FSA extends waiver on unauthorised overdraft charges

by Gill Montia

Story link: FSA extends waiver on unauthorised overdraft charges

The Financial Services Authority (FSA) has once again extended a waiver on its complaints handling rules regarding unauthorised overdraft charges.

The move allows banks not to deal with new complaints until January 2010.

The Office of Fair Trading (OFT) has been trying to establish the legality of the charges – widely regarded as exorbitant – under the 1999 Unfair Terms in Consumer Contracts Regulations.

The test case, which involves seven banks, has been running for two years and is currently bogged down in an appeal to the House of Lords.

In explaining its actions, the FSA says: “The new waiver has been offered to firms because, although considerable progress had been made in the test case, it is not yet clear how firms should be responding to complaints about unauthorised overdraft charges so that customers are treated consistently and fairly.”

However, the regulator will continue monitoring firms’ compliance with the conditions of the waiver, which include having systems and procedures in place to identify customers who are in financial difficulty and treating those customers “sympathetically and positively”.

Meanwhile, the log-jam of dissatisfied bank customers waiting to reclaim unauthorised overdraft charges has reached almost one million, according to consumer website, Legal Beagles.