Extreme bank-account and credit card charges attacked as unfair and possibly illegal
Izvor: KiWi
Extreme bank-account and credit card charges attacked as unfair and possibly illegal
One missed credit-card payment, or going overdrawn without permission, and suddenly a 30 demand can be borne. Bank prices may seem to be unfair and too harsh given the generally small amounts of unauthorized credit involved. Discover supplementary info about Page Not Found by browsing our commanding URL. Now it would appear that the law could possibly be in agreement.
Following o-n from a study released in October 2003, ten major credit card companies were informed in July 05 by the Office of Fair Trading (OFT) that the charges they impose for late payments were 'disproportionately large', and that charges needed to be modified to better reflect the expenses to them of managing late payment. Through the analysis, the bank card companies continued to maintain that the late payment fees they imposed were fair.
The legitimacy of these charges are being asked by a Scottish law firm, supported by the Scottish Citizens Advice, who are encouraging consumers to challenge the best of banks to charge such high charge fees. With current high-street credit card regular APRs ranging from 5.9% to 29.9% (source http://www.moneynet.co.uk/credit-card/index.shtml ) this is up to 25.4% points above the existing 4.5% Bank of England base rate, and banks reducing the interest charges on current and savings accounts (see http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html ), many consumers see the levels of the bank charges as yet another means of revenue generation by the banks through excessive penalization of consumers beyond the actual costs involved.
'The law says if somebody breaches their contract, for example you get over your overdraft without authorization, the bank's only eligible to recover its real loss,' Mike Dailly, Principal Solicitor in the Govan Law Centre informed BBC Money Box, 'If you get an automatic letter from your lender for going over your limit, that costs about 50p. Why should someone obtain a 36 letter for that purchase'? .
In a previous news release, the OFT explained that it, considers that, in a consumer contract, a standard demand probably will be disproportionately large if it's higher than a real pre-estimate of the problems that the card company would get in court if it charged the cardholder for breach of contract.
A representative of the British Banker's Association told the BBC that the banks were not charging customers more than the actual price, stating that the charges were to cover extra costs incurred due to a dependence on human intervention, to remove the item from the day's work, to study the customer's new credit account, and a managerial decision as to whether to return the unpaid item.
The Glasgow based Lawyer states that, The legality of bank charges has yet to be led on by way of a senior UK judge but these will not be added if they are found to be 'punishment' or 'unfair' charges. Until a final judgment is made by the courts, they've drafted a letter citing both Scottish and English case law combined with the regulations which apply through the UK to assist consumers obtain costs returned.
Disclaimer:
All information within this article, is for basic information purposes only and shouldn't be considered as guidance under the Financial Services Act 1986.
You are strongly encouraged to take proper professional and legal advice before entering into any binding contracts.
Useful resources:
Bank card price comparisons ( http://www.moneynet.co.uk/credit-card/index.shtml )
Current and savings account interest rate reductions more information ( http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html )
Author:
Michael Hanna
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