Thread: Rely from FSA

This is an answer to a letter cribbed off this site and sent to the FSA. Here si their answer.

Dear Mr X

Thank you for your email of 4 September 2007, which was addressed to Clive Briault. Your email has been passed to the Consumer Contact Centre as the appropriate department to respond.

Your enquiry

I understand from your email that you have posed a series of questions regarding the rule waiver granted for banks when dealing with complaints about unauthorised overdraft charges. I have listed your question as I have understood them below and answered them in turn.

1) What is the reasoning behind allowing banks to continue to charge consumers unauthorised overdraft charges, when banks/building societies do not have to deal with complaints on the same issue?

Banks and building societies are able to continue to levy these charges as they have not yet been deemed unlawful. Yeah right! This will be determined by the test case. If the test case does find that the charges are unlawful then you will be able to ask for repayment of the money you have been charged.

In the interim, we have put in place measures designed to ensure that consumers will not be disadvantaged in their ability to recoup past charges levied prior to or during the test case, should the courts determine these charges are unlawful.

2) It would be more equal if there was a suspension of cases and charges. Why has this more fair interim measure not been adopted?

I believe this was answered in question 1.

3) You wish to know why 'double charges' are allowed to continue? As you feel that it is contravention of the Office of Fair Tradings (OFT) Report 842 from April 2006.

The OFT report that you are referring to is 'Calculating fair default charges in credit card contracts - A statement of the OFT's position'. As you can see from the title this report is regarding credit card default charges and not unauthorised overdraft charges. After announcing their statement of principles regarding credit card charges in April 2006. The OFT decided to carry out further work looking at how the principles apply to bank accounts. It has now carried its initial review, which involved liaising closely with the FSA. The finding of this initial review is that the OFT shares the public concern about the level and incidence of bank current account charges, but it recognises that the application of the general principles it set out in 2006 to the banking industry is not straightforward and that a more detailed investigation of the fairness of bank default charges is needed.

If you have any questions or comments on the OFT's work you can contact them using the contact details on their website at www.oft.gov.uk.

4) Why to this date have the FSA been unable to get high street banks to comply with Unfair terms in Consumer Contracts Regulations 1999?

The FSA has some jurisdiction in this area but our powers are rather limited. However, the interpretation of the Unfair Terms in Consumer Contracts Regulations is really a matter for the courts.

5) Why has it been necessary for consumers to take action on widespread scale before regulatory authorities respond in their interests?

The increase in consumer activism in this area is a fairly recent phenomenon (post OFT ruling on credit card charges) and the decision to bring a test case which arises from it was a decision made by both the banks and the OFT.

6) When consumers make a new complaint about unauthorised overdraft charges they will be placed on hold pending the outcome of the test case. You would like to know why?

Up until this point, some customers have been refunded these charges when complaining, others have not. We don't believe it is in the interests of all consumers for this to continue.

7) Having found the funding (sometimes in cases pf extreme hardship) some consumers have already submitted court claims, which may now be stayed. You would like to know why?

The decision to stay court proceedings is a decision of the court that the case was due to be held in. The FSA has not instructed courts to stay all proceedings related to complaints about unauthorised overdraft charges.

8) Consumers are still subject to penalty charges irrespective of the fact such charges are precisely the subject of the forthcoming test case. How do you propose to justify this given your statutory obligations to the consumer?

I believe that this has been answered in question 1.

9) Will the FSA give a categorical assurance that the issue of consumer defaults placed on consumers credit files, as a result of unauthorised overdraft charges, will be thoroughly reviewed with the aim of removing altogether such default notices?

I am unable to comment on this issue. It is for the High Court to decide what action is appropriate following their decision on whether unauthorised overdraft charges are fair.

Unlawful charges

I note from your correspondence that you refer to unauthorised overdraft charges are 'unlawful charges'. May I remind you that these charges are the subject of a case in the high court and the legality of the charges is still in question. Pending the outcome of the test case these charges are not considered illegal.

I trust that this information is of use.

Yours sincerely

M Broadhurst (Miss)
Consumer Contact Centre
Financial Services Authority
Consumer Helpline: 0845 602 2185 (call rates may vary)
www.moneymadeclear.fsa.go v.uk
Get clear, impartial information from the UK's financial watchdog.
No selling. No jargon. Just the facts


Please can I have some comments in order to respond back to the very kind lady.

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And if not CRFX250 will beat them over the head with his judicial review.

OOOH look the buck went that way ----------------------------->

I find this statement particularly galling:

"Banks and building societies are able to continue to levy these charges as they have not yet been deemed unlawful. Yeah right! This will be determined by the test case. If the test case does find that the charges are unlawful then you will be able to ask for repayment of the money you have been charged."


Its not really fair at all because the banks have admitted guilt by default - simply due to the 2.6 billion that they have already paid out. It is VERY unfair on people who are still getting robbed by their bank and are not allowed to question the legality of the charges. Especially as there is blatently no competition among banks to offer accounts that dont charge. And it is a pain in the ass to change accounts. Its not like going to a different supermarket. Changing bank accounts will always be a hassle.

It also does not help the issue that timescales keep getting knocked around by banks that say it may take years to reach a decision. Thus the hatred of once great institutions grows.

Its time to end this - its time to just pay.........

At least the reply was more substantive than some MP's are getting even
if it was just an extra shovel load of garbage

TOTAL GUFF:

"The OFT report that you are referring to is 'Calculating fair default charges in credit card contracts - A statement of the OFT's position'. As you can see from the title this report is regarding credit card default charges and not unauthorised overdraft charges. After announcing their statement of principles regarding credit card charges in April 2006. The OFT decided to carry out further work looking at how the principles apply to bank accounts. It has now carried its initial review, which involved liaising closely with the FSA. The finding of this initial review is that the OFT shares the public concern about the level and incidence of bank current account charges, but it recognises that the application of the general principles it set out in 2006 to the banking industry is not straightforward and that a more detailed investigation of the fairness of bank default charges is needed."


READ: Banks make a hell of a lot more money from bank charges than credit card companies do and they will be very upset if we stop them from charging. Thats why we're stringing this out.

"5) Why has it been necessary for consumers to take action on widespread scale before regulatory authorities respond in their interests?"

A: The increase in consumer activism in this area is a fairly recent phenomenon (post OFT ruling on credit card charges) and the decision to bring a test case which arises from it was a decision made by both the banks and the OFT.


Avoids the question like a hot potato.

"The decision to stay court proceedings is a decision of the court that the case was due to be held in. The FSA has not instructed courts to stay all proceedings related to complaints about unauthorised overdraft charges."


Total and utter [naughty word]. The courts are following the lead of the joint actions of the OFT and FSA. They have probably just been told what to do.