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Consumer Rights: A guide to credit card charges in the UK

Consumer rights: what you need to know

Back in 2006, the Office of Fair Trading were concerned that credit card charges for late and missed payments did not reflect the real cost to the credit card companies. Those in debt accumulated thousands of pounds of extra debt due to unfair practices and unreasonable fees. Amidst money worries, anxiety and the distress caused by this unfair practice, many people are trapped in a vicious cycle whereby they were making no progress on paying off their debt due to inflated rates and a lack of financial guidance. This is known as snowballing, it effectively means being trapped in a cycle of charges that are impossible to clear. This practice, especially after the financial crisis in 2008 became common and banks were often negligent in assessing the rights of those indebted. This is why it is fundamental to understand consumer rights.

In recent years, charges have dropped since a 2009 Supreme Court ruling, but this did not fix the problem entirely and payouts are still available for those in financial hardship. Under the Lending Code, (an agreement that all major banks have signed up to) banks must treat you fairly and be considerate if you are in financial difficulty. A good way to determine whether you have been affected is to look back at the charges and consider whether you were in financial difficulty at the time. Under the Data Protection Act, you have a right to demand your past charges and assess your eligibility for reclaiming over-paid interest. We can help you with writing a letter to the lender explaining:

  • what difficulties you were having
  • how the charges contributed to your difficulties
  • how it affected you – the stress and anxiety it caused
  • why the charges were too high in the circumstances.

If you’ve a strong case, you could get some of your money back. In certain circumstances, a claim could be worth thousands of pounds based on the severity of the debt and whether snowballing has occurred. Negotiation is key, reclaiming bank charges has always been an art, not a science. The bank may offer you a settlement figure and we could investigate whether this is appropriate based on your circumstances. Of course, there are no guarantees. While in the early days of reclaiming banks never fought, and often gave a full payout, that’s far less likely now. So if you’re offered a settlement, think about it.

If you have been affected by any of the matters discussed in this article, get in touch for a no obligation discussion regarding any charges you have paid in the past or discuss with us your consumer rights.

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