If you have a credit card then it is likely that at some point you have paid a late payment or over limit fee. These types of card charges can be particularly frustrating especially as interest rates on credit cards are often very high. In 2006, after numerous customer complaints, The Office of Fair Trading investigated the charges. It was found that some lenders were charging up to £35 each time a customer made a late payment or exceeded their agreed limit. Debt charities were critical of this approach which often penalised the most financially vulnerable. After reviewing the situation, the OFT decided that a maximum fee of £12 should be applied for these card charges. Since the investigation, most banks have dropped their fees in line with the OFT’s investigation and now if you have paid unfairly high charges in the past you have the right to make a complaint.
Another investigation into card charges also occurred in 2006 this time into credit card payment protection insurance. The investigation was undertaken by the Financial Services Authority (FSA) who had recently taken control of the regulation of general insurance. The FSA investigation involved a combination of company visits and mystery shopping and revealed widespread failings across the industry. Further investigations followed resulting in several businesses being handed substantial fines. The investigations drew a good deal of media attention and many customers became aware of the fact they had been mis-sold a payment protection policy. Common ways in which cover was found to have been mis-sold include: where a policy was recommended to customers who were ineligible to use it, where the policy was added without the customer’s consent and where the policy was sold without full explanation of the costs. Since 2006 there has been year-on-year increases in the number of people making PPI claims and it is thought that as many as two million may have been affected.