Thousands of Bank of Ireland customers are expected to be repaid certain bank charges, following a decision of the High Court yesterday.
Mr Justice Kelly ruled in favour of the Director of Consumer Affairs, Ms Carmel Foley, in relation to a dispute between her and Bank of Ireland about the extent of the director's powers under the Consumer Credit Act (1995) to conditionally approve and review certain bank charges.
The director had claimed she was entitled, under the Consumer Act, to approve for two years, with alterations and then review, charges imposed by the bank for its Internet banking service, Business on Line, launched on a pilot basis in July 1999 and used by 13,000 customers.
She also claimed she could approve for one year, with some reductions and then review, charges relating to the American Express Blue Credit Card, introduced by the Bank in Ireland in 2000.
The bank rejected those claims and refused to take part in any review, arguing it exceeded the director's powers. Because of those refusals, the director then applied to the High Court for orders restraining the bank from imposing the relevant charges.
Mr Paul Gardiner SC, for the director, said yesterday it was anticipated the bank would now repay the charges to customers and he expected the only dispute would relate to the period from which charges might be repaid.
Ms Nuala Butler, for the bank, said she didn't object to the matter being adjourned for a week.
The case centred on interpretation of the relevant provisions of the Consumer Credit Act and determination of the extent of the director's powers.
In his reserved judgment, Mr Justice Kelly described the Consumer Credit Act as an unwieldy piece of legislation. The legislature sought to ensure that credit institutions would not be at large in relation to the imposition of charges on customers.
The scheme involved a notification of charges being made, with an implicit approval for such charges unless the director gave a direction within the time stipulated. If the director did give a direction, the charge could not be imposed without her prior written approval.
While the director had not complied in this case with the time limits for the issuing of her directions, the fact the bank had acted on those directions issued outside the time limits meant they were bound by the directions, the judge held. He stressed the court could not treat time limits as of no consequence and that the director went outside such limits at her peril. However, he did not believe it was the legislative intention that a failure to comply with time limits should render the director's exercise of her powers a nullity at law.
He also held the director was entitled to fix a time limit for her approval of the charges in question and to make her approval conditional.
In this case, recognising the shortcomings in the statutory scheme, the director had adopted a sensible approach with a view to trying to make the scheme work, he said. She had not just issued directions regarding charges but also indicated the basis on which she would approve those.
She was quite entitled to adopt that procedure as it telescoped in a sensible way the more cumbersome statutory procedure.
In his view, the director was only entitled to approve the charges if she was satisfied matters such as fair competition between credit institutions and commercial justification for the charges had, as required by the consumer legislation, been addressed. In this case, she had granted a conditional approval and was perfectly entitled to do so.
He found the conditions attached, save that of the bank having to participate in a review of the charges, were within the director's powers. He was also satisfied the director was entitled to grant time-limited approval for the charges in question which time had now expired.
Because of the continuing failure of the bank to comply with her requests to cease imposing charges for the Business on Line service or to participate in a review regarding the Blue American Express service, the director was entitled to orders requiring the bank to discontinue imposing charges for those services, he held.