Credit card cheques are to be banned by the government as part of a new consumer protection scheme.

The Bank of England released figures showing that people living in the UK owe £233 billion on credit cards, overdrafts

and other forms of loans.

The governments plans include creating a Consumer Advocate, who would focus on raising awareness of consumer issues and where necessary represent groups of consumers in court.

The amount of outstanding credit card debt in the UK has begun to rise again after falling back throughout last year, hitting £54.4 billion.

The government is looking to implement actions to encourage more responsible lending practices after debt levels became a topic of concern during the recession.

Credit card cheques offer an alternative method for spending on credit cards, issued to customers by providers.

However, this spending method has proven to be an expensive tool for consumers, as issuers charge handling fees for using them, with no interest free days offered and they do not offer the same level of protection if issues were to arise.

The government has been under pressure to enforce the ban, and now says this payment method will be banned completely, and it well be reviewing card fees and charges

It has been found that around a fifth of credit card users in the UK has seen an increase in credit limits in the past year it being requesting.

The government has also been called upon by consumer groups to aid consumers to resolve issues with businesses that they feel have 'ripped them off'.

Ron Gainsford from the Trading Standards Institute said: “The Consumer Advocate proposal is really good news because it will help to further foster a healthy balance between consumers and businesses”.

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As news of Santander changing all of its Abbey high street branches, into the Spanish banking giant, the same is happening with the credit cards.

In June 2009, Abbey commenced with the rebranding of its credit cards as Santander cards. The rebrand follows the announcements that were made in May, that Santander's three UK businesses, Abbey, Alliance & Leicester and Bradford & Bingley Savings, will adopt the Santander global brand and name in 2010.

Santander is the third largest bank in both England and the world. In the UK the banking giant will have over 1,300 branches and 25 million customers.

All new credit cards will be issued under the Santander name and replacement cards will be issued under the Santander name when it is time for their renewal. There will be a number of Santander Cards available to customers which can offer a wide range of incentives.

Santander Zero & Santander Credit Cards

Such include the Santander Zero. This is said to be the only card on the market with no foreign exchange fee and no cash advance fee, offers 0 per cent on balance transfers for 12 months and purchases for three months.

The Santander Credit Card is another product. This is a best buy card that offers 0 per cent on balance transfers for 15 months, 0 per cent on purchases for three months. After this a highly competitive ongoing APR of 15.9 per cent will be applied after the three month period.

Existing customers have already been informed by writing about the rebranding of their cards and all other terms and conditions of their cards remain the same.

To celebrate the credit card rebranding, all existing Santander Credit Card customers will benefit from fee-free foreign usage in June and July this year. This unique offer has been designed to help customers make their holiday spending abroad less expensive, this summer. Although news of the stronger pound against the dollar and euro also comes as good news for British holiday goers. Existing Zero customers already benefit from ongoing fee-free foreign usage.

Rebranding for cost effectiveness

Roger Lovering the managing director of Santander Cards, said: "We are delighted to rebrand Abbey's credit cards as Santander. Since Abbey brought its credit cards business back in-house in 2007, our commitment has been to provide our customers with innovative and cost effective spending options that offer them ongoing value."

"An example of this is the award winning Zero card, which offers customers fee-free foreign usage anywhere in the world. Operating as part of Santander, we will be able to leverage a global brand that represents strength and financial security to customers in today's difficult economic environment."

A personal finance spokesperson from a comparison website, spoke about the Santander credit cards rebranding.

She said: "For new customers considering the re-branded Santander range, the Santander Zero card is market leading because you don't have to pay overseas usage fees and there is no charge for withdrawing cash while abroad, so it may suit frequent travellers.

"However, as with any credit card, consumers must ensure they are fully aware of all the terms and conditions so they can be confident of choosing a credit card that meets their overall needs."
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An appeal in the House of Lords is due to begin this week that may determine the future of overdraft fees incurred by millions of customers across Britain.

The appeal, put forward by some of the UK's main banks, will be heard by five Law Lords and is in response to a decision made earlier this year by the Appeal Court.

The ruling upheld from last year gave the Office of Fair Trading (OFT) the power to decide whether or not bank account charges were fair.

There are currently around one million people waiting to find out if they can reclaim previous bank charges.

Banks make around £2.5 billion of income every year from charges applied to customers accounts as a penalty for going overdrawn without permission or paying a cheque or direct payment that bounces, billing up to £40 a time.

Marc Gander of the Consumer Action Group (CAG) said: "I hope the House of Lords will make a very clear finding that the bank charge terms are subject to the Unfair Terms in Consumer Contracts rules."

The hearing comes nearly two years after the OFT and the banks made a joint decision to go to court in order to resolve the legality of bank charges.

This came at a time when banks were being bombarded by claims from angry customers that felt the charges were unfair. These claims were being fired both directly and through the courts.

Banks paid out an estimated £784m to around 378,000 customers before the test case agreement in 2007, rather than opposing the attempts made by customers contesting the fees.

However, after both sides agreed to the litigation, it was agreed by the Financial Services Authority (FSA) and the courts that any future claims would be put on hold until a decision was made.

Nick Spooner of the campaign group Legal Beagles said: "It's going to be a very significant outcome, either way.”

The banks have always defended the charging system, describing them as reasonable, fair and legal.

If they are successful in the appeal, it will be a big blow to the OFT and campaigners involved in the bank charges case.

The banks employed Jonathan Sumption QC to represent them in the case - one of the UK's top civil barristers.

Ray Cox QC – a barrister specialising in banking said: "If anyone can do it for the banks, he can, but he's got an uphill task. But you can never be sure; the Law Lords will certainly not rubber-stamp the decisions of the other courts."

If the banks were to suffer a total defeat it would result in bank charges being abolished, which would probably trigger the introduction of monthly fees for current accounts.

It could also mean that banks would have to refund billions of pounds to customers, dating back over six years ago or more.

Some banks such as RBS have already developed contingency plans to prepare them for the possibility of this outcome, allowing them to refund bank fees.

"A victory for the OFT would swiftly open the door for refunds of past charges," said Mr Spooner.

"If the OFT rules they were indeed unfair, I believe they will have to be refunded in total, as the unfair terms triggering the charges will be unenforceable."

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