It is a new rule that may have the banks running scared. As of May 31, money lenders are no longer allowed to charge sky-high penalties for late payments on credit cards, store cards, mortgages, loans and overdrafts. The most they are, in fact, allowed to
charge is £12. And if they do not make the changes to these charges by this date, it is possible that these money lending outfits will be taken to court and made to pay up.
What this means is that outfits like Halifax, which is part of the Bank of Scotland group, can no longer charge £39 for unpaid cheques, direct debits and standing orders. Neither will other banks, which have penalty rates usually about £9 less than this. And on top of this, the people who were charged these staggering rates dating back six years can claim them back.
The Office of Fair Trading made the rule because it felt penalties should be there simply as a way for organisations to recover costs, rather than profit from people who have borrowed money in the first place.
In reaction to the new rule, the British Bankers Association has promised to challenge some of the cases. A spokesperson for the organisation says they thought that the OFT's decision should only apply to credit cards rather than all sorts of other money lending situations. The reason being, is that the investigation that the OFT carried out before it made the rule was only into the situation surrounding credit cards exclusively.
œWe are surprised that the OFT has widened the scope of its ruling when it only spoke to credit card providers. We expect our members to challenge this. We believe our bank's products provide good value, the British Bankers Association spokesperson says.
But partner at Class Law Solicitors, Stephen Alexander, says banks will have little chance of being successful of a legal challenge against the new rule in a small claims court. œNow that the OFT has decided that anything over £12 is unfair, it will be a lot easier for people to succeed against the banks in the Small Claims Court. People are entitled to claim back charges made within the last 6 years, he says.
While this rule, however, might be bad news for the banks, it provides probably som.comfort to all of the people out there who have wracked up debts through accruing credit card fines. At least now they can get some of their money back. And the consumer magazine ˜Which™ can help you.
˜Which™ magazine says for £10, it will provide all the paper work one needs to apply for a rebate on excessive fees. The information can be obtained through the website
which.net.
Banks make billions of pounds worth of profits each year, so it might seem that this ruling will hardly create even a dent in those profits. But at least it makes them play fair and give you some of your money back.
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