Have you ever been charged excessive amounts by your bank because you have inadvertently exceeded your overdraft limit, or written a cheque that the bank has bounced? Or have you been fined by your building society, your credit card or your store card company for not making a payment on time?
In 2010, the penalty charges associated with consumers getting overdrawn, having returned checks, unpaid direct debits, and standing orders generated around £5 billion in profit for UK banks.
Customers have accepted these fees since the banks would tell you that it is part of the account’s terms and conditions. What the banks won’t tell you is that charging a penalty fee that exceeds the amount incurred is illegal in England and Scotland.
The Financial Services Authority has decided to extend the waiver on reclaiming bank charges by another six months because the High Court test case is still ongoing.
The FSA can revoke the waiver at any time, for example, if the test case concludes or if the FSA does not think that it is making sufficient progress and the consumer is suffering as a result.
The waiver was first introduced in 2007 when the FSA said that there was too much inconsistency in the reclaiming process – some people were successfully reclaiming their bank charges with interest, whilst others were having their accounts closed down by their bank after being refunded, and others were having their request refused.
Last summer, the waiver was extended for six months but has now had to be extended for a further six months because it was due to run out on the 26th of this month.