Reclaim Unfair Illegal Bank Charges

Banks have effectively been given a £1.3billion bonus following a decision by the Financial Services Authority (FSA) to put the handling of unfair bank charges complaints and refunds on hold for a further six months.

The FSA originally put a waiver in place last July following an announcement from the Office of Fair Trading (OFT) and eight major banks that they would seek a high court ruling on whether the charges were fair.

The OFT won an initial judgment when the High Court judges that charges do come under its jurisdiction, but the banks appealed.

The appeal has drawn out the case further, and now, in light of the absence of a full legal ruling on the matter, the FSA has decided to allow the banks a further six months from the original waiver, which was until July 26.

The extension means that banks can ignore complaints until at least January 26 next year and continue imposing charges on their customers.

Last week, the OFT said that banks are making £2.6billion a year from bank charges; the extension to the waiver means they could potentially rake in a further £1.3billion from now until January.

Kevin Mountford, head of current accounts at moneysupermarket.com, was unimpressed by the further delays the new waiver will bring and says with such indecision, it no wonder UK consumers have lost faith in the banking system.

“We are seeing delays on overdraft fees, delays on the Financial Services Compensation Scheme and, all the while, nothing being done,” he said.

“There is an unhealthy addiction to committees and consultations at the moment – all at great expense – and the consumer loses with every piece of procrastination.

“Simply making a decision will improve people’s confidence in the sector rather than persisting with these seemingly perpetual delays,” he concluded.

But the FSA argues that the waiver is necessary in assisting the courts so that a legal ruling can be made on the issue.
Dan Waters, Director of retail policy at the FSA, said: “The FSA continues to work closely with the OFT and banks in reaching a resolution on the fairness of unauthorised overdraft charges.

“Our objectives continue to be certainty over this complex issue, and a fair and consistent resolution of consumer complaints about unauthorized overdraft charges.

“The FSA has reviewed the prevailing circumstances and has decided to offer firms a new waiver. The waiver will be for six months, when we expect to have a decision from the Court of Appeal.”

And Louise Hanson from consumer group Which? says although the waiver initially sounds like a further blow to the consumer fight, it is in fact a ‘necessary evil’ and that getting rid of it would not actually help unfair bank charges victims.

“Scrapping it won’t get people their money back,” she said, “only the banks can do that by conceding defeat and paying up instead of continuing to string out the process.

“In fact, 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.”