FSA extends overdraft fee complaints waiverWait for bank charge refunds is 'necessary evil'
22 July 2008
An official waiver allowing banks to put off dealing with customers trying to reclaim unauthorised overdraft charges has been extended for another six months.
The banks had previously been granted the waiver by Financial Services Authority (FSA) until 26 July, and the new one will run until at least January 26 next year.
The initial waiver was put in place last year when the Office of Fair Trading (OFT) and seven banks and a building society announced they would seek a High Court ruling concerning the fairness of the charges.
Some customers have had to pay, for example, £38 for a bounced cheque.
The OFT won the first leg of process earlier this year, when the court ruled that the charges came under its jurisdiction, but the banks are appealing the decision.
Although the banks have appealed, the OFT has already started investigating what level of charges would be fair and it's due to give its conclusion to the banks soon.
If the banks disagree with the OFT's view, this will also end up in court, around the same time as the appeal hearing. Both hearings are likely to happen this autumn.
Which? believes the FSA’s decision to extend the bank charges waiver is ‘a necessary evil’.
That’s because claims normally have a time limit, and for as long as the waiver is in place, consumers can claim charges dating back to July 2001 no matter how long the court case drags on.
But if the waiver was scrapped and the court case dragged on for another two years, consumers would only be able to claim back charges until July 2003.
Which? head of campaigns Louise Hanson said: ‘Lifting the waiver would actually see consumers losing more money. The clock would start ticking again on people’s claims even though they've no prospect of getting their money back until this whole issue is sorted out.
'The waiver is a necessary evil. Scrapping it won't get people their money back – only the banks can do that by conceding defeat and paying up instead of continuing to string out the process.'
Which? also welcomes the fact that the revised waiver will include a definition of financial hardship so that people struggling financially have their cases heard.
Also, any changes that banks make to their terms and conditions will now require FSA approval.