Default Charges Action Group
17th February 2005

Debt on our Doorstep is supporting a new action group established to take on the banks and lenders by challenging the legal basis for default charges. The group, which consists of activists who have lodged claims against their lenders, has now set up their own website at bankchargeshell.co.uk

Damon Gibbons, Chair of Debt on our Doorstep, commented "We are pleased to be associated with this grass roots campaign to challenge the level of default charges made by banks and other lenders. In the U.K there is no statutory limit on the amount that can be charged when borrowers default on loans, and it is clear that lenders mark up the amounts that they charge way beyond the actual costs incurred. That nothing has been done about that practice despite two Treasury Select Committee investigations shows that the Government must take action to address this in the Consumer Credit Bill.

In their recent research on interest rate ceilings the DTI accepted this practice and used it to defend the cost of home credit loans by saying that their cost compared favourably with credit cards once the charges for default on those cards were taken into account. This group is now showing that comparison to be erroneous as many charges levied by banks and credit card companies are in fact illegal."

The group has already been successsful in retrieving money from Alliance & Leicester and Yorkshire Bank and is working on submitting legal claims against a number of other lenders.