Bank charges won't be included in high cost credit report

A report is being put together detailing types of high cost credit but according to recent reports bank charges will not be included in this report.

The report forms part of the Office of Fair Trading enquiry into costly credit, and will include things such as pay day loans, doorstep lenders, and pawnbroking, all of which have been subjected to increased scrutiny, but the topic of bank charges has only be skimmed over as part of the report.

The report from the OFT enquiry is set to be published next month, according to reports, but some of the lenders that have been included in the report have described it as a ‘witch hunt’.

Providers of pay day loans have expressed disappointment with the OFT’s decision not to cover bank charges and instead focus on pay day loans and other types of credit.

The report, when released, it expected to highlight the astonishing levels of interest that can come with some types of borrowing, with some non-mainstream lenders charging up to 500 percent interest on a one year loan and some pay day lenders’ interest rates working out to between 1000 and 2000 percent.

At the time the OFT started into probe into high cost borrowing it had been expecting to win its High Court case against the banking industry with regards to bank charges.

One industry group, the BCCA, said that bank charges should have been included in the report, and the group said: ‘We are disappointed that the OFT will not be carrying out a thorough examination of the true cost of current account overdrafts.’

‘This is particularly significant, because the banks are exempted from having to quote APRs on overdrafts, whereas other short-term lenders are compelled to do so.’

Tags: Loan, Office of Fair Trading, high cost credit, year, bank charges, overdrafts

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Thousands hit by hidden charges

Wednesday 2nd March 2011

With inflation levels making everyday living more expensive, we should be paying more attention to the small print on our bills, not less.

Yet all too often, a lack of attention towards our direct debit payments and other bills, means that we miss hidden charges and end up in spiralling into financial difficulty. Although direct debit payments simplify the task of paying regular bills, they also mean hefty penalty charges if we happen to have insufficient funds in our account. Utility bills are a particularly troublesome source of direct debit dilemmas; if payments are missed or late, the consumer is at risk of getting billed the next month with ‘late payment charges’, inclusive of interest fees. Furthermore, if these payment issues become too regular, we are at risk of being cut off by the supplier and then facing a reconnection fee in order to restore the service. Beverley Budsworth, Managing Director of The Business Debt Advisor, said: “Arrears of utilities and council tax are a common theme we encounter with individuals in debt. There are savings to be made by paying by direct debit, however, this also means the utility suppliers are at liberty to vary your payments and this could mean that there any insufficient monies to cover the payments resulting in direct debit penalties which can be significant. “In these types of cases it is important to retain control, temporarily cancel the direct debit and pay the utility bills plus extra towards arrears by BACs (Banks Automated Clearing System) or debit card until order can be restored to the individual’s finances."Back in June 2010, a report was carried out which estimated that, on average, households were being charged £84 annually in hidden taxes on energy bills, due to mounting pressures to offset carbon emissions and combat climate change. These unpaid bills mount up, meaning that we incur additional fees as well as the initial direct debit payment. And in addition to depleting our household budget, these unpaid charges can find their way onto our credit files, giving us an adverse credit rating. Una Farrell, a spokesperson for the Consumer Credit Counselling Service, told The Observer: “People need to get to the bottom of their debts and regularly assess their financial products because not paying off these smaller amounts, as well as the larger ones, can affect their credit rating.”According to comparison site Uswitch.com an estimated 5.5m households are in energy debt, with the average debt being £132. A significant proportion of this debt is hidden when we move house.When we change our address, we are often more concerned with buying a new two piece suite than chasing up our finances. Consequently, direct debit payments that relate to our previous address continue unless the supplier is notified and the payment is cancelled or updated. Andrew Hagger, a spokesman for the comparison website Moneynet.co.uk told the Telegraph:“The unauthorized charges debited to your account could cost you up to £6 a day. The bank will write to the address it has on file, but as you’ve moved you wouldn’t know you were overdrawn.”And it seems that cancelling a credit card is not enough to escape mounting payments, as doing this simply leads the credit card company to issue additional administration fees. Beverley Budsworth, Managing Director of The Business Debt Advisor, added:“Budgeting is absolutely crucial to making sure that all priority debts including mortgage/rent, council tax and utilities plus any arrears are paid prior to unsecured debt i.e. credit cards and loans. It is much easier to negotiate payment plans with personal debt than it is with priority creditors.”
Manchester debt firm is liquidated owing creditors over £2.2m
Wednesday 11th August 2010

Bankrupt football legend probed by police over loan fraud
Monday 2nd August 2010

Mortgage broker ordered to repay £1.5m of client money used to pay off debts
Wednesday 14th July 2010

Barclays lifts lid on banking write-offs
Wednesday 20th February 2008

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Thousands hit by hidden charges

Tuesday 1st March 2011

With inflation levels making everyday living more expensive, we should be paying more attention to the small print on our bills, not less.

Yet all too often, a lack of attention towards our direct debit payments and other bills, means that we miss hidden charges and end up in spiralling into financial difficulty. Although direct debit payments simplify the task of paying regular bills, they also mean hefty penalty charges if we happen to have insufficient funds in our account. Utility bills are a particularly troublesome source of direct debit dilemmas; if payments are missed or late, the consumer is at risk of getting billed the next month with ‘late payment charges’, inclusive of interest fees. Furthermore, if these payment issues become too regular, we are at risk of being cut off by the supplier and then facing a reconnection fee in order to restore the service. Beverley Budsworth, Managing Director of The Business Debt Advisor, said: “Arrears of utilities and council tax are a common theme we encounter with individuals in debt. There are savings to be made by paying by direct debit, however, this also means the utility suppliers are at liberty to vary your payments and this could mean that there any insufficient monies to cover the payments resulting in direct debit penalties which can be significant. “In these types of cases it is important to retain control, temporarily cancel the direct debit and pay the utility bills plus extra towards arrears by BACs (Banks Automated Clearing System) or debit card until order can be restored to the individual’s finances."Back in June 2010, a report was carried out which estimated that, on average, households were being charged £84 annually in hidden taxes on energy bills, due to mounting pressures to offset carbon emissions and combat climate change. These unpaid bills mount up, meaning that we incur additional fees as well as the initial direct debit payment. And in addition to depleting our household budget, these unpaid charges can find their way onto our credit files, giving us an adverse credit rating. Una Farrell, a spokesperson for the Consumer Credit Counselling Service, told The Observer: “People need to get to the bottom of their debts and regularly assess their financial products because not paying off these smaller amounts, as well as the larger ones, can affect their credit rating.”According to comparison site Uswitch.com an estimated 5.5m households are in energy debt, with the average debt being £132. A significant proportion of this debt is hidden when we move house.When we change our address, we are often more concerned with buying a new two piece suite than chasing up our finances. Consequently, direct debit payments that relate to our previous address continue unless the supplier is notified and the payment is cancelled or updated. Andrew Hagger, a spokesman for the comparison website Moneynet.co.uk told the Telegraph:“The unauthorized charges debited to your account could cost you up to £6 a day. The bank will write to the address it has on file, but as you’ve moved you wouldn’t know you were overdrawn.”And it seems that cancelling a credit card is not enough to escape mounting payments, as doing this simply leads the credit card company to issue additional administration fees. Beverley Budsworth, Managing Director of The Business Debt Advisor, added:“Budgeting is absolutely crucial to making sure that all priority debts including mortgage/rent, council tax and utilities plus any arrears are paid prior to unsecured debt i.e. credit cards and loans. It is much easier to negotiate payment plans with personal debt than it is with priority creditors.”
Manchester debt firm is liquidated owing creditors over £2.2m
Wednesday 11th August 2010

Bankrupt football legend probed by police over loan fraud
Monday 2nd August 2010

Mortgage broker ordered to repay £1.5m of client money used to pay off debts
Wednesday 14th July 2010

Barclays lifts lid on banking write-offs
Wednesday 20th February 2008

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Which? calls on OFT to rein-in “excessive” card charges

The consumer group Which? is poised to make a “super complaint” to the Office of Fair Trading (OFT) about “excessive” debit and credit card charges customers are forced to pay when buying flights, cinema tickets and other goods and services.

The watchdog is calling on the OFT to investigate the charges, which it says are often “sprung” on customers at the last moment such as when they check out to pay for a purchase online, and says they are often far in excess of what it costs the retailer to process a transaction.

Budget airlines are among the worst offenders with some charging a card fee per leg of journey despite the fact that payments are processed in a single transaction.

A family of four booking a return flight with Ryanair would be charged a £5 card processing fee for each single flight bringing their total transaction fees to £40, which could be more than the cost of their flights.

A spokesman for the Stansted-based airline said: “Ryanair does not levy any credit or debit card payment ‘surcharges’. Even our administration fee is avoidable by passengers who use our recommended MasterCard Prepaid.”

Which? says that the actual cost of processing a debit card payment is 20 pence and never more than 2% of the transaction total if payment is made by credit card.

Peter Vicary-Smith, Which? chief executive, said: “There’s simply no justification for excessive card charges – paying by card should cost the consumer the same amount that it costs the retailer. Companies shouldn’t be using card processing costs as an excuse for boosting their profits.

“Low-cost airlines are some of the worst offenders when it comes to excessive card surcharges but this murky practice is becoming ever more widespread, from cinemas to hotels and even some local authorities.”
Estate agents, cinemas and even the DVLA are now beginning to levy excessive charges for paying by card, according to Which?.

The campaigning group wants retailers to tell customers about transaction fees upfront “in plain language” so as they can be factored into the overall purchase price. It says consumers should be charged no more than the retailer pays to process a transaction and suggests that large companies should absorb the costs involved in taking payments by debit card.

Prashant Vaze, head of fair markets at Consumer Focus, said: “Consumers are fed up with paying these surcharges. Often they have no other option, especially for internet transactions where there is no alternative to using cards. The worst offenders even ask for surcharges on a per person basis. Any debit or credit card charge should only be cost reflective. For far too long firms have made a quick buck through confusing and unfair card charges, which bear no relationship to the costs levied by payment agencies.

“We hope the Which? super-complaint forces the OFT to take further action against companies padding their profits with unfair excess charges.”

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