As the number of credit card complaints referred to the Financial Ombudsman Service (FOS) in the year to 31 March 2011 remains high, Which? Money experts round up the main problems and explain your rights.
While the total number of complaints fell by around 5% compared with the previous year (17,466 compared with 18,396), credit cards are the third most complained-about financial products after payment protection insurance (PPI) and current accounts.
Your rights: The Lending Code states that unless you have acted fraudulently or with gross negligence, the most you’ll be out of pocket is £50 before you report it lost or stolen. Once you’ve reported your card lost or stolen, you won’t be liable for any transactions. It is for your card provider to prove negligence or fraud.
Section 75 claims
Your rights: Under Section 75 of the Consumer Credit Act, your card company is ‘jointly and severally liable’ for any breach of contract or misrepresentation by the company. This means it is equally responsible along with the retailer or trader for the goods or service, and you can put your claim directly to the credit card company. You don’t have to reach a stalemate with the retailer or trader before you can contact your credit card provider. However, this right is particularly useful if the retailer or trader has gone bust or it doesn’t respond to your letters or phone calls. only applies to items costing over £100 and up to £30,000.
Your rights: Lenders have a duty under the Lending Code to be ‘sympathetic and positive when considering a customer’s financial difficulties’ and should ‘offer the customer appropriate and timely options where possible to help reduce the risk of deterioration in the customer’s financial well- being’, as well as providing ‘signposts to sources of free, independent money advice.’ If you feel your card provider is treating you unfairly, for example imposing late payment fees after you have indicated that you are struggling financially, complain to the card company and, if necessary, to the FOS.
Complaints about credit card ‘deals’
Your rights: Most card providers include a clause into your credit card contract stating that it may withdraw introductory interest-free or low-interest deals if you miss, or are late with, your monthly repayments. They are within their rights to do this. If you’ve missed a payment, it’s best to contact your credit card company as soon as possible – if you’re open with them, they’ll often reinstate the 0% deal, so long as you don’t miss another payment in the future. Setting up a direct debit for at least the minimum monthly repayment will mean you won’t risk losing a promotional deal.
Changes to interest rates
Your rights: These complaints are becoming much less common following the introduction of new rules earlier this year. For example, a card provider can’t in the first 12 months of holding the card, unless it is repricing its whole customer base due to changing base rate or credit market conditions. If your card provider wants to put up your interest rate on existing debt, you now have 60 days to reject the interest and close the account. You can then repay your existing debt over a reasonable period at your old APR.
The solution: How can I complain about my credit card?
If you have a problem with your credit card, your initial complaint should be made to the credit card company itself. The company has four weeks to acknowledge your complaint. If your complaint isn’t resolved to your satisfaction within eight weeks, you have the right to refer the matter to the Financial Ombudsman Service (FOS). There is no charge or fee for making a complaint to the FOS.
Decisions by the FOS are binding on the credit card company. However, if you’re not happy with the FOS’ decision, you can reject it and pursue the matter in court, although this could prove expensive.
To find out more about putting in a complaint to your provider or to the Financial Ombudsman Service, read the Which? guide.
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