action against the lenders for putting the bill for dealing with the judgment on to his clients. He said: “The question that no-one has asked is ‘who’s going to pay for all this?’ I have no doubt UK banks will do what they always do and pass these costs onto consumers by adding them to their mortgage – which they can do if the costs are reasonable.  “We could be looking at up to £40 million or more. “It’s not reasonable to expect vulnerable Scots facing repossession to pay banks and their lawyers twice for what is essentially their solicitors’ responsibility and failure.” "

Thousands face extra bills as court ruling hits property sales

GLC predicts major shockwaves for Scottish repossession law following RBS v. Wilson and others

A judgment of the UK Supreme Court today looks set to have profound implications for the law and practice of repossessions in Scotland. According to GLC's Principal Solicitor, Mike Dailly, the case of RBS plc v Wilson and others "may be to Scottish repossession proceedings what Cadder has been to criminal proceedings in Scotland". 

The UK Supreme Court upheld the appeal of two sets of Scottish homeowners in the case of Royal Bank of Scotland plc v. Wilson and others [2010] UKSC 50, where a lender's certificate of default did not amount to a 'requisition' for the purposes of section 5 of the Heritable Securities (Scotland) Act 1894, and where the court held that in the circumstances of the case, a 'calling-up notice' should have been served. 

 The standard practice of most lenders in Scotland in reposession proceedings has been to raise a writ founding upon a 'default' in terms of standard condition 9(1)(b) (of sch 3 of the 1970 Act) and seek recovery in terms of section 24 of the Conveyancing and Fedual Reform (Scotland) Act 1970.  In essence, lenders would not bother with a default or calling-up notice and would simply raise repossession proceeding based upon the mortgage arrears (lodging a 'certificate of default' setting out the amount of arrears). 

And that was that for many years in Scotland - defenders could use the Mortgage Rights Act (Scotland) 2001 and now the Home Owners & Debtor Protection (Scotland) Act 2010 to obtain a chance to pay, re-mortgage or restructure, sell, or apply to the Mortgage to Rent Scheme.  But no-one challenged the orthodoxy of the lender's right to use standard condition 9(1)(b) for a repossession based upon mortgage arrears; until now.

The UK Supreme Court's ruling makes it clear that standard condition 9(1)(b) cannot be used for a failure to comply with mortgage payments, and instead a calling-up notice is necessary in an arrears case. At para 74 Lord Hope says "As standard condition 9(1)(b) refers to a failure to comply with any other requirement arising out of the security, this section must be taken to refer to defaults other than in respect of the debt secured by the standard security. Content for its application is to be found in the requirements that are set out in standard condition 1 (maintenance and repair), standard condition 2 (completion of buildings), standard condition 3 (observance of conditions in title) and standard condition 5 (insurance) and any other similar conditions that may have been included by way of variation to maintain the value of the security subjects".

GLC's Principal Solicitor said: "The fact the UK Supreme Court has stated that standard condition 9(1)(b) cannot be used for a failure to pay ones mortgage, and that in such cases a calling-up notice and standard condition 9(1)(a) should be used instead, will send shock waves to lenders and their solicitors in Scotland.  More than that it could mean thousands of cases might have been raised incompetently, with defenders entitled to seek dismissal with expenses in principle.  GLC would recommend that all homeowners in Scotland currently subject to repossession proceedings seek advice from a law centre solicitor or local firm of solicitors in light of this decision".

GLC predicts major shockwaves for Scottish repossession law following RBS v. Wilson and others

Sheriff puts Bank of Scotland to proof on bank charges

- Onus of proof now on Scottish bank to show charges were not excessive

THE BANK OF SCOTLAND has failed in its attempt to prevent a customer amending her claim for unfair bank charges, recalling the sist, and fixing a full evidential hearing at Glasgow Sheriff Court this morning (Friday, 19 February 2010).

UK banks have been telling over one million of their customers in the UK that they now had no legal basis to reclaim unfair charges in light of last November's Supreme Court ruling. However, the Supreme Court itself had suggested that charges could still be challenged under different legal grounds, and Govan Law Centre (GLC) had sought to amend their client's claim to incorporate a revised 'regulation 5' case under the Unfair Terms in Consumer Contract Regulations 1999 (UTCCR), and significantly, an additional claim under the new section 140A of the Consumer Credit Act (CCA, as amended in April 2007).

Counsel for the bank, instructed by Dundas and Wilson CS LLP, had objected strongly to the pursuer's substantial amendments, arguing it would be 'improper' to allow the customer to amend her claim in this way. GLC's Mike Dailly, representing the customer, explained to the court that it was necessary to amend the claim in order to take on board legal developments, and although consumers could no longer attack charges as 'excessive in price' under the UTCCR, they could do so under the s.140A of the CCA. The ability to do so was hugely significant, as was the fact the onus of proof to show charges were not excessive was on the bank under the CCA.

In Sharp v. Bank of Scotland plc, Sheriff Baird, a senior sheriff at Glasgow Sheriff Court, rejected the submissions for the defenders, and granted the pursuer's application to substantially amend her Statement of Claim and Crave, recalled the sist, and fixed a full evidential hearing (know as a 'proof' in Scotland) for 11th June 2010.

Mike Dailly, Principal Solicitor at Govan Law Centre said:

"Over the last few weeks, UK banks have been telling one million customers that there were now no grounds to reclaim bank charges, standing November's Supreme Court's decision. Of course, the Supreme Court itself had explained that charges could still be challenged under different legal grounds, and that is what Sheriff Baird has permitted our client to do today at Glasgow Sheriff Court".

"But besides a challenge under reg. 5 of the UTCCR, the Bank of Scotland now faces a fresh challenge that charges were excessive and unfair under the Consumer Credit Act. That is a potentially devastating case for them to answer, because under this new law the onus of proof is on the bank to show that charges were fair. Given that our banks have admitted they subsidise 'free-if-in-credit banking' by squeezing more money out their poorest customers through bank charges, they will now have to defend the indefensible. And, they will have the added problem that we are asking the court to prohibit them from imposing future charges under the CCA".

"In a nutshell, our new arguments are hugely more powerful than the ones deployed by the OFT in their unsuccessful test case. Evidentially, the new arguments require the bank to prove their charges were fair - which is tactically significant for consumers. The new arguments not only enable consumers to seek a refund of past charges, but entitle them to ask the court to prohibit future bank charges. That is hugely significant, and in many respects, we believe the new bank charges campaign is going to be a tougher propsect for the banks than the pre-July 2007 campaign. And of course that previous campaign saw refunds in excess of £1bn for consumers across the UK - so we are incredibly optimistic".

Sheriff puts Bank of Scotland to proof on bank charges

Unfair bank charges: free help to amend existing complaint letters

What's this about?
Over the last two and half years complaints about unfair bank charges had been placed 'on hold' by UK banks and the Financial Ombudsman Service (FOS). This was because the UK's financial regulator - the Financial Services Authority (FSA) - had granted a waiver, which resulted in all complaints being frozen pending the outcome of the OFT's bank charges test case.

That waiver was lifted by the FSA after the OFT lost its test case before the UK Supreme Court. Most banks will now tell you that because they won they will not be refunding any bank charges, and that this issue is now closed. For example RBS is now writing to customers advising "we do not believe that there is any other legal basis on which the level of these charges can be challenged". It's untrue and incorrect to suggest that bank charges are 'fair' or cannot be challenged. The OFT lost on an extremely narrow technical point, and a consensus remains that bank charges are legally unfair and excessive.

Importantly, the UK Supreme Court was careful to explain that its judgment did “not resolve the myriad cases that are currently stayed in which customers have challenged Relevant Charges”. In particular, the court made it clear that “it remained open to question whether bank charges were fair” in relation to regulation 5(1) of the Unfair Terms in Consumer Contract Regulations.

What should I do now?
If you have an existing complaint with your bank or the FOS, it is likely this will be rejected unless you AMEND your grounds of complaint, to take on board the impact of recent developments, and explain why you are still entitled to a refund of unfair bank charges. There is no need to pay for anyone to help you do this - you can do this yourself, or with the free help or support of a community law centre solicitor, money advice agency or Citizens Advice Bureaux. Details of where to locate free help is set out below.

GLC has drafted the following downloadable example letters for use within the UK:

(1) Letter to bank with amended grounds of complaint:
| Word document link | htm link |

(2) Letter to the Financial Services Ombudsman with amended grounds of complaint:
| Word document link | htm link |

Use the following links to locate free help from a local advice agency in the following locations: glasgow; scotland; england & wales; northern ireland; ireland

It is understood (see the comment thread below) that the FOS has written to some people who have sought to amend their complaints, advising them that it is necessary to first put these 'new' grounds of complaints to the bank. This would effectively mean starting the complaint all over again. A suggested letter explaining why the 'amendments' are not 'new grounds' is here:

(3) Letter to FOS requesting a determination of the original complaint (as amended):
| Word document link | htm link |

There is no guarantee of success, however, we are encouraging UK consumers to insist upon their right to pursue a complaint with their bank and the FOS. If you are successful in obtaining a refund please let us know, by posting a comment below.MoneySavingExpert.com will be producing free updated guidance on how to reclaim unfair bank charges in the next week or so, so please sign up to the free MSE e-mail alert, for further details.

Unfair bank charges: free help to amend existing complaint letters

Overdraft fees - what next? BBC Radio 4's MoneyBox

Banks are preparing to write to customers who have requested the return of overdraft fees in the wake of this week's Supreme Court judgement.

Around a million customers have had their claims on hold. But the victory of the banks over the Office Of Fair Trading means almost all of them will fail - as they stand - unless they amend them (on how to do this see here).

But campaigners tell Money Box they think there is still hope.

At stake in the case is an estimated £2.6bn of annual income for the banks. Campaigners say they're disappointed with the decision. Paul Lewis was at the Supreme Court for the judgement to gauge reaction.

The programme will hear from Tony Boorman, Principal Ombudsman, Mike Dailly, principal solicitor at Govan Law Centre, and Angela Knight, chief executive of the British Bankers' Association.

BBC Radio 4, Saturday, 28 November 2009 at 1204 GMT, online & podcast, BBC iPlayer.

Overdraft fees - what next? BBC Radio 4's MoneyBox

Legal team appointed to fight bank charges

MoneySavingExpert.com has today arranged for top banking barrister Ray Cox QC to redraft its bank charges template letters in light of the Supreme Court judgement. The site is doing this via engaging Govan Law Centre, led by campaigning solicitor Mike Dailly, and it will instruct Mr. Ray Cox QC and Mr Giles Wheeler, both barristers at Fountain Courts Chamber, Temple.

Martin Lewis creator of MoneySavingExpert.com said:"There are millions of people with cases on hold, and the OFT won’t be giving its view until December – meanwhile the banks are already starting to apply to have cases kicked out of court. We hope to put the brakes on this by drafting amended documents which people reclaiming can submit to the court based on the latest ruling."

"The Supreme Court itself noted that the question of fairness could still be looked at under the now infamous ‘clause 5’ of the UTCCR regulations and that’s exactly where we will be attacking. It will be interesting to see how the banks react to what we hope will be the Rolls-Royce of template letters – drafted by a QC who has many times led cases for the banks themselves."

GLC's Mike Dailly said: "We're delighted to be working with MoneySavingExpert.com on what is perhaps one the biggest rescue operations in recent UK consumer history. Rumours of the demise of the unfair bank charges campaign have been greatly exaggerated by the banks. The Supreme Court gave a very clear message that bank charges could still be unfair under regulation 5, and so a brand new right to reclaim will shortly be available to consumers on the authority of no less than the Supreme Court itself".

The template letters and legal advice should be available within the next two weeks via www.MoneySavingExpert.com – it will also be made available to other free campaigning sites including the Consumer Action Group, Penalty Charges and Legal Beagles.

Further discussion in The Herald:
In the banking conflict, there is only one side that charges

Legal team appointed to fight bank charges

'Constitutional rights crisis' for UK consumers?

If the Supreme Court upholds the banks' appeal tomorrow it would be an obvious disaster for the rights of UK consumers; but if the appeal is rejected, don't hold your breath as the banks look set to keep on charging while they keep on fighting the Office of Fair Trading (OFT).

Where does this leave ordinary citizens who have been ripped off by unfair and excessive bank charges? Tens of thousands of court actions for bank charge refunds in the English and Scottish legal systems have been 'sisted' (‘stayed’ in England) since the OFT's test case commenced in July 2007.

The British Bankers Association (BBA) is already playing down the significance of an OFT win before the UK Supreme Court, and there is every likelihood that the banks will continue to fight on, whether by pursuing an appeal before the European Court of Justice, or by defending the case on the facts before the High Court in London.

Govan Law Centre (GLC) believes if the OFT wins tomorrow, there is a danger of a ‘constitutional rights’ crisis if tens of thousands of consumer claims remain frozen.

GLC's Mike Dailly said: “It’s a well established rule of law that UK citizens have a constitutional right of unimpeded access to the courts in England and Scotland. Yet tens of thousands of consumers have now had those rights suspended for two and half years”.

“If the court rejects the banks’ appeal, not only does this mean the OFT can assess the fairness of charges, but crucially it means any consumer is now entitled to ask the court to assess the fairness of their overdraft fees”.

“To put it another way, if the Unfair Terms in Consumer Contract Regulations apply to overdraft fees, there is no longer any question of law in dispute, and the reason for freezing claims disappears. Administrative convenience to the banks can be no justification for denying the British public access to the courts”

“Similarly there would be no need for the FSA to continue its waiver on bank charge complaints which expires in January. If the Supreme Court rejects the banks’ appeal, Govan Law Centre will try and re-active bank charges claims in Scotland as a matter of constitutional and human rights law, and we will work with other bank charge campaigners to do likewise across the UK”.

In IR v Lord Chancellor ex p Witham [1998] QB 575 the court held that the no-one can “abrogate the right of access to justice, unless it is specifically so permitted by Parliament”. This principle has been followed in numerous cases including R v Home Secretary ex p Leech (No 2) [1994] QB 198, and Watkins v. Secretary of State for the Home Department and others [2004] EWCA (Civ) 966.

Tomorrow’s judgment from the Supreme Court will remove the reason why bank charges claims were frozen. The only question left in bank charge cases is essentially one of ‘individual fact and circumstance’. Local county courts in England, and sheriff courts in Scotland, are well placed to assess factual disputes, given that the applicable law will have been settled by the Supreme Court.

Any further attempt to deny consumers the right to proceed with their claims will, in Govan Law Centre’s opinion, be unconstitutional, and separately, contrary to Article 6 of the Human Rights Act 1998 (which guarantees individuals the right to have their civil rights determined by an impartial tribunal within a reasonable period of time).

'Constitutional rights crisis' for UK consumers?

Banks face D-Day over unfair charges

The epic fight between the Office of Fair Trading (OFT) and Abbey, Barclays, Clydesdale, HBOS, HSBC, Lloyds, Nationwide BS and RBS/NatWest will finally come to a head on Wednesday. The newly formed UK Supreme Court will decide then on the appeal brought by the bankers against earlier rulings that their overdraft charges can be assessed by the OFT for fairness. For a full analysis see the article in The Independent on Sunday.

Banks face D-Day over unfair charges