Quoting exnihilo from 01:01, 25th Feb 2007
It's odd, isn't it, that the bank informed you of all these potential charges for misuse of their overdraft facility - which they provide to you for nothing (it's really not your money) and then you bleat when they enforce them.
I grant you that statute law supersedes the terms and conditions issued by the bank, but surely you did read them, did agree to them and, as an adult were in a position to accept the responsibilities they placed upon you.
Fine, make a claim if you have accidentally gone over by a trivial amount, but what we're seeing now is people regularly, habitually, and purposefully going over their limit, and then firing off a form letter to demand it back.
Sure, the law is the law, but the spirit of should be as important as the letter; just as the bank should not be able to take you for a ride neither should you be able to take them for granted. Expect to see this all tightened up in the not very distant future, and expect to see customers bear the costs for a few people who can't, or won't, look after their own finances.
Your point on contractual certainty is a good one - the commercial counterparty to the consumer should be entitled to rely on contracts that it has concluded in the ordinary course of its business, including the terms for breach thereof. My opinion, for what it's worth, is that there should be few exceptions to this basic principle of the common law system (unfair exclusion and limitation clauses and penalty clauses being two sensible carve-outs).
I would argue that these claims against the banks are actually notionally within the spirit of the law. The right of a consumer, as a contractual party, to claim that a liquidated damages mechanism for the breach of a term is unenforceable as a penalty clause is now, as you say, black letter law (as a result of European regulation). However this only echoes the long-held common law position that, where a liquidated damages mechanism is specifically provided instead of reliance on common law contract law principles, these LDs should represent a genuine pre-estimate of the loss incurrable by the injured party. As a matter of contract law, statute and public policy, the spirit of the law dictates that the remedies in damages for a breach of contract should be restricted to compensation for actual or expected losses flowing from that breach. Where a contractual provision does not reflect this underlying principle of contractual remedies in damages, it appears equitable that this be a limit on the parties' freedom to contract, particularly where one party is a consumer, with the relative lack of commercial and negotiating leverage associated with that role.
The frustrating part of all of this is that the courts are gagging for the opportunity to rule on these claims as it could be argued that there is no breach in the first place (as the "disproportionate" charges are generally characterised as an increased service charge rather than as a penalty for a breach of contract) and therefore these are not penalty clauses as perceived by common law and statute.
I would submit that more flagrant and inconscionable examples of the erosion of the freedom to contract and contractual certainty are present in the European Distance Selling Directive, "Doorstep Selling" Directive and "Package Travel" Directive, with their "cooling off" periods during which it is possible for the consumer to cancel the contract.
Finally, I think you're right that we'll all end up paying for our bank accounts, which penalises the more responsible of us in the long term. I noted with interest that the CEOs of Barclays and Natwest (I think?) had contrary views on this concept. As Barclays dismissed the possibility of implementing this, the cynical part of me thought that this is the first of many attempts to fend off challenges to the banks under competition law if account-running costs are introduced across the industry (would there be any alternative means for the consumer to access banking services without such charges and would there be real efforts by the banks to undercut their competitors on such charges? Could this be viewed as a horizontal arrangement distorting competition in the market?).
Blimey that was long-winded.
