Q. What does the OFT’s announcement mean?

A. The Office of Fair Trading has announced it has agreed to a test case with seven of the major UK banks and one building society to decide the principles of reclaiming bank charges in the High Court. This doesn’t mean any individuals are actually going to court; the OFT is using its powers to have a case heard on legal principle. This should decide whether bank charges for unauthorised overdrafts (which includes unpaid cheques and direct debits) are lawful or not. The banks that will be a party to the case are: Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc (includes Halifax and Bank of Scotland) , HSBC Bank plc, Lloyds TSB Bank plc, Royal Bank of Scotland Group plc (includes Natwest) and Nationwide Building Society.

Q: When is the result of test case likely to be published?

A: It is likely the result of the test case will not be published until Easter 2008. At this time it may still take the banks and the OFT a little time to agree to a new standard rate for charges which should be a lot lower than the present charge.

Q. What happens to reclaiming bank charges in the meantime?

A. The FSA has given banks a waiver from dealing with bank charges reclaiming cases until after the case, meaning they needn’t respond to complaints in full for the moment. At the same time the Financial Ombudsmen also said it won’t look at any complaints either that relate to bank charges. The courts have also followed suit, yet the situation there is more complex and certain hardship cases may still be able to go via that route. However, it is still important to register you complaint with us as soon as possible.

Q. How long will the waiver last?

A. No one knows. Technically, the FSA waiver is currently only in place for a year (unless the case is settled sooner), and is due to be reviewed in 2 months. It has said it will stop the waiver if it believes it is being abused or is to the detriment of consumers (though I believe a waiver which prevents people getting money that was being paid out to others, is in itself detrimental to customers).

Q. Were the campaign groups consulted?

A. Over a million people are reclaiming charges at present, and hundreds of thousands through sites like Consumer Action Group; however, as far as we are aware, none of the consumer groups were consulted before this was done. This is a disgrace, we had a fait accompli levied on us, in the name of consumer action, yet the official bodies failed to seek opinions.

Q. What is Reverse Bank Charges' view on this?

A. It’s estimated the banks will save £500 million due to the hold on claims this year alone. While a test case is welcomed, the effective stall on reclaims is a not welcomed. It's also of concern that the OFT doesn’t seem to be looking at all the arguments reclaimers have been making in courts. Currently, bank charge lawyers are looking at preparing additional legal argument for the case; it’s hoped the OFT will listen and put these across.

WHAT DOES THIS MEAN FOR YOU ?

Q: Only eight banks/building societies are in the test case, can I reclaim from the others?

A: All banks have agreed o the FSA waiver. This means all accounts and complaints will be put on hold until the resolution of the test case at the High court.

Q: Can I / should I start reclaiming now?

A: You can only reclaim the last six years worth of charges due to what’s called the ‘statute of limitations’; technically the date this starts is when you submit a claim. Therefore, if your charges are more than five years old, it's crucial to send in your claim form to us immediately. If your charges are within the last few years, you could safely wait until the test case has ended. However as a general rule, the sooner you can get your claim in to us the better. Claims sent to the bank now will be recorded and dealt with as quickly as possible once the test case has been concluded. Banks will still register and store our complaint on your behalf.

Q: Will they still give me details of all my past bank charges if I ask?

A: Yes. All banks are obliged to give us this information under the Subject Access Data request, so we can still write to ask for details of your charges if you do not have the information. Even if your account is closed.

Q: What should I do if I have only recently received my first one or two bank charges?

A: Most banks will usually give you one or two ‘free hits’. In other words call up your bank and politely request the money back. Most times they’ll agree and you won’t have to go through the whole reclaiming procedure. ITS BETTER TO

HAVE YOUR CLAIM IN AND REGISTERED NOW.