Credit Card News Egg Receives Plaudits From OFT 17088459

Egg receives plaudits from OFT

07 April 2006
Online credit card operator Egg has been singled out by the OFT as one of the companies that will potentially be exempt from the new legislation setting a £12 maximum default charge.

The OFT’s report stated that all fees above a £12 threshold would be considered “unfair” and “unlawful” as they did not reflect the true costs incurred by a failure to meet payments.

However, the OFT did state: “Where a card issuer has a policy of requiring customers to pay minimum monthly repayments by direct debits, such as that operated by Egg, and offers credit cards only to customers that satisfy a relatively high scoring requirement, it may be able to set a fair default fee at a level above the threshold.”

Mark Maguire, public relations manager at Egg, commented: “We are pleased that the OFT has recognised what we have put in place.

“We require all customers to set up a direct debit before they are issued with their card,” he continued. “[And] we make it as easy as possible for customers to make payments.”

As a result of the processes Egg has in place, Mr Maguire claimed it had “a low level of instances of default”.

It is thought by industry observers that this more responsible approach to lending by credit card companies is what the OFT hopes the new report will encourage.

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Written by Editorial Team