Overdraft fees claims kept on hold

Claims for excessive unauthorised overdraft fees are to be kept on ice for another six months.

The Financial Services Authority (FSA) today issued a new waiver so banks and building societies do not have to handle claims for overdraft fees to be returned while the court case over the fees rumbles on.

A group seven banks and a building society are currently appealing a decision from the High Court over overdraft fees and if whether the FSA has the power to decide if they are fair.

Which? head of campaigns Louise Hanson described the waivers as "a necessary evil".

"Scrapping the waiver won’t get people their money back – only the banks can do that by conceding defeat and paying up instead of continuing to string out the process," she said.

Under the current waiver bank customers can still lodge claims from back to July 2001 either with the County Courts and the Financial Ombudsman Service (FOS), but the claims will not be handled until the case is resolved.

Consumers are advised to continue putting in claims, which banks are required to record and keep them up-to-date with.

Claims are allowed to go ahead though in cases of financial hardship – and the FSA has now set clearer guidelines over what circumstances can be deemed as hardship.

Under the waiver, a person claiming fees back is considered to be in financial difficulty if their income is "insufficient to cover reasonable living expenses and meet financial commitments as they become due".

The FOS reports a few hundred cases of consumers in financial hardship have gone ahead.

"If you feel you are in financial hardship, contact your bank for them to see if the waiver does not apply," an FOS spokesperson said.

If the bank does not feel you are in financial hardship, you can still appeal to the FOS.

"We’re glad though that the FSA has listened to our concerns about hardship cases," said Ms Hanson at Which?

"People in financial difficulty need greater clarity and banks must be prevented from moving the goalposts with detrimental changes to their terms and conditions."