Action taken by the Office Of Fair Trading ( OFT) has resulted in seventeen UK banks and building societies agreeing to repay an estimated GBP149m in interest and charges to approximately 497,000 customers, OFT reported on Thursday.
The consumer protection organisation said it contacted fifty banks and building societies in November 2013, asking for confirmation that the statutory requirement to provide post contract information under the Consumer Credit Act had been fully complied with. The action was taken because of previous similar issues relating to the Act by some other banks.
Under Section 77A of the Consumer Credit Act 1974 (CCA), lenders are required to send periodic statements to customers, which must contain specific information and wording. If a creditor fails to comply with the regulation, it is not entitled to enforce the agreement and the debtor is not liable to pay interest or default sums during the period of the creditor’s non-compliance. Section 86B of the CCA requires the creditor to send a notice to the debtor where they fall into arrears by more than two payments, which is intended to alert the customer of the potential consequence if they fall into arrears.
The seventeen banks and building societies that will make the repayments did not provide customers with some of the post-contractual information regarding their credit agreements, as required by the CCA. The required statutory wording in statements and arrears notices was not provided to customers, who paid interest and charges on products such as store cards, credit cards, loans and hire purchase agreements.
It is not necessary for customers of the banks and building societies concerned to take any action at this time, OFT said and added that if their agreement is affected they will be contacted directly by their bank or building society.
Senior OFT Director for Consumer Credit, David Fisher, stated: “These issues were not deliberate misconduct, but the institutions concerned should have ensured they were complying with the law. The OFT welcomes the proactive steps taken to return money to customers where it was incorrectly charged.”