Claim Bank Charges Back - Helping you to reclaim Unfair Bank Charges!

Banks are set to rake in £1.3bn after being given permission to delay offering refunds to millions of customers hit with unfair overdraft fees.

The news follows a decision by City watchdogs relating to a long-running court case over the legality of rip-off overdraft fees.

The Office of Fair Trading (OFT) is taking the banking industry to court on the basis that charges of up to £38 a time for bouncing a cheque are unfair and excessive.

It has won an initial judgment that should ensure refunds are paid to millions of people.

However, the banks are dragging out the case through the appeal courts with the result that payments are being delayed.

The City watchdog, the Financial Services Authority (FSA), has allowed the banks to put the handling of complaints and refunds on hold until the case is settled.

This so-called waiver was first introduced in July last year and was due to run out this month - a year in which the banks will have collected £2.6billion in overdraft fees.

The FSA said it would allow the waiver to run another six months, until January 2009, allowing the banks to collect another £1.3bn.

There is every chance the banks will appeal the case through to the House of Lords, which could delay any compensation for customers until well into next year.

The delays mean the banks can continue to generate billions of pounds from what the OFT believes are illegal charges. This money is coming straight out of the pockets of some of the poorest people in the country.

The FSA said the delay in resolving the situation will not affect the ability of bank customers to claim refunds of charges going back to 2001, once the case is finally settled.

And while a general waiver for dealing with refunds has been established, the banks will be required to handle complaints involving customers suffering real financial hardship.

Martin Lewis, founder of MoneySavingExpert.com, said: 'For all its talk of consumer protection, the FSA's decision to extend the hold on reclaiming bank charges is a kick in the teeth to the millions of people trying to reclaim them.

'The original hold was installed as the test case was announced, because of apparent "inconsistencies," even though the enormous majority of people were being paid out by the banks.

'Yet now, a year on, the test case decision is out and there's a legally binding, precedent-setting court decision that bank charges are governed by fairness rules, so why not allow people the chance to ask for their money back?'

Director of retail policy at the FSA, Dan Waters, explained the decision saying: 'The FSA continues to work closely with the OFT and banks in reaching a resolution on the fairness of unauthorised overdraft charges.

'Our objectives continue to be certainty over this complex issue, and a fair and consistent resolution of consumer complaints about unauthorised overdraft charges.

'The FSA has reviewed the prevailing circumstances and has decided to offer firms a new waiver. The waiver will be for six months, when we expect to have a decision from the Court of Appeal.'

The watchdog has the power to lift the waiver if it believes the banks are dragging out a resolution of the case unnecesarily.'

The consumer group Which? said extending the waiver for another six months appears to be the least worst option.

Its head of campaigns, Louise Hanson, said: 'The waiver is a necessary evil.

'Scrapping it won’t get people their money back – only the banks can do that by conceding defeat and paying up instead of continuing to string out the process.'

Which? is concerned that banks have been changing their terms and conditions in recent months in a bid to get around any crackdown on unfair overdraft fees.

Miss Hanson said: 'People in financial difficulty need greater clarity and banks must be prevented from moving the goalposts with detrimental changes to their terms and conditions.'

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