Director General of Fair Trading v First National Bank plc

Director General of Fair Trading v First National Bank plc [2001] UKHL 52 is the leading case on the Unfair Terms in Consumer Contracts Regulations 1999.It was an action to test the fairness of clauses in loan agreements which secured a bank's commercial interest rates after a debtor that had defaulted and they had been to court to determine their repayment scheme.The case was brought by the Director General of Fair Trading (now the Competition and Markets Authority) on behalf of consumers.Lord Steyn said, ‘The system of pre-emptive challenges is a more effective way of preventing the continuing use of unfair terms and changing contracting practice than ex casu actions: see Susan Bright, ‘Winning the battle against unfair contract terms’ (2000) 20 LS 331, 333-8.’ He added that he was initially persuaded by the idea that because the legislation had excluded interest, the court could not, but had then decided that because the legislation did not exclude expressly or by necessary implication that interest can accrue, the contract term was fair.He also asks whether the court should have deferred to the Director General's view of what was unfair, recognising respective institutional competence.
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