As OFT flops on default charges, the Pay It Back campaign starts..3rd May 2006

In a formal response to Debt on our Doorstep, the OFT has indicated that it does not have the power to get credit card companies to refund illegal default charges. In correspondence to Debt on our Doorstep, the OFT comments:

'The OFT's role is to protect consumers generally by preventing the use of unfair terms in the future - it cannot obtain redress for individuals where unfair terms have been used in the past. In such cases, however, the individuals may be able to take action themselves under the Regulations. Terms which are unfair under the Regulations are not binding on consumers. Therefore, our action can only be forward looking. Should we litigate (and have not ruled it out) any injunction would also be forward looking.'

The OFT then go on to advise that all individuals who have been overcharged will need to contact their local Ciizens Advice Bureau to take legal action.

Debt on our Doorstep have asked that the OFT consider action against the consumer credit licenses of lenders in order to secure refunds for customers who have been overcharged but this too has now been ruled out, despite the OFT's own guidance stating that 'Unfair business practices not involving convictions or breaches of legislation may also result in your licence being refused or revoked'. Instead of taking this action the OFT remark that 'The OFT has concluded that the terms levying the current levels of credit card default charges are unfair. This is just our view, it is for a court to decide whether a particular term is unfair' and are refusing to take any action at this time.

Damon Gibbons, Chair of Debt on our Doorstep has branded the response 'completely lacking in imagination'.

He continued 'it is absolutely obvious that the OFT is failing to use all of its available powers to obtain a fair deal for consumers. We have asked for our complaint to be escalated and are urging consumers who have had any default charge of more than £12 in the past 6 years to complain to their M.P's and ask for them to pass on the details of the complaint to the Parliamentary Ombudsman.

A standard complaint letter is available here. Simply put in the name of your M.P, the lender you are complaining about, sign and post it off or e-mail it to your M.P!