The banking industry has formally agreed to Office of Fair Trading (OFT) demands that it slash the penalty fees applied to credit cards, the majority of them by a half.
Many credit card providers had already cut their fees following the OFT’s threat of possible legal action in May, but did so unilaterally without agreeing with its findings.
The maximum fee that banks will now be able to charge for individual unauthorised payments or bounced direct debit payments has now capped at £12.
The OFT said that it was satisfied with the announcement and said that it will not be taking any further action.
“The reduction of default charges on credit cards is great news for consumers,” said OFT chief executive John Fingleton.
“By taking an innovative approach to this issue, the OFT has brought about a significant change in one area of the financial services sector.”
The OFT also confirmed that it would be opening up a new front in its war on charges however, announcing a six-month investigation into current account charges.
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