The High Court announcement of 24th April 2008 that the Unfair Terms in Consumer Contracts Regulations (UTCCRs) could be applied to unauthorised overdraft charges should have focused the minds of all affected banks and building societies. The somewhat pyrrhic victory subsequently claimed by the banks seems to have missed the point; the legal decision brings closer the day when the mammoth backlogs of charge-related complaints will have to be faced, regardless of which side wins or loses.
With a conservatively estimated 750,000 complaints to handle, firms should by now be well advanced with planning their project requirements. To add to the workload, the consumer lobby has been quick to secure airtime and column inches to urge customers to lodge a complaint if they have not already done so. This continuous media attention has led to the volume of incoming bank charge-related correspondence received by several current account providers almost doubling since the announcement of the High Court ruling earlier this year.
It is unclear whether or not the banks will appeal the initial decision at the case management conference on 22nd May 2008. However, the High Court judgment is unambiguous in declaring that the banks’ contention that the UTCCRs did not apply to their terms and conditions is flawed and an appeal on this verdict will probably fail.
Moving forward, it seems unlikely that the Office of Fair Trading will decide that the banks’ terms and conditions are fair so further hearings and appeals will follow. So what should firms be doing? Chief Executives should be assuring themselves that the risk is being effectively managed within their complaints management processes, people and systems whilst assessing their capability for coping with what is likely to be a multi-scenario final decision.
While no-one knows with any certainty who the decision will favour the growing backlog will still have to be addressed. Huntswood’s view, based on our extensive experience in this area, is that many firms will be using the court case as ‘breathing space’ rather than taking action now and this we feel is a mistake. There are highly pragmatic steps that can be taken to prepare for Decision Day, all aimed at putting the customer at the heart of the process. Those banks that alienate their customers during Bank Charges 2 (BC2) risk damaging an important revenue stream for many years to come.
For over a decade, Huntswood has been resourcing, managing and successfully delivering intensive and highly regulated customer service projects on behalf of financial services firms. We have a spotless record of meeting the demands of mortgage endowment complaints, PPI complaints, pension’s remediation and past sales reviews. Most significantly we were a key player in Bank Charges 1, providing over 1,000 complaint handlers, quality assurance people and project managers for the top high street banks. At the same time, our consulting arm has worked with banks to streamline processes while reducing risk and ensuring that the FSA’s Treating Customers Fairly (TCF) outcomes are delivered on time and in full.
We are well placed to provide practical advice and support to help you prepare for Bank Charges 2 by building policy and creating best-practice processes to ensure efficiency is achieved and the customer experience is consistently a positive one. To discuss how Huntswood can minimise the risks associated with BC2, please contact us on 0800 583 0794.