unfair UK bank charges

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step 1 - send letter to your bank

step 2 - refused a refund? - send a final letter

step 3 - raise a court action:
[England/Wales/Northern Ireland]

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Your bank is in Scotland or Northern Ireland, but you live in England or Wales?  Or perhaps you live in Scotland or Northern Ireland but your bank has its registered office in London?  Which part of the UK are you entitled to raise proceedings?

There are several reasons why this issue could matter.  In general, most people will want to raise proceedings at their local court.  It is much easier to attend hearings at your local court.  However, if your claim for bank charges is in excess of £750 (the small claims limit in Scotland) or £2,000 (the small claims limit in Northern Ireland), then the ability to sue in England & Wales may be attractive as the small claims limit in England & Wales is £5,000.  

Using the small claims procedure is important because it is the only court procedure that caps legal expenses in the event of loss.  In other words, the small claims procedure enables you to raise litigation without the fear of massive legal expenses in the event of failure.

The rules on where you can raise proceedings - known as 'jurisdiction' - are set out in the Civil Jurisdiction and Judgments Act 1982, as amended by the Civil Juridiction and Judgments Order 2001 Schedule 4 of the 1982 Act (as amended) regulates the court's jurisdiction over consumer contracts.  This includes a consumer's bank or building society account.

Importantly, para 8 of schedule 4 provides that a customer is entitled to sue their bank where they live (where they are 'domiciled') or where the bank is domiciled - the relevant parts of Schedule 4 are reproduced below.  In contrast, a bank can only sue you (as a consumer) where you live.

So, for example, if you bank with the Royal Bank of Scotland but live in London, you can raise a small claims action either in London or Edinburgh.  Alternatively, if you live in Glasgow, but bank with the NatWest, you can raise a small claims action either in Glasgow or London.   Likewise if you live in Aberdeen and bank with the Halifax plc, you can raise a small claims action either in Aberdeen or Halifax (cf. the Bank of Scotland's 'domicile' is Edinburgh; however, many other bank & credit card companies will have their registered office in England). 

A company 's domicile is usually established from where it has its 'seat', that is usually its 'registered office' or the place where its central management and control is exercised: section 42, 1982 Act.  Thus some consumers may have a choice where to sue.

Where proceedings arise from the operation of a particular branch, agency or establishment, proceedings can be raised where that 'branch, agency or establishment' is situated - from section 44 of the 1982 Act.

It is understood that the England & Wales Money Claim Online service requires a claimant to have an address in England or Wales, and therefore, if you are raising proceedings in England you would have to forward your claim to a particular County Court by post.  While raising proceedings in England will entitle you to sue for a maximum of £5,000 under English small claims procedure, if the claim is defended you must be prepared to travel to England to present your defence.  Accordingly, you should think very carefully about this issue, weighing up all of the pros and cons.


Can my bank's terms & conditions determine where proceedings are raised?

Paragraph 9 of Schedule 4 (see below) allows parties (the bank & you, the customer) to agree that one part of the UK has 'exclusive jurisdiction'.  That is known as 'prorogation' of jurisdiction.   In other words, that proceedings must be raised either in England, Scotland or Northern Ireland.  

In general, paragraph 9 can only apply if both you and your bank were domiciled in the same part of the UK when the account was opened (i.e. either both in England/Wales, or both in Scotland, or both in NI) and the contract contains a clause conferring exclusive jurisdiction to one part of the UK.

You should therefore check your bank's terms and conditions.  

A clause which states:

    "If your address is in Scotland, Scottish law applies to the contract between you and us. If you live elsewhere, English Law applies between you and us" (Abbey National plc T&Cs) or

    "This agreement is governed by the law in Scotland" (Bank of Scotland/HBOS T&Cs)

is unlikely to confer exclusive jurisdiction

Firstly, such clauses do not deal with exclusive jurisdiction - they simply deal with the application of common law rules.  The courts have held that such clauses do not go far enough to confer exclusive jurisdiction.  

For example, in the case of McGowan v. Summit at Lloyds 2002 SC 638, 2002 SLT 1258, an insurance policy contained a clause which said: 'this Document shall be governed by the laws of England, whose courts shall have jurisdiction in any dispute arising hereunder'.  An action was raised in Scotland and Lloyds defence was the case was incompetent as the Scottish courts had no jurisdiction in light of the clause.  However, the Inner House of the Court of Session (Scotland's highest court) held (applying the English case of S&W Berisford plc v. New Hampshire Insurance Co Ltd [1990] 2 QB 631) that the clause did not create exclusive jurisdiction in England, and only created concurrent jurisdiction i.e. proceedings could be raised in either Scotland or England in terms of the clause and the 1982 Act.

In the English High Court case of S&W Berisford plc (cited above) a clause in an insurance policy stated that 'This insurance is subject to English jurisdiction'.  Justice Hobhouse (as he then was) held that those words 'were inept' to create an exclusive jurisdiction clause.


I have checked my bank's terms & conditions are there appears to be an exclusive jurisdiction clause for Scotland/NI?

If this appears to be the case (and your bank is domiciled in England) you may wish to consider arguing that this clause is an unfair term of contract in terms of UTCC Regulations 1999.  Paragraph 1(q) of Schedule 2 to the 1999 Regulations provides as follows:



    1(q) excluding or hindering the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract.





Jurisdiction over consumer contracts 

     7.  - (1) In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this rule and rules 8 and 9, without prejudice to rule 3(e) and (h)(ii), if - 

(a) it is a contract for the sale of goods on instalment credit terms; or 

(b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or

(c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the part of the United Kingdom in which the consumer is domiciled or, by any means, directs such activities to that part or to other parts of the United Kingdom including that part, and the contract falls within the scope of such activities.

    (2) This rule shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation, or to a contract of insurance.

     8.  - (1) A consumer may bring proceedings against the other party to a contract either in the courts of the part of the United Kingdom in which that party is domiciled or in the courts of the part of the United Kingdom in which the consumer is domiciled.

    (2) Proceedings may be brought against a consumer by the other party to the contract only in the courts of the part of the United Kingdom in which the consumer is domiciled.

    (3) The provisions of this rule shall not affect the right to bring a counter-claim in the court in which, in accordance with this rule and rules 7 and 9, the original claim is pending.

     9. The provisions of rules 7 and 8 may be departed from only by an agreement -  

(a) which is entered into after the dispute has arisen; or 

(b) which allows the consumer to bring proceedings in courts other than those indicated in those rules; or

(c) which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same part of the United Kingdom, and which confers jurisdiction on the courts of that part, provided that such an agreement is not contrary to the law of that part.


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