Cab news
Reclaiming Bank & Credit card Charges
The Bank Charges test case
You may have read of the OFT’s decision to introduce a Bank Charges test case, which has led to the financial regulator, the FSA, putting a hold on reclaiming unfair charges.
What happens to those wanting to reclaim, or in the process of reclaiming charges while the OFT case is going on?
Complaints can still be made. click here for sample letter. But for now, the Financial Services Authority has allowed banks to suspend their work on complaints (Waiver). And the Financial Ombudsman Service has decided not to progress complaints about current account charges until the outcome of the legal action is known.
Can the banks continue to levy charges until the OFT's action is resolved, while consumer actions to reclaim charges are being suspended?
Yes until the FSA have completed the investigation into the fairness of the current levels of charges FSA say they believe in would be inapproriate to ask banks to make changes to their charging structure at the moment.
Again because the legal issues have not yet been determined, the FSA has also not intervened in the levying of the charges themselves. However, it has set strict conditions on the Waiver that banks must follow, designed to ensure that consumers’ ability to recoup charges levied prior to or during the test case will be unaffected.
Under the conditions of the Waiver, amongst other things, banks must:
- not take the period during which the Waiver is in place into consideration in any decisions made about limitation periods or time limits for complaints
- not make materially adverse changes to the level of charges during the Waiver
- do all they can to help account holders avoid incurring these charges in the first place
- apply the relevant principle(s) established in the test case when dealing with complaints about charges, and
- continue to deal with genuine hardship cases during the Waiver period.
A review of the Waiver began at the end of September to assess whether the criteria for granting the Waiver are being met by the banks. The FSA will also review compliance with the Waiver regularly to ensure that consumer interests are protected and can revoke it at any time if satisfied that it is no longer appropriate.
What is the OFT’s position on the county courts staying individual consumers’ claims pending the test case?
It is not for the OFT to determine how the courts should handle claims before them (including deciding whether to stay proceedings) in light of the test case or the Waiver (both of which are intended to achieve the legal clarity necessary to achieve the fair and consistent handling of consumer complaints). That is for the courts to decide.
It’s important to understand this is specifically about Bank Charges and does not apply to credit card claims.
The Bank Charges test case doesn’t impact on credit cards
