I have an excellent credit rating (subscribe to experian to keep close eye on it) with not a single default, missed payment or over credit limit default. I have a number of credit cards all of which are below their limits. Having recently read a review of how credit card companies make or review customer limits and seeing my borrowing against limit ratio was at 37% I decided to reduce this to get below the 30% which appears to be the better option. Consequently I paid off £10,000 to Barclaycard and the same to another card company on 17th Feb. On Sunday 22nd my barclaycard was refused on two attempts for the sum of £189. Although it is always embarassing to have a card refused for whatever reason I did have another card with me and used that. I contacted Barclaycard and was advised that the £189 would have exceeded my credit limit - I obviously disputed that as I knew they had received the £10k previously and was quite concerned about possible implications. After some discussion I was told my credit limit had been reduced from £12300 to £1750 on 18th Feb and that they had written to me. Naturally I was extremely annoyed and registered a formal complaint, saying that I had not received their letter (I still havent received it!) and had had no notification of any kind. I also believed this action to be in breach of the banking code (30 days or 15 days in wirting depending on interpretation) and completely against the new government guidelines. I rang them today to ensure the complaint was registered and to see what action they were taking. Although I was told they are looking into the complaint they insisted that they can reduce a credit limit without notification. It appears this sort of action is quite commonplace. I pointed out on several occasions the quality of my creditworthiness and that I check my credit score with experiean regularly to ensure it stays as high as possible - but this does not appear to have any influence. I also pointed out that my 5th Feb statement shows my limit at £12300 with my balance below this after all transactions pending and online shows my £10k having been received on 17th Feb. it is only recently they reviewed the interest rate on my card and reduced it to 11% apr which is why I styed with them. You can imagine my anger at the reprehensible way they have dealt with this and I will be approaching the banking ombudsman and the FSA if I dont get a satisfactory resolution to my complaint.

So my basic question is can they legally do what they have done and what if any recourse do I have? sorry this is long winded, but the background is important here and may be a warning to others.

Yes, they can reduce your limit but they should have given notice out of courtesy. Banks don't have much money to lend at the moment as I'm sure you know.

Hi as per your terms and conditions they are well within their right todo this, the fsa will advice the same Im afraid. You shouldnt rely on credit cards as they are only a short term thing.

thanks guys, but the issue is not the use of the card - I'm an old hand at them (I had the original vbarclaycard which was the first credit card in the UK) - but the breach of the banking code - I checked the wording and it clearly says there is a requirement for written notification at least 15 days prior to implimenting any change. However the banking code does not appear to be a legal requirement - at least its not mentioned as such, its simply an agreement by the banks to follow such code.

You say 15 days prior to implementing any change. But is that for credit card credit limits? Or is that overdrafts/terms and conditions in general?

I would be very surprised if credit card companies were compelled to keep credit open for 15 days after deciding they wanted to withdraw it.

I realise you're annoyed by this - apart from the complaining, did you ask them why they did it? When this happened to a friend recently, they were able to tell him why it was their assessment had changed. In his case, it was moving house - from private ownership to rented. He'd also dropped off the electoral roll at the same time and some kind of chain reaction started. (Within a few weeks, every CC company followed suit.)

Bear in mind that the "experian credit score" is not what it seems (at least on my reading). They do not give the score to the various lenders. Lenders do the scoring themselves based on the same data - but might do it differently. The score you see on the screen is more to give you an indication of how Experian think that lenders might view you.

thanks lawman, but if banks were / are allowed to breach contracts at will then the whole legal system would break down. The only vague area as I see it is that of the timescales. Under the banking rules for overdrafts and loans they are legally required to give 30 days notice of any significant change they make to the contract you have with them. They can still make the change quite legally but they are required to give this 'reasonable' notice. In the case of credit cards it seems to be more of a vague area. Some information suggests that credit cards are no different from ordinary bank accounts and therefore the 30 days still applies, other information suggests this is reduced to 15 days and the wording in the banking code is not as clear as it could be. In my opinion a contract is a contract and if banks are allowed to breach it willy nilly then the same would apply to the other party to the contract - we all know that the banks would not stand for that.

I sympathise, even though it was quite a large balance. Responders here don't appear to have bothered to look at the Banking Code. Para 10.11 applies "Sometimes, we may decide to reduce your credit - card limit. We will tell you if we do this."

The notice period and method isn't stated, I guess it has to be "reasonable" whatever that is. There is another recurring issue here, the number of occasions, abnormally frequent in my experience, where banks claim to have sent a letter but it is never received. Hard to prove put postal reliability is statistically high.

Potentially there is a breach of the Banking Codes here. That would be serious if true and banks specifically flag that issue. Make sure your Complaint specifically alleges a breach of the Banking Codes. If you are not happy, invite the Financial Ombudsman Service to consider the Distress and Inconvenience arising. If the case is accepted for consideration it costs the bank a £400 plus case fee, the complainer nothing.

That seems reasonable. Where you have a balance, then you need a greater level of protection/notice of a change. Where its a change to available credit, it is less detrimental to withdraw it. In fact, until recently I had >£100K of "available credit" spread over a number of cards. If the bank became aware of a change of my circumstances or I started to max out cards, I think it would be reasonable for other providers to reduce their limits - without holding them to a set period during which they must continue to offer credit. Imagine all the screams from "nanny state apologists" if credit card companies continued to allow people to increase their debt after it was clear there was a problem.

There seems to be growing sloppyness when it comes to sending out letters. I'm constantly annoyed by undated, or vaguely dated letters I get from credit card companies about changes in T/Cs, bundled insurance etc. Halifax recently increased my limit (I spotted it on the Experian report), but it took them 3 weeks to write to me about it. I closed a dormant Barclaycard a month ago, and the Experian report in respect of that card has become "frozen" as at Jan 4th - ie not showing as settled.

Another thing that annoys me is the role of credit reference agencies generally. They are quasi-judicial. If you have a dispute with your CC company, ultimately you can always withhold payment just paying what you think you owe and let them go to court for the rest. This should be a private matter. But the actions of the CR agencies in cahoots with the banks prevents this from being a realistic option. This seems anti-competitive to me. If it weren't for the agencies acting as middlemen, it would rather like a cartel. Can you imagine a dispute with Tescos affecting your ability to deal with Sainsbury's?

Hey Mistral

Out of interest, how long did you have the balance before you made the £10k payment?

Eco

the balance was one that increased over aperiod of around 6 months as I use the card for fuel and business expenses etc then reduce / pay off when I feel necessary. I guess that it had been between 8k and 11k for around 3 months.

So not really that long then. Just ive seen instances where a limit is drastically reduced after a large payment even when the account is well managed. Obviously this happens a lot when payments are late etc but ive seen examples where it happened when the balance was high for an extended period of time. Its as if the bank are glad to get them money back and decide they arent lending it again.

Was just a thought.

Eco

Hi Eco,

I'm not sure where they're at with this. I've stretched my thoughts to the limit, but there seems no logical reason for doing it particularly when the market is so difficult for lenders of any kind. If they are desperate for casflow which is what we are being told then logically they should be looking to retain profitable accounts with regular use and good records. But I suppose if banks had been logical in the past they wouldnt be the mire now.

A bit like the car makers I guess - they have been over producing for the last twenty years to my knowledge and have practically given their cars away to their employees on cheap loan bases for 6 - 12 month contracts just to keep their companies at the top of the best sellers lists. Now they cry they're in trouble - well tough, there's a lot of small businesses out there with a greater reason to be complaining than these obese producers and I simply dont have any sympathy. Let them sell the cars they have before the taxpayer gives them any cash - sorry I should have said government, after all we have no control over our own cash it seems!!

apologies - rant over

Mistral