OFT slams credit card companies for imposing excess penalties |
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Wed, 27 Jul 2005 13:05
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LONDON: The Office of Fair Trading has aligned itself firmly on the side of the consumer by ruling that the penalties imposed by certain credit card companies were well over reasonable limits.
The trading watch-dog has told around eight major credit card companies that the penalties which are somewhere between £20 and £25 are 'excessive.' Barclaycard and the Royal Bank of Scotland were also among these companies who were warned that they had 90 days in which they had to adjust their fees in an acceptable manner or they would face legal action by the OFT.
The OFT released this data after examining the way firms deal with late payments from way back in 2003, "The levels of the default charges imposed by the credit card companies need to be reduced in order to be fair," the OFT said in a statement.
Ever since Barclays brought out the first credit card in 1996, the use of this form of 'plastic currency' has become quite ubiquitous. Last year, credit card transactions stood at a massive £144 billion as compared to £97 billion in 2000. The OFT's latest ruling is merely the tip of the iceberg for the largely unregulated credit card industry. Contrary to assurances, two banks have found their names in this list of the OFT.
Commenting on their position, a spokeswoman for the Royal Bank of Scotland said, "Only a very small proportion of customers attract a default charge and as a responsible lender we must have a process in place to manage late payments."
Barclaycard's spokeswoman also voiced similar sentiments, "These fees are easily avoidable if customers manage their accounts properly. They are clearly set out in their terms and conditions," she pointed out.
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