Some Good News From FSA On Bank Charges

There is partial good news from the FSA regarding the six-year limit on claims, but the banks still don't have to pay up.

I got a call from an FSA spokesperson late yesterday afternoon. He clarified the FSA's position on bank charges, saying that it won't let banks use the six-year rule to dodge paying claims that are delayed as a result of the waiver. This is good news of course, in that it upgrades the situation they've created from an abysmal situation just to a terrible one.

So, with this new information, my guidance will now change. I no longer think it's necessary to issue a claim in the county courts in order to lock in the past six years of claims. However, the FSA did not assure me that claimants are safe to do absolutely nothing at all. Therefore, you should still write to your bank, setting out all the charges you are claiming. This is so that you later have evidence that you intended to claim.

Sadly, the FSA's spokesperson had nothing to say about my other points. He seemed more concerned about getting claims out of the county courts than about helping people to claim their money back swiftly.

Things to do

Here's a list of things for claimants, and sympathisers, to do:

1. Sign our petition to the FSA, the county courts and the Financial Ombudsman Service. Also, please forward it to friends using the Tell A Friend button.

2. Complain to the FSA using this form. According to Fool reader Nicholas Max, just 217 people complained to the FSA last year. If we can beat that number just on this subject, we have a newsworthy situation.

The FSA will only consider complaints about its core functions, so you should state exactly where it is going wrong. To that end, Max suggests that you point out that it has misjudged the impact if its decision on two of its four statutory objectives:

• Market confidence: maintaining confidence in the financial system
• Consumer protection: securing the appropriate degree of protection for consumers

Explain your complaint in full. To do this, you might like to lift text or borrow ideas from this article: Big Blow For Bank Charges Victims and from the petition.

You should also state what remedy you want. What we want is the FSA to rescind its waiver to the banks and to ask the Financial Ombudsman Service to resume dealing with complaints. Furthermore, we ask it to use its influence on the county courts to resume dealing with our small claims.

Be polite, and you're more likely to get a decent response.

If you're unsatisfied with the FSA's response (i.e. if it refuses to investigate, or you're not happy with the progress or outcome of the investigation) you can refer it to the Complaints Commissioner, which, the FSA says, will conduct an independent review.

You must contact the Complaints Commissioner within three months of receiving the FSA's decision letter. You can contact the Complaints Commissioner at ComplaintsCommissioner@fscc.gov.uk, through www.fscc.gov.uk or on 020 7562 5530.

3. Try this remote possibility. If you're struggling with debt, you might want to point out to your bank paragraph 13 (3) of the FSA's directions:

The FSA encourages the firm to take steps to assess who it is charging, why and when, and thus what more it can do to help account holders avoid incurring unauthorised overdraft charges in the first place (whether or not they have complained). The firm is reminded of the commitment relating to financial hardship in the Banking Code.

But I don't want to raise your hopes. This is a very softly worded condition and 'financial hardship' is a term that's open to interpretation. Also, paragraph 13 (3) arguably contradicts the over-riding point of the waiver: that the banks need do nothing but acknowledge your complaint.

Furthermore, the banks have been abusing the Banking Code by charging these penalties in the first place. They've subsequently been abusing it by using dozens of dirty tricks to avoid repaying the fees and to bully customers, including closing current accounts.

I have no faith in the Banking Code whatsoever and I have zero faith that this condition will help claimants get their money back (except, perhaps, in one or two cases that sneak through, maybe so that the banks can give themselves some good press).

However, I still think this remote possibility is worth doing. If banks refuse to help you, we'll then have more ammunition to throw at the FSA to pull the waiver. So please let me know how you get on, whatever the result.

4. Write to your MP. I'll be writing to mine using the arguments I've outlined in this article, in Big Blow For Bank Charges Victims and in the petition.

Find your MP here. You'll get an email address and a physical address. If you have time, send a physical letter. I think it'll be taken more seriously than an email. Better yet, write a quick email and then follow it up with a letter when you have time.

5. Check out the Consumer Action Group. A lot of claimants post messages on this site, so you can get an awful lot of information by reading through the latest. Something useful might crop up.

More important information

Sadly, I've been overwhelmed with bank charges queries since this time last year. With the recent news from the FSA, my inbox is further snowed. In an effort to answer some of the more common questions, and to pre-empt some others, here's some more information:

The waiver can be taken up by all banks, not just those that the Office of Fair Trading (OFT) is taking to court in its super-claim. We can expect all the banks to take up the waiver.

The Financial Ombudsman Service (FOS) has confirmed that it has suspended handling all bank charge complaints, not just those involving banks the OFT is taking to court. As far as I've seen, no county courts have yet agreed to halt claims, although this is likely to happen soon.

The super-claim should help everyone, a lawyer has told me, not just the people whose banks are being taken to court by the OFT.

But the super-claim won't mean that you get your money back automatically. In the likely event that the OFT wins, we will probably still need to chase the banks. Even worse, the banks still might not pay and we'll have to take them to the FOS or the county courts to get our money anyway. (This'll be easier after the super-claim though.)

Furthermore, if the banks do simply pay up, for all we know it could take another year or two for them to work through their backlogs.

The super-claim will likely take years. Not only do the High Courts take ages, but the banks will appeal. This will probably extend the process a great deal more. I reckon we're going to have to wait closer to five years for a result, rather than one.

The FSA has cleverly pushed future bad press onto the county courts. It has said that if the OFT case is not resolved within a year then the waiver will continue 'as long as the court stay is still in place'. So it can blame the courts if the waiver goes on and on.

However, the FSA surely knows that the county courts are the least likely of all groups (out of the FSA, the FOS and the courts) to want these small claims to resume, because the courts don't want to have to deal with all the small claims.

Unspecified compensation. A condition of the waiver is that the banks must pay extra compensation to victorious claimants as a result of the delay. Sadly, it doesn't specify any interest rate at which the extra compensation should be given. We have to be cynical about the amount the banks will try to get away with.

For claims that banks decide to deal with. Banks must apply for the waiver, and we can expect them all to do so. However, they can choose to deal with individual claims even whilst the waiver is in place. I suspect this will happen on occasion.

When it does, here we have, finally, one piece of bad news (as opposed to terrible news). Any offers made by banks after they've taken up the waiver cannot be full and final offers. This means that if they offer money and you accept, and then the super-claim ruling shows you should have got more, the bank will then have to make up the difference.

Notice that this applies to claims made after the bank has taken up the waiver only. For what happens to existing offers made before the waiver, see my eigth paragraph in Big Blow For Bank Charges Victims.

Credit cards. Just to repeat myself from another article: I don't see why claims for credit-card charges can't continue, as there is no mention of these by the FSA, the FOS or the OFT in this matter.

Emailing me is a bit hit-and-miss at the moment. So, before you email, please ensure you've read up on the subject. The answer to your query may be on The Fool website. See:

Big Blow For Bank Charges Victims
It's Vital You Still Claim Your Bank Charges
The Ultimate Guide To Reclaiming Bank And Card Charges

Finally, you're certain to get a response (and a much faster one) if you ask the experienced claimants on our Reclaim Unfair Bank & Credit Card Charges discussion board.