Printer Friendly

Cut in cost of defaults; FINANCE: Charges on credit cards reduced.

Byline: By Chris Morley

DEFAULT charges outlined in mortgage, current bank account and store card agreements could be cut by an average 60 per cent, Birmingham lawyer claimed.

After imposing a reduction in default charges on eight major credit card providers, the Office of Fair Trading may have set a precedent and opened the way for others, according to Hammonds.

Last month the OFT announced that it was requiring all credit card default charges to be reduced to pounds 12 in order to meet the test of fairness set out in the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).

The principles have wider implications for similar types of charges laid out in the terms in other agreements including those for mortgages, current bank accounts and store cards.

Elena Curzio, city-based consumer credit specialist at Hammonds, said the charges could be reduced significantly.

She said: "The OFT decided that banks and credit card companies were applying excessive charges to consumers who made a late repayment, had a cheque bounce or had their account go into an unauthorised overdraft.

"The OFT is also planning to investigate other types of repaymsent agreements across a broad spectrum of financial products - the implications could be wide ranging for the financial services industry."

Over the last few months the company has advised a number of financial institutions on the OFT announced changes.

Ms Curzio added: "Every credit card company will now have to consider whether it is going to follow the OFT's position statement and decide whether the way in which its own charges are calculated is in line with the OFT's recommendation."
COPYRIGHT 2006 Birmingham Post & Mail Ltd
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Business
Publication:Birmingham Mail (England)
Date:Jul 27, 2006
Words:268
Previous Article:Letter: YourSay - Hoodies' blaze.
Next Article:Growing firms get support.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters