The major banks in the UK have pledged to cut their credit card penalties in response to criticism from the Office of Fair Trading (OFT) over high charges for late or over limit payments.
Barclays has reduced charges for late or over limit payments for its Barclaycard customers to GBP12 from GBP20, in accordance with the recommendations set out by the OFT in its report.
The bank said in a statement: Barclaycard disagrees strongly with the OFT’s legal analysis and conclusions but has decided to make the change to GBP12 in order to remove uncertainty and create clarity for customers.
However, Barclays also said that around 10% of their customers will see an increase in their APR by between 2% and 5%. Lloyds TSB, HSBC, HBOS and Egg are also reducing their charges to the recommended GBP12.
The OFT said in April that it was giving credit card providers until May 31 to reduce charges the regulator viewed as unfair, setting a maximum penalty of GBP12 for late payment or purchases over the agreed limit. The OFT said that legal action would be considered if the banks did not lower the penalties and added that the same principles may be applied to other fees such as overdraft charges.
The British Bankers’ Association said that it did not accept that the principles were the same and responded with a threat to end free current account banking in the UK.