bt fees - light at the end of the tunnel?

jamescredmond

press report - london metro 30/08/07.

office of fair trade to consider enquiry into bt fees.

given that most providers now impose 3% there is a suspicion that cartel-type activity is at work.

oddly, I found no mention of oft interest in any of the other dailies.

so without wanting to hold out any false hope for stoozing it looks likely the big players will come under pressure to reduce fees or at least justify fees as they stand.

if anyone can further enlighten us I'd be indebted (pun intended).

jamescredmond

whoops - that should've read 30/07/07

glennw

Thanks for this.

I wonder if BT fees will be the new reclaiming target?

Martins teaser from this weeks tip:
There’s another major reclaim yet to come! To tease you, I’ve been working on another major reclaim that will join bank charges, mortgage fees, credit cards, council tax and endowment misselling reclaiming. Details here soon.

Clariman

That's an interesting thought. My first thought was that there can't be any case for reclaiming BT fees because they are definitely fees to provide a 'service' rather than 'penalty' fees. However, it could be argued that it is misleading to claim an APR of 0% when there are BT fees being charged, because APRs are supposed to take into account all costs of the loan.

If BT fees do ever get reimbursed there will be many stoozers out there kicking themselves for having turned down so many deals!

Clariman

realaledrinker

I second Clariman's comments.

No way is this aimed at declaring BT fees 'illegal'. You have the choice to accept the fee or not to do the BT.

You might just as well claim a cartel is at work because most cards require a 2% minimum payment.

glennw

Clariman wrote: »

However, it could be argued that it is misleading to claim an APR of 0% when there are BT fees being charged, because APRs are supposed to take into account all costs of the loan.

Good point. Guess we'll have to wait and see...

Milarky

Clariman wrote: »

However, it could be argued that it is misleading to claim an APR of 0% when there are BT fees being charged, because APRs are supposed to take into account all costs of the loan.

It IS misleading to claim an APR of any rate whilst excluding the (non-trivial) BT fees charged - it's just that for some reason it still seems to be legal.

3% on a 12 month card (HBOS, are you taking note?) for instance, adds at least that (nearer to 3.5% allowing for minimum payments) to the cost. It's worse still when deals are for 6 or 9 months. Banks obviously use these fees to recover the cost of nominally lending at 0% (or other low rate) They are perfectly able to advise customers of the 'true' cost of any particular deal. So the only reasons I can see they don't is

1) if one does but others do not their loans look 'dearer' and so they would lose business

2) they can make the nominal rates low (or zero) if they retain fees - thus making everyone's lending look cheaper - and thus (on the theory of supply and demand) lend more

It's probably also difficult for the OFT to just tell them to stop charging fees altogether - they might be able to justify some kind of set up costs. And then there are the non credit card forms of lending - personal loans and mortgages - whose APR calculations need to be standardized to include fees (etc) if they currently exclude them.

Given the great British penchant for muddling through I'd expect the OFT would take a look at this - think about it - then take another longer look - issue some more guidelines - then quietly forget about change and leave it to self regulation (like summary boxes) in which half a loaf for the consumer is considered better than none.

So I don't think there will be a 'free-for-all' to reclaim old BT fees somehow - just a move to cap them (eg £35) agreed between the CC issuers maybe and no action by the Regulator

Paul_Herring

Milarky wrote:

Clariman wrote:

However, it could be argued that it is misleading to claim an APR of 0% when there are BT fees being charged, because APRs are supposed to take into account all costs of the loan.

It IS misleading to claim an APR of any rate whilst excluding the (non-trivial) BT fees charged - it's just that for some reason it still seems to be legal.

Ah - but there's the rub. None of them actually claim 0% APR. Lets take Egg as an example. From http://new.egg.com/visitor/0,,3_84106--View_1763,00.html we have:


(
For the benefit of later readers when this URL dies:

0% for up to a year
0% interest for up to a whopping 12 months on balance transfers*
)

With the obligatory asterisk leading to:

(*3% handling fee on all introductory balance transfers
** 2.5% handling fee on all anniversary balance transfers)

The only actual mention of an APR is the typical rate.

Another: http://www.halifax.co.uk/creditcards/home.asp

Halifax wrote:

The Halifax One Credit Card could be the only card you'll ever need with introductory offers on both purchases and balance transfers.

• 0% for 12 months on balance transfers
• 0% for 12 months on purchases
• 15.9% APR typical (variable)
• A 3% handling fee applies for each balance transfer

- again, no promise of 0% AER - just 0% for 12 months on balance transfers.

Now whether they should be giving such prominance to the 0% offer in this manner without actually mentioning an APR which includes the BT fee is more relevant...

Rafter

Unfortunately in order to clarify things, the OFT standardised the calculation of APR to be the cost of a £1000 purchase paid off in 12 equal installments over 12 months in the period following any introductory period and including any annual fees.

So balance transfers, cost during any introductory period etc are totally excluded.

Personally I think they should clamp down by making it compulsory to include any fees or charges in any calculation of interest rate included in promotional literature.

So a 12m 0% BT with a 3% fee would have to be quoted as 12m at 3%.

The same rule could then be applied to mortgages and other products where huge 'hidden' fees are being used to subsidise juicy looking rates.

R.

Karl.H_2

I sure hope so. Stoozing will be a lot more appealing.
Thanks for that.

payless

I just had a call from one provider stating 1.9% APR for BT
in fact it was
1.9% flat for 6 months + 3% fee

The call centre staff had difficulty understanding the different