Bank charges case: banks given another six months grace

21 July 2008 / by Rebecca Sargent
The test case between nine major UK lenders and the Office of Fair Trading (OFT) received yet another blow today as the banks were granted more grace.

The case, which will eventually decide whether unauthorised overdraft charges can be deemed fair or not, is currently under appeal from the banks which are averse to the OFT's suggestions.

As it stands, customers who think they have paid excessive bank charges are entitled to complain, but the dealing with complaints by any one of the banks involved was on hold until July 26.

However, the Financial Services Authority (FSA) has agreed to extend this for another six months, leaving consumers powerless against their banks and unable to reclaim bank charges.

According to the FSA, it has granted the waiver in an attempt to help the courts decide whether bank charges are unfair or not.

Director of retail policy at the FSA, Dan Waters, 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."

Failing a decision, the FSA intends to review the waiver in 2009 and explained that it could revoke the waiver at any time if it is considered to no longer be appropriate.

Kevin Mountford, head of current accounts at moneysupermarket.com, commented: "Is it any wonder that people's faith in the UK banking system is at a low ebb when no one seems to be able to make a decision.

"We are seeing delays on overdraft fees, delays on the Financial Services Compensation Scheme and, all the while, nothing being done," he added: "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," Mr mountford concluded.

© Fair Investment Company Ltd