Consumer Forum calls for bank charge fairness


Dear (MP’s Name),

I am member of The Consumers Forum (formerly Penalty charges Forum) which was set up in 2005 to fight against unlawful bank charges.

I was deeply concerned to read on The Consumer’s Forum website that the Supreme Court decision did not in fact deny the Office of Fair Trading the right to assess banks’ terms and conditions on overdraft charges for fairness, as many consumer sites have reported. The truth is it only stopped the OFT assessing them in a very limited way in respect of price. At Paragraph 53 of the Supreme Court Judgment, Lord Philips said “… they will still be open to attack by the OFT on the ground that they are “unfair” as defined by Regulation 5(1)” The OFT simply stopped fighting the banks as they could not afford the cost of further litigation. I must ask, what point is there in having a regulator that will not afford necessary protection to the very consumers that it was initially set up to protect.

I would like you to ask the government why, despite the fact that the Coalition agreement clearly states that the Coalition “will introduce stronger consumer protections, including measures to end unfair bank and financial transaction charges”, has it not taken any direct action against the banks, but yet it has debated the huge banking bonuses structure in parliament? Surly, an issue that is causing thousands of consumers to live in poverty should be at the forefront of any Political parties’ agenda.

Finally, and equally important is the issue of a Statutory Ceiling for interest rates, since the introduction of the Consumer Credit Act 1974, the UK has had no statutory ceiling for interest rates. There use to be a 48 per cent per annum limit but, unfortunately, the 1974 Act abolished it. Currently, the only protection under the Act for consumers is that it states lenders cannot charge “extortionate” interest rates. That is of little or no assistance to people who cannot afford to go to court and when there is no legal definition of “extortionate”.

The removal of the cap has allowed many companies to set up and charge horrific interest rates such as the Payday Loan companies who have advertised APR Interest Rates of up to 4214%. A rate, which I feel sure you will also see as both repugnant and exorbitant.

The Australian States of New South Wales and Queensland have imposed a 48%-APR maximum loan rate, including fees and brokerage. Payday loans in Canada are limited by usury laws, with any rate of interest charged above 60% per annum considered criminal according to the Criminal Code of Canada.And indeed closer to home the MSP Margo MacDonald (Independent) is seeking to bring a bill before the Scottish Parliament prior to the year end.

The Consumers Forum is requesting that consumer protection should be at the forefront of the government’s agenda and legislation should now be put into place to protect consumers and most importantly the poorest in our society, this includes the immediate reintroduction of an APR limit.

I hope that as my MP you will support this campaign wholeheartedly and bring this matter to the Parliaments attention. The United Kingdom is falling to protect consumers and this must change.

Yours sincerely

(Your Name)