More banks slash card charges

HBOS and MBNA today joined the list of credit card providers that intend to cut the fees they charge customers who make late payments.

Two days after the deadline set by the Office of Fair Trading (OFT) for card providers to respond to a damning report on the fees, both providers announced they would reduce the charges to £12 over the next two months.

MBNA will slash its charge from £25 on June 28, while HBOS will cut the £20 fee charged on cards issued under the Halifax and Bank of Scotland brands from August 1.

Both providers said they disagreed with the OFT's legal analysis, which concluded card providers were unlawfully making up to £300m a year from late payment fees.

MBNA added that its fees had "always been fair, transparent and legal".

The OFT published its report on late payment fees in April, following an investigation into the card market.

It said the charges amounted to an unfair penalty on customers who failed to pay on time and that they did not reflect the cost of dealing with a late payment.

And it recommended that the fees, which are typically between £20 to £25, be cut to a maximum of £12.

Yesterday, Barclaycard, Lloyds TSB and HSBC confirmed that they would cut their late payment charges to £12 in response to the OFT's findings.

Although the OFT does not have the power to impose a charging cap on companies, it can take them to court.

John Fingleton, its chief executive, has warned that he is prepared to take action against card providers.