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12/12/2008
Credit Card Companies Agree To Play Fair
Credit card companies have agreed with Government to implement a new set of 'fair principles' that will help put an end to overnight hikes in credit card charges and give much-needed breathing space to borrowers struggling to repay their debts.
A fortnight ago, Consumer Affairs Minister Gareth Thomas gave credit card companies a deadline of two weeks to report back with a statement of fair principles, warning that he would ask the Office for Fair Trading to investigate if strong commitments to fairer treatment were not agreed.
Following the meeting with lenders on Thursday, Gareth Thomas said: "I am pleased by the commitments card companies have made to me today.
"I recognise that these changes will not be without financial pain for credit card companies, but it was vital that we nipped in the bud the bad practices that were causing real hardship for borrowers.
"These commitments will help families manage their finances and cope with repaying their debts."
The commitments come on top of the agreement reached at the Minister's Credit Card summit last fortnight that the industry will give a breathing space of up to 60 days to borrowers in difficulty.
That means they won't chase a debt where somebody is trying to get back on their feet and to agree a repayment plan with the help of a not-for-profit debt advice agency.
Those borrowers who have already experienced hikes should complain to their card provider if they felt their rate increase was unfair. If they are unhappy with the handling of their complaint, borrowers can take their case to the Financial Services Ombudsman Service.
If the interest rate has been increased without justification, the Ombudsman can require the lender to compensate the borrower.
The Government will ask the OFT to monitor industry's progress on implementing these principles into the New Year.
(JM)
A fortnight ago, Consumer Affairs Minister Gareth Thomas gave credit card companies a deadline of two weeks to report back with a statement of fair principles, warning that he would ask the Office for Fair Trading to investigate if strong commitments to fairer treatment were not agreed.
Following the meeting with lenders on Thursday, Gareth Thomas said: "I am pleased by the commitments card companies have made to me today.
"I recognise that these changes will not be without financial pain for credit card companies, but it was vital that we nipped in the bud the bad practices that were causing real hardship for borrowers.
"These commitments will help families manage their finances and cope with repaying their debts."
The commitments come on top of the agreement reached at the Minister's Credit Card summit last fortnight that the industry will give a breathing space of up to 60 days to borrowers in difficulty.
That means they won't chase a debt where somebody is trying to get back on their feet and to agree a repayment plan with the help of a not-for-profit debt advice agency.
Those borrowers who have already experienced hikes should complain to their card provider if they felt their rate increase was unfair. If they are unhappy with the handling of their complaint, borrowers can take their case to the Financial Services Ombudsman Service.
If the interest rate has been increased without justification, the Ombudsman can require the lender to compensate the borrower.
The Government will ask the OFT to monitor industry's progress on implementing these principles into the New Year.
(JM)
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