The case of The Office of Fair Trading vs Abbey National Plc & Others Literature review

The case of The Office of Fair Trading vs Abbey National Plc & Others - Literature review Example The appeal starts by Lord Walker. In The appeal, the Supreme court was to give a verdict as whether the OFT should go ahead and undertake investigations to find out if the charges â€Å"the Banks†, which were the appellants, made for unauthorized overdrafts by their customers were fair. At the moment, banks provided retail banking services on grounds that customers’ accounts that lend the bank money are excluded from paying charges to the bank for services offered. Customers whose accounts had authorized overdrafts only paid charges for the money they borrow â€Å"the Banks†. Customers whose accounts had unauthorized overdrafts, however, paid interest on money borrowed besides paying fixed fees for every service they received from â€Å"the banks†. The Office of Fair Trading holds investigative powers on consumer contracts’ fairness terms. The power of the Office of Fair Trading, however, has limitations bound to it. The limitations stipulated in th e Unfair Contract Terms, in Consumer Regulations 1999. The Unfair Contract Terms, in Consumer Regulations 1999, implemented European Council Directive 93/13/EEC. The directives help protect customers and ensure a favorable business environment for fair trading. OFT has the mandate on undertaking this. The provisions regulation 6 (2) (b) give way for evaluate trading activities of a business enterprise or organization. OFT scrutinizes the activities so as to determine the level of fairness of the activities. The OFT scrutinizes contracts and customer satisfaction to determine their fairness. In the case the court of appeal did hold the point of exclusion in the case only to the contracts’ â€Å"core terms†. The court excluded ancillary terms as charges for unauthorized overdrafts on reasons that the charges were within the exclusion. The charges, according to the court, were part of the charges for banking services provided. At first instance ([2008] EWHC 875 (Comm), an d in the Court of Appeal, OFT was successful. Under the Unfair Terms in Consumer Contracts Regulations 1999, the Office of Fair Trading wished to conduct an investigation on â€Å"the Banks’† relevant terms in their contracts with customers by imposing charges on customers whose accounts had unauthorized overdrafts. The Office of Fair Trade hold mandate to undertake the investigation, notwithstanding regulation 6 (2) (b).The decision of both the High Court and the Court of Appeal that regulation 6 (2) (b) could not deter the OFT from doing the investigation made â€Å"the banks† to file appeal. Lord Walker emphasized the lack of decision on the fairness of the system of charging current account customers with unauthorized overdrafts. The court could only decide on the investigative mandate of the OFT (para 3). Lord Mance reaffirmed the investigative roles of OFT (para 61). Determining whether charges were consisted ‘cost and revenue’ as against â₠¬Ëœthe goods or services distributed in exchange’ within the meaning of the Regulations was the main point to decide on. First, charges were ‘in exchange’ for the transactions to which they relate should the customer have inadequate funds to do so (Para 75). Secondly, regulation 6 (2) (b) no longer had a standing to the â€Å"ancillary† charges in the binding form (Paras 38-41, 47, 78, 112)1. In his reasoning, Lord Mance stated that, if in case the contracts were to serve as the package, then the charges levied would be fair. He further states that the charges