The FSA says that the six-year limit on bank-charges claims won't apply whilst the OFT's case is outstanding, but legal experts don't think this is quite so clear cut.
I wrote recently (article links at the end) that the Financial Services Authority told me that we did not need to worry about the six-year rule. It explained that it had written conditions into its waiver to banks that prohibits them from using the rule against customers whose individual claims have been delayed by the super-claim for bank charges.
(To recap: The six-year rule applies in most civil litigation. If the claimant doesn't make a claim before six years is up, he/she can no longer launch a case. So the issue here is whether the banks can hide behind the six-year rule once the delays caused by the FSA's decision are over.)
I let you know the 'good news' as quickly as possible. It was the only piece of good news in my evaluation of the FSA's conditions. Unfortunately, having consulted with two lawyers, it seems that it's not entirely straight forward.
If the banks ignore the condition, the FSA cannot force them to repay each individual claimant. What the FSA might do is fine them, but it's unlikely that the size of the fine would be anything like the amounts they will have made in penalty charges, which will be in the billions of pounds. And this still doesn't directly help the customer.
Alternatively, the FSA could revoke a bank's licence. The question is, can we trust it to do this? As I've explained in my recent articles, its actions have done nothing at all to help claimants, rather it has put them in awkward and stressful positions, and has severely delayed their ability to get their money back.
Maybe the Financial Ombudsman Service (FOS) will sort things out. I just talked with a spokesperson who said that, when you submit a complaint to the FOS, it won't just consider the law. It'll consider all sorts of things, including the Banking Code and directions from the FSA. This means it won't have to simply abide by the six-year rule when it investigates individual claims that a bank refuses to settle.
I wouldn't interpret this to mean that the FOS will definitely rule in your favour over the six-year rule, but it seems highly likely to me, if the super-claim is successful.
While consumers aren't obliged to accept the FOS's ruling, financial services firms are. Thing is, on the rare (according to the FOS) occasions when the firm does reject the ruling, it goes back to the FSA, which has no more powers to enforce payment than before.
My view is that, although it seems unlikely to me that the FSA would revoke the licence of any of the big banks, a bank would still have to be brave to ignore its directions, or a ruling from the FOS. There's only so much bad press a bank can take.
Even so, this is far from water-tight, and adds just one more extra layer of worry for claimants. The solution, if you're concerned enough, is to continue to claim in the courts and then get the claim stayed. (There is further guidance on this at the links at the bottom of the page.)
It's not up to me to decide whether you want to continue to claim-and-stay. You must weigh up the costs, risks and rewards yourself. If you would like guidance, seek help on our Reclaim Unfair Bank & CC Charges discussion board or on the excellent Consumer Action Group boards.
The petition
Uncertainty over the six-year rule is just the beginning of the recent worries for claimants. We know that unless decisions are reviewed, people will have to wait for years to get a resolution on their claims.
The FSA risks making people distrustful; some people have begun to suspect that it isn't working for the consumers' best interests.
The county courts will risk the same if they stop processing small claims too. It might be that they are over worked right now, but that's because they have a lot of safeguarding the consumer to do at present. That's what they are there for, and it's why we have the small-claims system. These small claims aren't so small to most of the millions of claimants and potential claimants.
I hope that the FSA and the courts re-consider. I started a petition to the FSA, the FOS and the county courts recently. Please sign it and tell your friends.
Read the background (articles in chronological order):
Big Blow For Bank Charges Victims
It's Vital You Still Claim Your Bank Charges
Some Good News From The FSA On Bank Charges
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