The Financial Services Authority (FSA) today (Friday 27 July) issued a 'waiver' from its complaints handling rules that apply to unauthorised overdraft charges complaints. This follows the decision by the Office of Fair Trading (OFT) and some firms to initiate a test case in the High Court to resolve legal uncertainties on the application of the law to these charges.

This action means that, until the test case is resolved, any bank or building society that applies for the waiver will not be required to handle complaints relating to unauthorised overdraft charges within the time limits set out in the FSA rules. The Financial Ombudsman Service (FOS) has adopted a similar approach and the county courts are expected to follow.

Clive Briault, Managing Director, Retail Markets, said:

"The FSA supports the test case on unauthorised overdraft charges as the current situation does not provide certainty or consistency for consumers or firms.

"We have granted the waiver to help facilitate this test case. We believe it is not in the interests of all consumers for complaints to continue to be dealt with in the current inconsistent way. Once there is certainty on these charges, complaints can be dealt with fairly and consistently. To ensure consumer protection we have imposed a number of conditions on the waiver that firms must adhere to."

The conditions in the waiver include dealing promptly with complaints once clarity is achieved and communicating clearly with consumers throughout the process. The FSA also expects firms to continue to help their customers avoid incurring unauthorised overdraft charges in the first instance and to continue to deal with hardship cases.

The FSA will review the waiver in two months time to ensure, among other things, that firms are complying with its conditions. The FSA can also revoke the waiver at any time if it considers that the waiver is no longer appropriate, for example if progress on the test case is not being made or if a delay in the resolution of the test case is likely to cause undue risk to consumers.

The FSA will publish later today the results of thematic work on how firms are currently handling complaints on unauthorised overdraft charges. Practices varied across the visited firms, but in some the FSA found significant deficiencies and important areas of weakness in their approach. These included:

a failure to respond to complaints fairly and consistently; to address adequately the subject matter of complaints; or to ensure complaints are resolved at the earliest possible opportunity;
unfair closure of accounts, or threats to do so; and
false or misleading statements made to complainants.