Vanquis
If you have ever made a late payment on your credit card or accidentally exceeded your credit limit you have probably been given a penalty charge by your lender. These charges can be sizable and are particularly frustrating when they are applied again and again sometimes taking you further into debt.
In 2006, The Office of Fair Trading investigated the charges applied by Credit Card companies, including Vanquis, for late payments and penalty fees. They found that these charges were often extremely high and unfair to customers.
It was discovered that some credit card companies were applying bank charges of up to £35 on each occasion a customer exceeded their credit limit or made a late payment. For years consumer groups had been highly critical of these charges claiming they penalised the most financially vulnerable and placed some customers in a cycle of spiralling debt.
Lenders, such as Vanquis, attempted to justify these charges by claiming they were necessary to cover the costs incurred when customers exceeded a limit or made a late payment. Given that most fees are automatically applied and customer letters computer generated, though, it is very difficult to justify such high costs. The Office of Fair Trading agreed and made the decision anything above a £12 fee was ‘unfair.’
The figure of £12 was reached as it was decided this was sufficient to allow Vanquis, and other lenders, to cover the cost of staffing and postage with some contribution towards the maintenance of IT systems.
Although The Office of Fair Trading didn’t take formal action against any lenders, it did state that if, in future, credit card fees remained at the £12 limit there would be no further action. As a consequence most lenders did lower their fees.
Although Vanquis and most other lenders have now lowered their fees to a more reasonable rate many customers are angry that for many years they were forced to pay fees that have now been found to be unfair. In many cases, the same customers paid these fees over and over adding up to hundreds and sometimes thousands of pounds.
The fact that these fees have been deemed unfair does mean that customers now have a right to make a complaint about past charges. If you have paid fees that you believe were unfair you could make a claim and recover past charges. So far, we have helped thousands of customers make these kinds of claims. For many this has meant a welcome lump sum of several hundred pounds or a significant reduction in outstanding credit card debt.
Credit card companies were also reprimanded in 2006 regarding the sale of Payment Protection Insurance as another investigation by The Office of Fair Trading highlighted significant failings in the way businesses were selling the cover. It was found that many companies were using high-pressure sales techniques and frequently offering the cover to customers who were unsuitable for the cover and, in some cases, ineligible for it.
Credit Card Payment protection insurance is designed to cover the borrowers card repayments if they are unable to work due to involuntary unemployment (for example redundancy) or as a result of accident or ill health. The cover is usually charged on a monthly basis and is calculated depending on the individual cardholder’s outstanding balance. Payment protection may be charged at a rate of between 79p-£1.50 per £100 outstanding. To give an example, this means if you owe £2,000 on your credit card you may pay between £15.80-£30.00 per month. This may not seem like a huge amount of money, but it could add up to between £189.00-£360.00 per year. Many people also do not realise that the rate of payouts for this kind of cover can be extremely low. A 2008 survey by The Competition Commission found that just 11% of people who tried and use their cover were successful in doing so.
The low rate of payouts is, at least in part, due to the fact that so many policies have been mis-sold. Credit card Payment Protection is not suitable for everyone and there may be something about your personal circumstances that meant you couldn’t be covered and should not have been offered the insurance. Common examples include people over the age of 65 or those with pre-existing medical conditions.
If you believe you may have been mis-sold a credit card payment protection policy or you are interested in claiming back bank charges from Vanquis or any other lender call our team on 0207 471 2000.