RBS customers furious over 'old address' fee

Royal Bank of Scotland faces mounting criticism from furious borrowers after announcing a £12 penalty charge for customers who fail to notify it of a change of address.

RBS said it would levy the charge after two statements had been sent to the customer's old address - in practice after two months.

The bank denied suggestions of profiteering, and pointed out that it incurs costs in tracing customers with whom it has lost touch.

"It is in the interest of customers to ensure the contacts details we hold for them are correct," a spokesman said. "We give clear instruction on each monthly statement on how to contact us to update these details."

Consumer groups accused the bank of trying to recoup revenue lost following an Office of Fair Trading crackdown on charges in May last year. The OFT ruled that penalty charges for late bill payments would be illegal if they amounted to more than £12.

"I've never come across this kind of charge before," said Richard Mason, head of credit cards at the price comparison analyst Moneysupermarket. "But the OFT has cut credit card lenders' profits and that has made other charges inevitable."

Michelle Slade, an analyst at the personal finance consultancy Moneyfacts, said credit card companies were continuing to find all sorts of ways to increase revenue since the OFT ruling. This month seven credit card providers, including American Express, Morgan Stanley and MBNA, have raised their interest rates. Other lenders have introduced new fees payable by customers who rarely use their cards, or cut the number of days following a credit card transaction after which interest becomes payable on the spending.

Lenders have focused particularly on the costs paid by borrowers who use their plastic to make cash withdrawals from ATMs. Such lending costs significantly more than ordinary credit card use. American Express this month raised its fees for cash withdrawals from 2.5 to 3 per cent of the amount taken out, and raised the rate payable on such lending by more than five percentage points to 25.9 per cent a year.

In addition, many credit card lenders, including RBS, now classify all sorts of transactions as cash withdrawals. Money spent on internet gambling accounts, for example, is routinely regarded in this way and charged at higher rates.

Ms Slade said: "The OFT's actions have spread the cost burden to a much wider customer base, with card providers continually seeking ways to recoup their lost revenue."