The Office of Fair Trading (OFT) has dashed the hopes of many by announcing that it will not apply its ruling on “unlawful” penalty fees to overdrafts.
Banks and other credit card providers have been told by the OFT that the fees they charge for missed payments or unauthorised borrowing are “excessive” and should be reduced.
The average charge is around £25, but varies by as much as 60 per cent when you compare credit card deals and other products.
The fees are also often charged by the day, leading to large multiples.
The OFT ruled that these should represent the genuine costs to the bank of dealing with overheads, and said that £12 should be considered the maximum “legally fair” charge.
Now, however, it has said that its review will be limited to credit card charges and will not consider other forms of bank fee.
“We expect credit card issuers to adjust their default fee levels quickly,” reiterated OFT chief executive John Fingleton.
“We have not ruled out future legal action if the market does not respond positively.”
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