The Office of Fair Trading is at last preparing to take the big banks and other financial institutions that issue credit cards to task over charges. On credit cards, the average fee for exceeding the credit limit has climbed 40% to over £22. The charge for missing or late payments has also soared to over £22.

The OFT believes that these charges represent an illegal and unfair penalty as the banks true costs of dealing with these situations are much lower. So it seems that the OFT is likely to try and cap such charges at a figure closer to £15. The banks certainly won’t be too keen on this, as such a decision would cost them in the region of £400 million per annum. We understand that the OFT could make an announcement in just a few weeks time.

In a parallel action The Bank Action Group is taking legal action on charges levied on current accounts and overdrafts. During the last 2 years bank charges on these accounts have run up by as much as 31%, taking the average to around £30. The Bank Action Groups case is being led by Stephen Hone who is using the same reasoning as the OFT, as he asks the High Court to agree that charges are too high and as such represent an illegal penalty.

These actions are made at a time when the UK’s Banks are booming. The top five clearing banks, HSBC, Barclays, RBS-Nat West, Lloyds-TSB, and Halifax-Bank of Scotland, have recently announced profits up 17% at a staggering £35,000,000,000 – yes, £35 billion!

We think the Banks can afford to trim their charges – don’t you?