FSA Extend Overdraft Fee Waiver
Writes Dan Drage dan.drage@consumerchoices.co.uk
Banks are to be granted a six month extension to the waiver that allows them to avoid entering into unauthorised overdraft fee complaints procedures.
The waiver replaces an existing one, which expires on 26 July 2008, and has been offered to those firms who signed up to the previous waiver. Approximately 98% of the market signed up to the original agreement.
The duration of the waiver is six months, while many industry analysts predict it will be years before the Financial Services Authority (FSA) finally drops its waiver that allows banks to put all claims on hold for the moment.
Additional conditions of this new waiver include continuation of the FSA's consumer protection measures including record keeping requirements and a suspension of the limitation period for making a complaint.
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"By buying another six month reprieve, banks are able to create and implement strategies that will enable them to both recoup and absorb these loses"
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Dan Waters, Director of Retail Policy at the FSA had the following to say:
“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”
He continues:
“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.”
Chris Eagle, Commercial Manager at Credit Choices, foresees banks stretching this one out as far as they can:
“At some stage, the banks will inevitably lose this case and have to refund, in part or in whole, unauthorised overdraft fees to their customers. However, by buying another six month reprieve, banks are able to create and implement strategies that will enable them to both recoup and absorb these loses.”
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