GET ANOTHER CLAIM STARTED ASAP 
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News Unauthorised overdraft charges 17 January 2008 – OFT's test case began today.
In July 2007, the Office of Fair Trading (OFT), seven UK banks and one UK building society brought a test case to the High Court about unauthorised overdraft charges. See
What should you do now? for what this means for you.
Unauthorised overdraft charges
These charges are made by banks and building societies when you go overdrawn (if you do not have an arranged overdraft facility), when you go over any agreed overdraft limit or when your bank or building society refuses to pay an item if you do not have sufficient funds in your account. For example, a charge may be made if a cheque is bounced because there is not enough money in your current account to cover the payment.
Over the last few years, more and more consumers have complained to their banks and building societies about the fairness of these charges.
High Court 'test case'
This court case is being called a 'test case' because the decision will clarify whether these charges are fair and lawful. The court's decision is likely to apply to all existing and future claims against these charges. We believe this will deliver a fair outcome for consumers because, once the test case has established a clear basis for resolving these complaints, firms can deal with them in a fair and consistent way.
The test case started on 17 January 2008. See
Personal current accounts in the UK on the OFT website for more information.
The FSA's involvement The 'waiver'
Until July 2007, some customers were being refunded these charges when complaining, others were not. We didn't believe this inconsistent approach was in the interests of all consumers. So we granted a number of banks and building societies a 'waiver' to help progress this test case. This means that firms who were granted this waiver do not have to deal with complaints about unauthorised overdraft charges in the time specified under FSA rules. In effect, from 27 July 2007, banks and building societies put customer complaints on this issue 'on hold' until the test case is resolved.
However, we set out a number of conditions that firms must meet in dealing with their customers while the waiver is in place. In particular, firms must continue dealing with any cases of genuine financial difficulty during the waiver period – see the
Banking Code for how firms can help in these circumstances. Firms must also ensure that their customers are updated on developments of the test case.
This waiver applies only to complaints about unauthorised overdraft charges. Firms must continue to deal with complaints about other financial matters, such as insurance, mortgages or other complaints regarding their current accounts, in the usual way.
We reviewed the waiver after two months and published the results of this review on 21 November 2007. We concluded that it was still appropriate for the waiver to remain in place.
What should you do now?
If you've made a complaint or are thinking of making a complaint about unauthorised overdraft charges here are some general questions and answers to help you – for information about your individual circumstances speak to your bank or building society.
- What this will mean for you, if
- you have an outstanding complaint
Your complaint will remain with the bank or building society but will not be dealt with until the test case is resolved. - you were made an offer of settlement by the bank or building society before the waiver was granted
You had two months to decide if you wanted to accept or reject the offer. If you have not accepted an offer from your bank or building society, it is likely that you will now have to wait for the outcome of the test case. - you received a final response from the bank or building society which did not include an offer
If you are not happy with the firm's response, you can still take your complaint to the Financial Ombudsman Service. However, the Ombudsman is unlikely to progress complaints about unauthorised overdraft charges – other than in financial difficulty cases (see below) – until the test case is resolved. - you have already had a settlement and want it reviewed
A full and final settlement is just that – it is final. In some exceptional circumstances a complaint can be reviewed – for example, if there is evidence of coercion or bullying. However, you can still complain about any new charges incurred since that settlement. - you are in very difficult financial circumstances – 'financial difficulty cases'
If you have a case of genuine financial difficulty, your bank or building society must still deal with your complaint – see the Banking Code for how they can help. If you're not happy with the firm's response to your complaint, you can take it to the Ombudsman, who will consider whether your complaint can be dealt with before the test case is resolved. - you wish to complain from today
You can complain now or you can wait until the test case has been resolved – you won't lose out. Your complaint will be recorded and stored, then dealt with as quickly as possible once the test case is resolved. Your bank or building society will still have to acknowledge your complaint within five days. - you are worried about your complaint being time-barred
We have protected your rights by making it a condition of the waiver that complaints will not be time-barred. In effect, the clock stopped on 27 July. For example, if you are applying to reclaim charges for the last six years and the court case took one year, that year would not count. (Please see below about making a complaint in Scotland.) - you want to complain to the bank about other issues
You can still use the existing complaints process for other financial complaints – see Making a complaint. But, if your complaint relates to the fairness of unauthorised bank charges, that part of your complaint won't be dealt with until the test case is resolved. - you want to make a complaint in Scotland
You can take your complaint to the Ombudsman or the courts. If you want to take your complaint to court in Scotland, the timing is important. You may want to get independent advice and file a claim now to protect your rights (although you will have to pay a court fee).
- Will banks and building societies still charge customers for unauthorised overdraft charges during this time?
Yes, it is likely that they will do so. But this will not prevent you asking for repayment of any future charges if the test case finds they are unlawful. - What about banks and building societies who haven't signed up to the waiver?
We expect all banks and building societies to sign up, but we will monitor the complaints handling process of those who don't very closely. - How will the FSA know if the waiver conditions are being met?
The FSA will review compliance with the conditions in the waiver regularly to make sure consumer interests are protected. We can revoke the waiver at any time if we are no longer satisfied that the waiver is appropriate. - How long will the test case last?
The test case started on 17 January 2008 but we cannot predict how long it will last. However, we have granted the waiver for one year and it will be reviewed regularly. For example, we published a review of the waiver on 21 November 2007. We can revoke the waiver at any time if progress on the test case is not being made or if a delay is likely to cause undue risk to consumers. - If the banks and building societies win, what does this mean for customers who have received money in the past?
Previous settlements will not be affected by a court decision in favour of the banks and building societies. - What happens if the OFT wins? Will this mean that customers who've had unauthorised bank charges get money from the bank?
It will depend on the precise outcome of the case, but many customers are likely to be entitled to refunds if this happens.
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