MBNA credit card fees challenged

Mon 9 August, 2004

NEW YORK (Reuters) - MBNA says said a regulator has challenged the credit card issuer's default charges as a result of a probe spawned by parliamentary criticism of the high penalties levied in the industry.

The Office of Fair Trading said in March it was investigating charges such as late, over-limit and returned check fees imposed on customers by credit card lenders after a parliamentary committee criticised banks for the high level of penalties they levy.

The Office of Fair Trading had contacted eight lenders asking them for information on charges.

In July 2004, Wilmington, Delaware-based MBNA received a letter from the OFT saying the regulator is challenging how much the company charges those who default on their credit card debt in Britain, MBNA said in a regulatory filing with the U.S. Securities and Exchange Commission.

If the OFT prevailed, MBNA said the amount it charges for defaulting there could be "significantly reduced."

At the same time, MBNA may also be subject to claims from customers seeking reimbursement of default charges.

"The Corporation is assessing the OFT challenge and cannot state what its eventual outcome will be," MBNA said in the filing.

The Parliament's Treasury Select Committee ordered the country's booming credit-card industry in December to stop overcharging and misleading customers. It asked the OFT to look into lenders' penalty charges.

British credit-card spending rose to 120 billion pounds last year from 30 billion sterling in 1993, according to Bank of England figures. The amount owed on credit cards has jumped to 52 billion sterling from 10 billion sterling in that time, fuelled by consumer spending.

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