| FSA upholds waiver on bank charges |
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| Thursday, 22 November 2007 | |
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The Financial Services Authority (FSA) has completed its review of the 'waiver' of its complaints handling rules in the context of unauthorised overdraft charges.
The waiver meant that banks did not have to handle requests for refunds of bank charges pending the outcome of a High Court test on unauthorised overdraft charges brought in the High Court by the Office of Fair Trading (OFT). The FSA concluded that the waiver is operating effectively and can remain in place. The waiver was granted on 27 July 2007 to support the test case. The purpose of the test case is to bring certainty on whether these charges are fair and lawful. The FSA said at the time that it would review the waiver after two months. The FSA said it had established that the waiver is meeting its four key requirements, following detailed examinations of banks' compliance with the conditions of the waiver and extensive consultations with consumer groups and other stakeholders:
Clive Briault, FSA Managing Director, Retail Markets, said that the test case between the OFT and the firms is a crucial step in establishing certainty about the legality and fairness of unauthorised overdraft charges. He added that when this certainty has been established complaints about unauthorised overdraft charges can be dealt with “consistently and fairly”. "The waiver we granted in July allowed firms to put complaints about unauthorised overdraft charges on hold until these complaints could be dealt with consistently and fairly. But it was important to review the operation of this waiver to ensure that it was working as intended. Our thorough review shows that it is appropriate for the waiver to remain in place,” Briault said. Particular concerns had been raised during the review period about the position under the waiver of complainants who may be in financial difficulty. The FSA said it was satisfied that the relevant part of the waiver is being complied with. However, in view of the importance of this issue, the FSA pledged to carry out further work, in conjunction with the Banking Code Standards Board (BCSB), to check that firms continue to provide appropriate treatment of consumers in genuine financial difficulty. The FSA said that its waiver review confirmed that it remains appropriate for the waiver to continue to apply to consumers in Scotland and Northern Ireland. The review also clarified the status of small business accounts, which are not covered by the waiver. The FSA said it had agreed with the banks arrangements to ensure small business customers are not disadvantaged. In the course of the review the FSA found that a number of banks had changed their terms and conditions in relation to unauthorised overdraft charges. In the waiver, each firm agreed 'it will not make materially adverse changes in the level of its unauthorised overdraft charges (or in ways that it applies such charges to its customers' accounts) which could amount to customer abuse'. The FSA said it would be closely monitoring how any change made by a bank will affect customers in practice and whether this amounts to a breach of the waiver. The test case is expected to start in January 2008. Related articles
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