The Financial Ombudsman is urging financially weary bank charge claimants to avoid taking their cases to court, but to instead contact them instead to reclaim their charges.
Many bank customers who have suffered financial difficulties due to unfair bank charges have since seen their cash refunded through the Financial Ombudsman Service rather than having to go through the county courts.
A waiver introduced by the Financial Services Authority has allowed banks to stall payment of reclaims until the current High Court battle between the FSA and eight High Street banks has concluded.
The only exemption to the FSA waiver are circumstances in which those suffering severe financial hardship due to hefty charges applied to their accounts for going overdrawn can still have their case heard – either through the Financial Ombudsman or via the courts.
Once a claimant has been turned down by the courts they are unable to apply to the FOS, which means that any banking customer in financial difficulty should apply direct to the FOS with their claim and bypass the courts altogether.
Since the waiver was introduced last year the banks have been very compliant in settling some 250 cases, with the FOS not having to force their hand with a formal ruling, according to Emma Parker from the FOS.
She said: ‘So far the process has been very co-operative. We have not had to make a formal ruling. We have talked to the banks and asked them to resolve the situation and they have, so it hasn’t got to that stage.’
The eight High Street banking institutions at the centre of the High Court case are currently appealing a ruling made earlier this year, which allowed the Office of Fair Trading to assess the fairness of bank charges.
The appeal cannot extend beyond the end of 2008 but, if the banks are unsuccessful, the following battle between them and the OFT could extend until the end of 2009 or beyond.