Thursday 2nd August, 2007 

Last weeks unbelievable decision by the financial regulator, Financial Services Authority (FSA), to allow banks to suspend dealing with complaints about unfair bank charges until an OFT test case has been decided should not stop you from reclaiming your bank charges.

This waiver means that banks will no longer have to deal with complaints within the stipulated time period set out by the FSA. The FSA has basically allowed the banks to ignore complaints about unfair charges, except for acknowledging receipt within five days.

Debtwatchdog.com encourages customers of banks who feel their banks have imposed unfair bank charges to continue with their claim and, where necessary, take them to court. "It could take years before a final judgement is made," said a spokesperson for Citizens Advice, speaking about the OFT case.

At the heart of the test case is whether the bank charges are a fair reflection of the cost incurred as a result of an account being overdrawn. It has been argued that the banks are making punitive charges to overdrawn accounts, without prior permission, which is against current rules.

Many cases taken by individuals for unfair charges have been settled out of court, which indicates reluctance on the banks part to contest such claims. Some commentators have concluded that this reluctance indicates that the banks do not want to set a precedence which would lead to more claims being made against them.

However, Angela Knight, chief executive of the British Bankers' Association (BBA) stated that the reason for the banks not taking further legal action was down to the individual nature of each case and that no definitive conclusion could be drawn from the cases due to their uniqueness.

There has been some speculation that if the banks were to lose their test case with the OFT that free banking would end. In light of the massive profits made by the banks and the highly competitive nature of the industry, we at Debtwatchdog.com believe this will not happen, unless the banks get together and make an informal agreement with each other about this issue, which will entail yet another OFT test case.