Credit card charges labelled "unfair"
A report from the Office of Fair Trading (OFT) has found that the charges applied by credit card companies on payment defaults are too high.
The government's investigation found that UK credit card providers charge around £300 million every year for repayment penalties.
Following an investigation, the OFT has now recommended that default charges should not exceed £12.
It argued that this amount is sufficient to cover administrative costs incurred by credit card providers in the event of a missed repayment, but does not result in the generation of unreasonable profits.
Chief executive of the OFT John Fingleton said: 'Our statement of principles provides practical guidance to banks which increases their incentives to compete vigorously while protecting consumers from being charged unfair amounts.
'Our threshold approach is a spur to changes in market practice. We expect credit card issuers to adjust their default fee levels quickly.'
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