Customers who have used store cards over the past few years could be entitled to compensation, as it emerged that store card provider NewDay forced unfair charges on users.
‘Store cards‘ allow customers to purchase items on credit and are a popular perk at many of the high street‘s most popular chains. NewDay provides these cards for the likes of Debenhams, Topshop and House of Fraser, as well as credit cards for those with poor credit ratings. Over 5.4m customers use these cards, and can face charges of at least 19.9% APR if they fail to pay for their purchases on time.
However, the results of an independent study commissioned by NewDay in 2014 found a number of flaws in the company‘s system. For example, customers could incur additional late fees as a result of delays in posting transactions.
Approximately 3% of NewDay‘s customers suffered unfair charges, and, following discussions with the Financial Conduct Authority (FCA), it has now pledged to refund more than £4m.
“Our review identified a small number of circumstances in which some customers were charged fees that they did not anticipate or were not clearly understood and we concluded that these fees should no longer be charged,” a NewDay spokesperson said.
“Consequently, from 1 January 2016 none of our customers have been charges these fees. We have kept the FCA fully informed throughout the process.”
The charges were updated in February this year. According to NewDay, the compensation covers the period from 1 April 2014 to 1 January 2016. The redress scheme will not cover charges made before 1 April 2014, when new credit card regulations were introduced, but the company will consider each case individually.
“It is important that firms, where they identify concerns in relation to their fees, disclose those concerns to the regulator, proactively act on those concerns and keep the regulator informed,” said FCA Director of Supervision of Retail and Authorisations Jonathan Davidson.
“NewDay has disclosed this matter to us and has committed to putting things right for its customers. Where firms identify unfair overcharging within their policies and systems we would encourage firms to undertake similar initiatives.”