Banks have been given a further six months to sit on bank charges claims, pending the outcome of the test case to determine the fairness of these fees.

The news was revealed this morning by the Financial Services Authority (FSA), the City regulator. Yet, in the meantime, banks can continue to levy charges of up to £39 a time for going just a penny over your overdraft limit.

Victims are still submitting claims to get in the queue (for free template letters, see the Bank Charges guide), even though reclaiming is on hold. However, those in financial distress can claim now (see the Bank Charges Hardship guide).

It's thought nearly a billion pounds of charges have been reclaimed already. So far, 6.1 million free bank charges template letters have been downloaded from this site alone.

The hold on claims for most has been in place since July 2007, when it was announced the test case would take place. The current waiver, allowing banks to sit on claims, was due to expire this weekend but has now been extended until 27 January.

Test case latest

The House of Lords is currently considering an appeal by banks against an earlier ruling both in the High Court and the Court of Appeal that bank charges are subject to fairness laws. A decision is expected in October.

If that appeal fails, the Office of Fair Trading will decide on fairness, and it's provisionally stated the charges are unfair.

This week, the Tories branded bank charges unfair.

MSE has written an open letter to Conservative leader David Cameron, asking him to put his money where is mouth is and back the automatic payback of charges. See the current free weekly email for the letter.

Wendy Alcock, money analyst, says: "It's now two years and counting since the FSA waiver, meaning consumers continue to have no come-back to the practice of bank charges being taken from their accounts without their permission.

"While the banks are starting to show signs of recovery, their delaying tactics leave consumers sitting on the side lines until the waiver is lifted. Sadly, this does not look to be anytime soon."

The FSA says the new waiver has been offered because "it is not yet clear how firms should be responding to complaints about unauthorised overdraft charges so that customers are treated consistently and fairly".

However, the waiver could be revoked at any time if the FSA considers "it does not provide adequate consumer protection, or material progress is not made in the test case, or a firm fails to comply with the conditions set out in the waiver".

Further reading/Key links

Fight back: Bank Charges, Bank Charges Hardship