FSA Grants New Waiver Regarding Overdraft Charges

by Amanda Banks, for LawAndTax-News.com

21 July 2008

The UK's Financial Services Authority (FSA) on Monday issued a new waiver from its complaints handling rules with regard to unauthorised overdraft charges.

The waiver replaces an existing one, which expires on 26th July 2008, and has been offered to those firms who signed up to the previous waiver.

This represents approximately 98% of the market. Signatories will not be required to handle complaints relating to unauthorised overdraft charges within the time limits set out in the Dispute Resolution manual.

The key points of the waiver include:

• A duration of six months and a review early in 2009;
• Continuation of the FSA’s consumer protection measures including record keeping requirements and a suspension of the limitation period for making a complaint;
• Additional guidance on the identification of those complainants in financial difficulty; and
• Enhanced monitoring of firms focussing on consumers’ experience whilst the waiver is in place.

Dan Waters, Director, Retail Policy, commented:

"The FSA continues to work closely with the OFT and banks in reaching a resolution on the fairness of unauthorised overdraft charges. Our objectives continue to be certainty over this complex issue, and a fair and consistent resolution of consumer complaints about unauthorised overdraft charges."

"The FSA has reviewed the prevailing circumstances and has decided to offer firms a new waiver. The waiver will be for six months, when we expect to have a decision from the Court of Appeal."

The FSA can revoke the waiver at any time if it considers a waiver is no longer appropriate, for example, if it no longer provides adequate consumer protection, or material progress is not being made in the test case, or a firm fails to comply with the conditions set out in the waiver.

The FSA first granted a waiver from its complaints handling rules regarding unauthorised overdraft charges in July 2007, for 12 months.

The waiver means that while it is in operation, any bank or building society granted the waiver will not be required to handle this type of complaint within the time limits set out in the FSA rules.

The county courts have 'stayed' cases referred to them, and the Financial Ombudsman Service has adopted a similar approach.

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