Big four high street banks fold over excessive penalty fees

Barclaycard, Lloyds TSB and HSBC have all said that they will not contest the Office of Fair Trading's (OFT) order that they must slash their credit card penalty fees.

The announcement means that the banks will now be limited to charging penalties of a maximum £12 for overdue payments or unauthorised credit card borrowing.

Consumer protection group Which? has said that the decision is a victory for card users.

"Which? is pleased that these providers have acknowledged that their credit card charges are too high," said Doug Taylor of Which?

"We welcome their decision to cut the charges and hope other banks and credit card providers follow suit.

"Earlier this year, the Office of Fair Trading said that the suggested £12 charge may not necessarily be fair, but that anything above £12 is likely to be unfair. 

"So, we still do not know whether the £12 actually represents a fair charge and repeat our call to all providers to open their books to scrutiny and show the true costs involved."

Which? also warned that fees of up to £35 will still be applied to current accounts and asked people charged to keep up pressure on banks by challenging the charges.

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