Store card charges to plungeWatchdog steps in to cut late fees
02 April 2008
Late and over-limit fees on some store cards will drop by £10 after action by the Office of Fair Trading (OFT).
From this month, default charges on store cards for retailers including Hobbs, Jessops, Scottish Hydro and Viyella, will drop from £22.50 to £12.
The decision by Barclays Partner Finance (BPF) followed an approach by the OFT after its warnings to the credit card industry on high default charges.
In 2006, the OFT stated that credit card default charges were set too high and also suggested that this applied to default charges on store cards as well.
The OFT considers that a fair default charge shouldn’t exceed the reasonable administrative costs of a business.
As a result of its findings, the OFT approached BPF about its charges.
A spokesman for BPF said: ‘The company strongly disagrees with the OFT’s legal analysis and conclusions, but has decided to make the change to remove uncertainty and create clarity for customers.
‘BFP believes its fees are transparent, legal and wholly avoidable.’
The OFT has published a default charges statement (a pdf document) setting out the principles along which credit card default fees should be calculated.
Which? Money Editor Martyn Hocking said: 'The interest rates charged on store cards are typically far higher than those charged on credit cards. For the store card issuer to then slap excessive penalty fees on top seems particularly unreasonable, so it is good to see the OFT taking action in this case.'