MBNA rapped for credit card debt tactics
Posted on December 18th, 2010
Credit card group MBNA has been ordered to improve the way it deals with customers struggling to keep up with debt repayments.
The Office of Fair Trading has imposed a series of requirements on the lender after Citizens Advice raised concerns about the way its in-house debt collection arm was handling customers in financial difficulties.
The trading watchdog found when people who could not afford to make their full repayments offered to pay a token sum, the letters MBNA sent to them were so unclear, consumers often could not tell if their offer had been rejected or accepted.
It also failed to follow its own policy on some occasions, by bypassing customers’ appointed representatives, and instead contacting individuals directly.
As a result of the investigation, from January 1 MBNA must make it clearer in letters sent to customers who are in financial difficulties that it will accept partial repayments if they have shown that this is what they can afford to pay.
It must also stick to its policy of only contacting customers who have an appointed representative to act on their behalf if the customer or representative has given permission for this, or if they have confirmed that the representative no longer acts for the customer.
The group may also contact customers directly if an expected payment has not been made, or it has been unable to get in touch with the representative, despite making reasonable efforts.
It can continue to send statements of account or other communications to customers in line with its statutory obligations.
Ray Watson, director of the OFT’s consumer credit group, said: ‘Our investigation found problems with the way MBNA communicates with customers in financial difficulties.
‘MBNA has agreed that it will make its debt collection letters clearer and clarify its policies and procedures for dealing with appointed representatives.’
The OFT added MBNA had co-operated fully during the investigation and was in the process of addressing the issues. If the group breaches any of the requirements it can be fined up to £50,000 and even have its consumer credit licence revoked.
An MBNA spokesman said: ‘As a result of ongoing dialogue with the OFT, we have agreed to deliver greater transparency in some of the communications we have with our customers in financial difficulties.
‘We believe these changes are enhancements to our existing strong practices. We are in the process of implementing them now.’
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Tags: Credit Card, Debt
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