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Financial Services Authority
Telephone: 0207066 8080
Email: foi@fsa.gov.uk
Dear Mr Siddle
Freedom of Information: Right to know request
Our Ref:12 June 2009
FOIl285
Thank you for your request under the Freedom of Information Act 2000 (the Act), for a copy
of the letter issued on 19 March 2009 to all firms that have a waiver.
Your request has now been considered and the relevant information is attached. We thought
it might be helpful to put the documents in context. Firms were first granted a waiver in 2007
in relation to dealing with complaints about the level, fairness or lawfulness of unauthorised
overdraft charges. That waiver included consumer protection measures to ensure that people
were not disadvantaged while the waiver was in place (the waiver has subsequently been
renewed and extended). We also carry out ongoing monitoring work in relation to firms'
compliance with the waiver. The letter to banks, and attached annex, is part of this work.
Yours sincerely
~
. S. Spies (Mrs)
Information Access Team
The Financial Services Authority
25 The North Colonnade Canary Wharf London E14 5HS United Kingdom
Telephone +44 (0)20 7066 1000 Fax +44 (0)20 7066 1099
Financial Services Authority
Registered as a Limited Company in England and Wales No 1920623. Registered Office as above
Dear [lawyer/compliance]
GENERAL MODIFICATION BY CONSENT - DISP RULES
I refer to the waiver by consent of certain rules in the FSA Dispute Resolution manual
("DISP") in respect of the handling of unauthorised overdraft charges complaints. As you are
aware, the FSA has extended the existing waiver until 26 July 2009.
The waiver is conditional upon compliance with the conditions contained in it. If a firm
believes at any time that it has not complied with a condition of the waiver, it should notify
the FSA immediately.
We will continue to assess whether the waiver remains appropriate and, following the recent
ruling from the Court of Appeal, it is appropriate to draw your attention to the following
points.
Waiver condition 13 (21)
As you will be aware, condition 13(21) of the waiver provides that a firm must not make any
change to the level or structure of its unauthorised overdraft charges. However, if a firm
proposes to do this then it may apply to the FSA for a variation of this condition.
We would like to emphasise that firms considering making such an application should
contact the FSA well in advance of any proposed implementation date for the changes. This
will enable us to respond to the application in good time.
Firms are also encouraged to discuss with the FSA in advance how they plan to approach
conducting the required analysis of the impact of the proposed changes.
Waiver condition 13 (5)
This condition relates to the preservation of records that are (or could be) relevant for the
handling of existing or future relevant charges complaints.
As this requirement has been in place since the first waiver in July 2007, we expect that firms
will have taken pro-active steps to ensure that any systematic or routine procedures in place
for destroying or archiving old records have been reviewed, to ensure that such processes
could not cause the firm to be in breach of waiver condition 13 (5).
Minimum standards for handling complaints where financial difficulty is claimed
Where a complaint about bank charges also contains an additional element where the
customer is claiming or indicating they are experiencing financial difficulties, we note that
firms (either individually or through the BBA) have confirmed they will adopt minimum
standards for handling such cases (see Annex).
These minimum standards were drawn up in response to findings from our ongoing waiver
monitoring visits to firms, which have indicated inconsistencies in the treatment of customers
claiming financial difficulties, and identified some failings in the sympathetic and positive
treatment of customers in financial difficulty.
Our waiver monitoring work is continuing, and will incorporate assessments of the extent to
which a firm's approach to handling complaints where financial difficulty is claimed is in line
with these minimum standards.
If you have any questions about this letter, please contact either [FSA staff member] or [FSA
staff member].
Yours sincerely
[FSA staff member]
Financial Services Authority
Annex
Minimum standards for handling complaints where financial difficulty (FD) is claimed
1. Firms to use their own records, where available (e.g. account activity and existing
borrowing), to consider initially if the customer might be experiencing FD. Only
when this cannot be determined will it be appropriate for a firm to gather more
information, i.e. issue an income/expenditure form ("VE form"). (FSA accepts that in
a majority of cases it will be necessary to issue an l/E form, in particular before
considering rejecting a claim ofFD.)l
11. If an VE form is issued, the firm to provide a reasonable period of time before issuing
a closure letter to the customer, which should clearly explain the reason why the firm
has not accepted that the customer is in FD, and that the firm will reopen the case
should the customer subsequently return the VE form.
111. Where an liE form is returned it is to be reviewed by adequately trained and
experienced staff to assess if the customer might be experiencing FD and the extent of
the problem. Staff should be able to interpret information to make an informed
judgement which is clearly documented and in line with internal policy and guidance
(including considering if a customer may have under declared their outgoings). An
appropriate course of action should be taken dependent upon the extent of the
problem, i.e. some customers may only require guidance on what to do, others may
require more immediate action.
IV. Any correspondence issued to the customer that provides detail on the decision taken
by the firm must be compliant with Disp requirements, e.g. it should clearly explain
the outcome of the investigation and the rationale for the decision, and provide details
of how to escalate the complaint if the customer is not happy with how it has been
resolved (this included cases rejected because the customer did not return an I&E
form).
v. Firms to provide a range of measures to support customers, and to treat them
positively and sympathetically. These might include; help and guidance about
dealing with FD and avoiding charges; suspending collections and recoveries activity;
suspending the accrual of further interest and charges; and a consideration of a refund
of charges, in particular where the charges may have added to the FD during, or
immediately before, the period of FD. The rationale for why a particular level of
refund has been given should be documented and clearly explained to the
complainant.
The minimum standards are not Handbook guidance but rather update firms on the findings
of good practice from our thematic review of the handling of unauthorised overdraft
complaints. The minimum standards do not purport to define the suitability standards for
unauthorised overdraft charge complaint handling. Firms should have regard to the minimum
standards in deciding what action they need to take to comply with the FSA Handbook and
the waiver. There may be several ways of complying with a regulatory requirement, and
I Firms are also referred to sections 14.4 and 14.5 of the Guidance to the Banking Code
2 Firms are also referred to sections 14.2 and 14.3 of the Guidance to the Banking Code
following guidance or other materials we publish, such as the letter issued on 13 November
2008, is only one approach. For further information, please refer to the section on FSA
guidance and supporting materials in our Enforcement Guide, paragraphs 2.22 - 2.27
(http://fsahandbook.infoIFSA/html/han...F).Afirm's senior management
remain responsible for establishing and implementing effective controls over unauthorised
overdraft charge complaint handling.
Telephone: 0207066 8080
Email: foi@fsa.gov.uk
Dear Mr Siddle
Freedom of Information: Right to know request
Our Ref:12 June 2009
FOIl285
Thank you for your request under the Freedom of Information Act 2000 (the Act), for a copy
of the letter issued on 19 March 2009 to all firms that have a waiver.
Your request has now been considered and the relevant information is attached. We thought
it might be helpful to put the documents in context. Firms were first granted a waiver in 2007
in relation to dealing with complaints about the level, fairness or lawfulness of unauthorised
overdraft charges. That waiver included consumer protection measures to ensure that people
were not disadvantaged while the waiver was in place (the waiver has subsequently been
renewed and extended). We also carry out ongoing monitoring work in relation to firms'
compliance with the waiver. The letter to banks, and attached annex, is part of this work.
Yours sincerely
~
. S. Spies (Mrs)
Information Access Team
The Financial Services Authority
25 The North Colonnade Canary Wharf London E14 5HS United Kingdom
Telephone +44 (0)20 7066 1000 Fax +44 (0)20 7066 1099
Financial Services Authority
Registered as a Limited Company in England and Wales No 1920623. Registered Office as above
Dear [lawyer/compliance]
GENERAL MODIFICATION BY CONSENT - DISP RULES
I refer to the waiver by consent of certain rules in the FSA Dispute Resolution manual
("DISP") in respect of the handling of unauthorised overdraft charges complaints. As you are
aware, the FSA has extended the existing waiver until 26 July 2009.
The waiver is conditional upon compliance with the conditions contained in it. If a firm
believes at any time that it has not complied with a condition of the waiver, it should notify
the FSA immediately.
We will continue to assess whether the waiver remains appropriate and, following the recent
ruling from the Court of Appeal, it is appropriate to draw your attention to the following
points.
Waiver condition 13 (21)
As you will be aware, condition 13(21) of the waiver provides that a firm must not make any
change to the level or structure of its unauthorised overdraft charges. However, if a firm
proposes to do this then it may apply to the FSA for a variation of this condition.
We would like to emphasise that firms considering making such an application should
contact the FSA well in advance of any proposed implementation date for the changes. This
will enable us to respond to the application in good time.
Firms are also encouraged to discuss with the FSA in advance how they plan to approach
conducting the required analysis of the impact of the proposed changes.
Waiver condition 13 (5)
This condition relates to the preservation of records that are (or could be) relevant for the
handling of existing or future relevant charges complaints.
As this requirement has been in place since the first waiver in July 2007, we expect that firms
will have taken pro-active steps to ensure that any systematic or routine procedures in place
for destroying or archiving old records have been reviewed, to ensure that such processes
could not cause the firm to be in breach of waiver condition 13 (5).
Minimum standards for handling complaints where financial difficulty is claimed
Where a complaint about bank charges also contains an additional element where the
customer is claiming or indicating they are experiencing financial difficulties, we note that
firms (either individually or through the BBA) have confirmed they will adopt minimum
standards for handling such cases (see Annex).
These minimum standards were drawn up in response to findings from our ongoing waiver
monitoring visits to firms, which have indicated inconsistencies in the treatment of customers
claiming financial difficulties, and identified some failings in the sympathetic and positive
treatment of customers in financial difficulty.
Our waiver monitoring work is continuing, and will incorporate assessments of the extent to
which a firm's approach to handling complaints where financial difficulty is claimed is in line
with these minimum standards.
If you have any questions about this letter, please contact either [FSA staff member] or [FSA
staff member].
Yours sincerely
[FSA staff member]
Financial Services Authority
Annex
Minimum standards for handling complaints where financial difficulty (FD) is claimed
1. Firms to use their own records, where available (e.g. account activity and existing
borrowing), to consider initially if the customer might be experiencing FD. Only
when this cannot be determined will it be appropriate for a firm to gather more
information, i.e. issue an income/expenditure form ("VE form"). (FSA accepts that in
a majority of cases it will be necessary to issue an l/E form, in particular before
considering rejecting a claim ofFD.)l
11. If an VE form is issued, the firm to provide a reasonable period of time before issuing
a closure letter to the customer, which should clearly explain the reason why the firm
has not accepted that the customer is in FD, and that the firm will reopen the case
should the customer subsequently return the VE form.
111. Where an liE form is returned it is to be reviewed by adequately trained and
experienced staff to assess if the customer might be experiencing FD and the extent of
the problem. Staff should be able to interpret information to make an informed
judgement which is clearly documented and in line with internal policy and guidance
(including considering if a customer may have under declared their outgoings). An
appropriate course of action should be taken dependent upon the extent of the
problem, i.e. some customers may only require guidance on what to do, others may
require more immediate action.
IV. Any correspondence issued to the customer that provides detail on the decision taken
by the firm must be compliant with Disp requirements, e.g. it should clearly explain
the outcome of the investigation and the rationale for the decision, and provide details
of how to escalate the complaint if the customer is not happy with how it has been
resolved (this included cases rejected because the customer did not return an I&E
form).
v. Firms to provide a range of measures to support customers, and to treat them
positively and sympathetically. These might include; help and guidance about
dealing with FD and avoiding charges; suspending collections and recoveries activity;
suspending the accrual of further interest and charges; and a consideration of a refund
of charges, in particular where the charges may have added to the FD during, or
immediately before, the period of FD. The rationale for why a particular level of
refund has been given should be documented and clearly explained to the
complainant.
The minimum standards are not Handbook guidance but rather update firms on the findings
of good practice from our thematic review of the handling of unauthorised overdraft
complaints. The minimum standards do not purport to define the suitability standards for
unauthorised overdraft charge complaint handling. Firms should have regard to the minimum
standards in deciding what action they need to take to comply with the FSA Handbook and
the waiver. There may be several ways of complying with a regulatory requirement, and
I Firms are also referred to sections 14.4 and 14.5 of the Guidance to the Banking Code
2 Firms are also referred to sections 14.2 and 14.3 of the Guidance to the Banking Code
following guidance or other materials we publish, such as the letter issued on 13 November
2008, is only one approach. For further information, please refer to the section on FSA
guidance and supporting materials in our Enforcement Guide, paragraphs 2.22 - 2.27
(http://fsahandbook.infoIFSA/html/han...F).Afirm's senior management
remain responsible for establishing and implementing effective controls over unauthorised
overdraft charge complaint handling.
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