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Banks (Penalty Charges)

Volume 502: debated on Tuesday 15 December 2009

5. If he will take steps to limit the levels of penalty charges imposed by banks on their customers; and if he will make a statement. (306846)

The Government announced in the pre-Budget report on 9 December that they would work with consumer groups, the Office of Fair Trading and the banks to agree a new framework that will make bank charges fairer, simpler and more transparent. The Government will take action to deliver change if a voluntary approach does not result in a fair outcome for consumers.

I thank the Minister for that very helpful reply. She was given a fairly broad hint by the judgment of Lord Walker in the case of Abbey National and others, when he said that his decision was

“not the end of the matter,”

and that

“Ministers and Parliament may wish to consider the matter further.”

What can she do to review the operation of section 140 of the Consumer Credit Act 1974, which requires fairness in the contractual relationship between banks and customers?

The Office of Fair Trading is still considering that judgment in detail, and on 22 December it intends to make an announcement about what further action will be taken. Our position is very clear: we want to see a fairer and more transparent system of charges, and we are working very closely with the OFT to achieve that.

I welcome the Government’s decision to stop unrequested credit card cheques being sent to consumers, but I urge the Minister also to consider unrequested credit card limits. That is of great concern to consumer organisations and very detrimental to the most vulnerable consumers.

I thank my hon. Friend for his question. He has a long record of standing up for the consumer in such matters. We were very pleased to be able to introduce measures to stop the practice of unrequested credit card cheques, and we continuously keep under review how we can best protect our most vulnerable people.