Office of Fair Trading v Abbey National plc: Fifteen All in the Game between the Office of Fair Trading and the Banks
Abstract:OFT v Abbey in the High Court was concerned with the validity of charges imposed by banks on customers following the issue of payment instructions by a customer in the absence of sufficient funds to meet the order. Two potential sources of challenge to such charges were considered: the common law of penalties; and the Unfair Terms in Consumer Contracts Regulations 1999. Held: that generally the common law of penalties does not apply to such charges; and that the terms imposing them are subject to review under the UTCCR.
The common law of penalties does not apply because neither the issue of the instruction, nor any subsequent action by the bank, constitutes a breach of contract by the customer upon which a penalty might be levied. The UTCCR does apply to such charges because they are not the price of the services supplied by a bank to its customer. Hence, the exception in Regulation 6 does not apply and the contractual terms imposing the charges can be assessed for fairness under Regulation 5. The judgment did not consider whether any terms were fair for the purposes of the UTCCR.
Document Type: Research Article
Publication date: July 1, 2009
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