what's happening on complaints about unauthorised overdraft charges?
The Financial Ombudsman Service – and courts across the country – put individual complaints about unauthorised overdraft charges on hold, while waiting for an important legal "test case".
The Financial Services Authority (FSA) also agreed that banks could suspend their work on complaints about these charges, until the "test case" decision was made.
The Supreme Court issued its decision on the "test case" [summary in PDF format] on 25 November 2009. The Court made a unanimous ruling on the issues on which the Office of Fair Trading (OFT) had sought a decision.
The Court ruled that the fairness of unauthorised overdraft charges could not be challenged on the basis proposed by the OFT. The OFT has since announced that it will not make a further legal challenge on any new grounds.
The ombudsman has to take the law into account when we decide cases. This is why the Supreme Court's ruling is very important in our work on bank charges.
So we have considered the Supreme Court's decision – and its implications – very carefully. Our view is that the legal ruling means we will not generally be able to help with cases that involve "template" or "standard letter" complaints about unauthorised overdraft charges.
But in keeping with our usual approach to complaints that are referred to us, we will review each case individually – to see whether there are any one-off circumstances that may apply. For example, we would expect current-account providers to deal positively and sympathetically with a consumer in financial hardship – including where bank charges had added to their difficulties.
my complaint with the ombudsman service was put on hold during the court case. What do I need to do now?
You don't need to do anything. You should receive a letter from us shortly, explaining how the Supreme Court ruling affects your complaint.
my complaint was put on hold by my bank. What do I need to do now?
Your bank is now required to review your complaint in light of the Supreme Court's decision. So you should hear directly from your bank in due course.
In the meantime, if there have been any changes in your circumstances since you first raised your complaint with your bank, you may want to get in touch with your bank to update them.
If you are in genuine financial hardship, this does not affect the legality of the charges. But it is relevant to how your bank or building society treats the amount you owe. Give them the necessary information about your financial circumstances to enable them to consider your situation fully.
If your bank or building society agrees that you are experiencing financial hardship, they should suggest an appropriate settlement. This may or may not involve reducing the amount you owe – depending on the circumstances.
If you're not happy with your bank or building society's response to an official complaint, we can look to see if we are able to help.
We have written to the major current-account providers [letter opens in PDF] and claims-management companies [letter opens in PDF] to set out our approach to cases involving current account-charges and financial hardship – and to ask for cooperation in ensuring the efficient handling of these complaints.