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Bank charges given another 6 months' grace by FSA

22 January 2009 / by Rachael Stiles
The Financial Services Authority has extended its waiver on repaying bank charges for unauthorised lending for another six months.

Millions of consumers await the result of an ongoing test case which, it is hoped, will clarify the fairness of charges incurred for exceeding overdraft limits, going overdrawn without prior agreement from their current account provider, or bouncing cheque or direct debit payments.

Initially implemented by the FSA in July 2007 and already extended once last year, the waiver would have run out on January 26, but it has now been extended again until July because the High Court test case has not yet come to a conclusion.

While the waiver is in place, banks are exempt from the FSA's own rules regarding complaints from customers, which state that banks are ordinarily required to deal with them within a certain period of time.

Since the waiver came into practice, customers have still had to continue to pay bank charges; sometimes as much as £39 each time they go outside the terms and conditions of their account.

The OFT said as far back as 2006 that the 'unfair' bank charges are disproportionate to the costs incurred by the banks when a customer goes outside the terms of their account and should be reduced.

Commenting on the extension, Dan Waters, director of Retail Policy and Conduct Risk at the FSA, said: "Our objectives continue to be certainty over this complex issue, and a fair and consistent resolution of consumer complaints about unauthorised overdraft charges."

Bradley Askew, managing director of claims company Claims Financial, said that "this is yet another disappointing decision for consumers, who yet again have not been consulted at all.

"It is also very bad timing because many of our clients are already struggling due recent economic turmoil, which, ironically is due to the banks." he continued. "We have a lot of disappointed clients. Many for them have now been waiting for 18 months."

Commenting on the banks' appeal against the ruling by Mr Justice Smith that the OFT is allowed to determine the fairness of the bank charges, Mr Askew said: "I am confident that this will eventually be decided in favour of our clients but the delay is unjust because the Office of Fair Trading (OFT) has already said they believe the charges are unfair, and a High Court Judge has given a judgment that the OFT can make such a ruling.

"It seems to me that the right thing in this case would be for every consumer in the country to get their refund and for the banks to stop these delaying tactics".

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