The High Court has reserved judgment on a dispute between the Director of Consumer Affairs and Bank of Ireland over the extent of the director's powers to conditionally approve and review certain bank charges.
The director, Ms Carmel Foley, claims she is entitled, under the Consumer Credit Act (CCA), 1995, to carry out a review, after two years, of charges imposed by the bank for its Internet banking service, Business On Line, launched on a pilot basis in July 1999 and used by some 13,000 customers. She also claims she may review, after one year, charges relating to the Blue American Express credit card, introduced by the Bank in Ireland in 2000.
The bank rejects those claims and has refused to take part in any review, arguing it is in excess of the director's powers. It claims the director has no power to make her approval of bank charges subject to conditions nor to impose a time limit on an approval, once granted.
Mr Justice Kelly has been asked to decide the extent of the director's powers in this regard. The case centres on interpretation of the relevant provisions of the CCA. The case concluded yesterday after a one-day hearing.
Under the CCA, credit institutions are required to notify the director of charges being imposed for services and of proposals to increase or introduce new charges. The director may, within three weeks or four months of receiving the notification, direct the institution to refrain from imposing the charge without her prior approval.
In this case, the director approved the charges for both services, subject to conditions, including a reduction in the level of charges for the Blue American Express card and provisions for review of the charges.
Mr Paul Gardiner SC, for the director, said the director is entitled to keep under general review terms and conditions relating to charges and to discontinue terms and conditions that were unfair. A direction could have a time limit attached to it.
His case was that the direction permitting the bank to impose the charges had a time limit, which had expired. The bank had refused to take part in a review of the charges. Participation in the review was one of the conditions attaching to approval of the charges and, given the bank's refusal to participate, it had been directed to refrain from imposing the charges.
In the proceedings, the director is seeking orders directing the bank to stop imposing charges on customers for its Business On Line service and the Blue American Express credit card service. It has been agreed, pending the outcome of the action, that the bank may continue to impose the charges.
In an affidavit, the director said she had expressed concerns to the bank in June 2001 about the "major variance" between the projections provided by the bank when notifying the proposed charges for the Blue American Express card to her in 1999 and 2000 as compared to the actual figures for the six months up to March 2000 and the year to March 2001.
Her office had sought further information from the bank to enable her to properly review the imposition of the charges. After a number of reminders, the bank purported to reply in November 2001 to the issues raised but its letter failed to address a number of these. This was pointed out to the bank in a further letter from her office but no further information was given.
In March 2002, she was informed by letter that the bank's view was that the director was not entitled to have a review of the charges. The bank argues the director has no power to request further information about charges once a notification of those charges has been submitted, together with a statement of commercial justification for the charges and details of estimated additional income arising from the proposed charges. It also argues the director cannot "stop the clock" while institutions are responding to her requests for further information regarding charges.
The bank also says there is no question of its being "substantially enriched" as a result of collecting charges for the Business OLine service. In October 2000 a decision had been made to reduce the service fees below those approved by the director in order to pro-actively market the service and encourage the switch to electronic banking. Some €18.5 million had been spent on the service to date and it was being run at a loss.
