Banks granted unfair charges waiver

[Legal Beagles]

FSA ruling means financial institutions can ignore complaints over unauthorised charges until January next year

More...

[Amethyst]

Re: Banks granted unfair charges waiver

Banks will not have to consider giving refunds to customers who complain about unauthorised charges for at least six months, the City watchdog said today.
The Financial Services Authority (FSA) has granted an additional waiver enabling banks to ignore the complaints until at least January 26 next year.
The regulator originally put a waiver in place last July following an announcement from the Office of Fair Trading (OFT) and eight major banks that they would seek a high court ruling on whether the charges were fair.
The OFT won the first leg of the process earlier this year when the court ruled that the charges came under its jurisdiction, but the banks are appealing against the decision.
Last week, the OFT said banks were making £2.6bn a year from customers having insufficient funds in their accounts.
It wants to challenge the level of fees charged by current account providers, which can be as much as £40 for each bounced payment or unauthorized withdrawal.
The FSA has made changes to the waiver - under the new rules banks must not make any changes to the level or structure of unauthorised overdraft charges without the watchdog's permission.
They must also consider the claims of customers at risk of falling into financial difficultly because of charges.

The consumer group Which? described the waiver as a "necessary evil". Head of campaigns, Louise Hanson, said: "Scrapping it won't get people their money back - only the banks can do that by conceding defeat and paying up instead of continuing to string out the process."
Lifting the waiver would actually cost customers money, Hanson warned, as although consumers can claim charges dating back to July 2001 while it is in place, a six-year limit on claims will resume when it is removed.
"The clock would start ticking again on people's claims even though they've no prospect of getting their money back until this whole issue is sorted out," Hanson added.
Before the waiver was put in place, millions of template letters were downloaded by bank customers seeking to reclaim charges they had made for bounced payments and unauthorised withdrawals.
Banks refused to contest the claims in the courts and some customers were able to reclaim thousands of pounds they had paid in fees.
Even if the banks lose their appeal and the waiver is lifted it is unlikely customers will be able to reclaim as much in the future - instead of repaying the full amount charged banks are likely to cap repayments at the amount above the level of an agreed "fair" charge.

[Amethyst]

Re: Banks granted unfair charges waiver

Waiver review wasn't meant to occur until the 26th ?????????????

[Amethyst]

Re: Banks granted unfair charges waiver

FSA/PN/073/2008
21 July 2008
The Financial Services Authority (FSA) today issued a new waiver from its complaints handling rules regarding unauthorised overdraft charges.
The waiver replaces an existing one, which expires on 26 July 2008, and has been offered to those firms who signed up to the previous waiver. This represents approximately 98% of the market. Signatories will not be required to handle complaints relating to unauthorised overdraft charges within the time limits set out in the Dispute Resolution manual.
The key points of the waiver include:

• A duration of six months and a review early in 2009;
• Continuation of the FSA’s consumer protection measures including record keeping requirements and a suspension of the limitation period for making a complaint;
• Additional guidance on the identification of those complainants in financial difficulty;
• Enhanced monitoring of firms focussing on consumers’ experience whilst the waiver is in place.

Dan Waters, Director, Retail Policy, 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 unauthorised 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."
The FSA can revoke the waiver at any time if it considers a waiver is no longer appropriate, for example, if it no longer provides adequate consumer protection, or material progress is not being made in the test case, or a firm fails to comply with the conditions set out in the waiver.
The FSA first granted a waiver for 12 months from its complaints handling rules regarding unauthorised overdraft charges in July 2007. The waiver means that while it is in operation, any bank or building society granted the waiver will not be required to handle this type of complaint within the time limits set out in the FSA rules. The county courts have 'stayed' cases referred to them and the Financial Ombudsman Service has adopted a similar approach.
Notes for editors

1. The waivers are available on the FSA website.
2. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
3. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

[Jester]

Re: Banks granted unfair charges waiver

Excuse me for being cynical, but didn't the FSA state when they put the last waiver in place that Banks could not change their terms and conditions, then all the banks went and did exactly that without any penalty from the FSA.

Also, what do they term 'hardship' ?

I'm facing the real possibility of losing my home. If that doesn't count as hardship then what does ?

Once again, the FSA is proving toothless and irrelevant. It is simply pandering to the whim of the Banks who will continue to extort money from their customers AND (no doubt) the Banks will continue to tamper with their T&C's whilst the FSA sits around and does nothing.

I am in a highly cynical and condescending mood today ... as you may probably be able to tell

[jet_black]

Re: Banks granted unfair charges waiver

Excuse me for being cynical, but didn't the FSA state when they put the last waiver in place that Banks could not change their terms and conditions, then all the banks went and did exactly that without any penalty from the FSA.

Also, what do they term 'hardship' ?

I'm facing the real possibility of losing my home. If that doesn't count as hardship then what does ?

Once again, the FSA is proving toothless and irrelevant. It is simply pandering to the whim of the Banks who will continue to extort money from their customers AND (no doubt) the Banks will continue to tamper with their T&C's whilst the FSA sits around and does nothing. Here here!

I am in a highly cynical and condescending mood today ... as you may probably be able to tell

Maybe, but we still love you

[Amethyst]

Re: Banks granted unfair charges waiver

Additional guidance on the identification of those complainants in financial difficulty;

Well I hope they hurry up and tell us what this additional guidance consists of.

[Amethyst]

Re: Banks granted unfair charges waiver

http://www.fsa.gov.uk/pages/Doing/Re..._quarterly.pdf


* There are two versions of the 2008 waiver - what is the difference?

The versions are the same, except the 10 largest firms (whom we have notified) are required to report management information to us monthly (see Condition 13 (10) & Annex 1 in the 2008 waiver direction) – while the smaller firms are required to report quarterly.
In summary, the main effect of the 2008 waiver is to continue the suspension of certain time limits in DISP for the duration of the waiver as they apply to certain types of complaints. These are complaints received by firms about the level and fairness of charges applied to the accounts of customers who seek to make payments for which they do not have available funds in the account and whose overdrafts have not been agreed by the firm in advance. There is further information in our press release of 21 July 2008.

[Amethyst]

Re: Banks granted unfair charges waiver

AH HA

2.
In making an assessment of financial difficulty the firm will take into account:
a.
evidence of changes in lifestyle, including loss of employment; disability; serious illness; imprisonment; relationship breakdown; death of a partner; starting a lower paid job; parental/carer leave; and starting full-time education;
b.
evidence of the following events:
i.
items repeatedly being returned unpaid due to lack of available funds;
ii.
failing to make loan repayments or other commitments;
iii.
discontinuation of regular credits;
iv.
notification of some form of insolvency or court proceedings;
v.
regular requests for increased borrowing or repeated rescheduling of debts;
vi.
making frequent cash withdrawals on a credit card at a non-promotional rate of interest; and
vii.
repeatedly exceeding a credit card or overdraft limit without agreement (and, in this regard, where a complainant has incurred over £500 in unauthorised overdraft charges in the previous 12 months, that is to be treated as indicative of financial difficulty).

[Amethyst]

Re: Banks granted unfair charges waiver

In case you missed it...............


2.
In making an assessment of financial difficulty the firm will take into account:

vii.
repeatedly exceeding a credit card or overdraft limit without agreement (and, in this regard, where a complainant has incurred over £500 in unauthorised overdraft charges in the previous 12 months, that is to be treated as indicative of financial difficulty).



also see FSA meets with Banks to discuss Hardship conditions - 2nd July - Page 2 - Legal Beagles

[Curlyben]

Re: Banks granted unfair charges waiver

So for hardship are ALL of those factors to be taken into account, or just some.
I have charges in excess of £500 last year, so would that count?

[Amethyst]

Re: Banks granted unfair charges waiver

Each of the points may be taken as being 'indicative' of financial difficulty - so I am thinking people with over £500 charges in the past 12 months should reapply to have their complaint heard or their stay lifted at court.


However, from this bit the refund may not be on the agenda for the waiving of the waiver....

15.
When dealing with complainants in financial difficulty, the firm should consider the following steps in respect of the period during which they are assessed as being in financial difficulty:
(a)
the firm might waive future unauthorised overdraft charges; and
(b)
the firm might not enforce debts against complainants in financial difficulty to the extent that these debts are made up of unauthorised overdraft charges.
16.
Before closing a personal current account of a customer in financial difficulty, the firm might offer the customer a basic bank account, if this is a facility that the bank offers.

[scoobydoo]

Re: Banks granted unfair charges waiver

"They must also consider the claims of customers at risk of falling into financial difficultly because of charges."


interesting

This is saying they must "consider the claims"

Not just act fairly under the banking code ( which is what the FOS indicated recently)

I would say that if one or more of the conditions applied then I would be writing to the bank quoting the above and then if no joy getting in touch with FSA and FOS .

We need hardship cases here to write again and then look at any replies.
------------------------------- merged -------------------------------
whoops crossed posts

So they are not saying charges will be refunded - but could stop future charges .

Not good enough say if someone is about to lose their house .

Also not consistent as what about the recent case where the charges were refunded?

[Amethyst]

Re: Banks granted unfair charges waiver

I think a couple of reapplys will make the situation a lot clearer - and if someone has their claim in with the FOS on hold - who meets this new criteria - to give FOS a nudge and see what they intend to do.

[scoobydoo]

Re: Banks granted unfair charges waiver

I think that a letter to FSA might be in order?

What if someone is in dire financial position and the refund of charges would say pay off arrears - should the bank not even consider that?

I suppose they are too worried about setting a precedent. But surely that would be exceptional circumstance.