Consumers who are looking to reclaim unfair overdraft charges will now have to wait a further six months after the Financial Services Authority (FSA) announced today that it is extending the waiver that allows banks not to pay out on claims.
The FSA explained that it was extending the suspension of its normal rules, which require banks to deal with complaints promptly, because the High Court has still not decided if bank overdraft charges are unfair or not.
The waiver was introduced last year when the Office of Fair Trading (OFT) commenced a court action to prove that high charges for unauthorised borrowing are unfair.
The waiver was due to expire next week but the FSA has said that it will allow banks to put reclaim letters on hold until a suitable outcome is reached.
The waiver will be reviewed again before its expiry date said the FSA. A second round of High Court hearings is expected to start before the end of the year. It involves eight High Street banks and the OFT, and will be put before Mr Justice Andrew Smith.
Back in April, Mr Justice Andrew Smith ruled that the OFT had jurisdiction in the matter, and he has recently been asked to rule if fees levied under previous bank terms and conditions can also similarly be assessed by the OFT.
It is thought that the entire case may not be resolved until late 2009. Since the end of 2005, thousands of people have successfully reclaimed hundreds of millions of pounds in fees.
However, the waiver extension has been described as a ‘kick in the teeth’ for consumers, according to bank campaigners.
According to price comparison group uSwitch, banks earn roughly £3.5 billion a year from the charges.