Gold card protester gets scent of victory: Maria Scott reports on a dispute over interest charges that may affect other cardholding bank customers

ALAN GOLD, a north London dentist, appears close to winning a long-running battle with Lloyds Bank over interest charges on his gold card which he believes could result in him receiving more than pounds 1,000 compensation. It could have implications for other Lloyds Bank gold card customers.

Mr Gold's problem was highlighted in the Independent last year. He had held an American Express gold card for about 10 years and it is linked to an automatic overdraft facility with Lloyds Bank. The interest rate was 2.5 per cent over base rate, or so Mr Gold thought until he noticed last year that his bills for interest seemed to be large.

He checked with Lloyds Bank and discovered that he was now paying an annual rate of 19.5 per cent. The bank had altered the terms of the card so that the overdraft interest was operated on a 'managed' basis, meaning it no longer had a direct link with the base rate. In most cases managed rates are substantially higher than base rates.

Mr Gold was furious because he recalled no communication from Lloyds Bank alerting him to the change. The bank produced a copy of a letter that it claimed to have sent out to all its American Express gold card customers explaining the change, which was made at the end of 1987.

At that time the managed rate was 12.6 per cent, but it was increased later.

Mr Gold complained that even if he had seen the letter he would not have appreciated that the change in the way interest was charged could mean that he would be paying eight points over the base rate - the margin that existed last year.

He complained to the Banking Ombudsman, Laurence Shurman, who told him last week that he had provisionally ruled in Mr Gold's favour. He was minded to ask Lloyds to repay him interest charged over and above the original rate of 2.5 per cent over base rate, between November 1987 and 27 July this year.

Mr Shurman has now given Lloyds Bank until 1 September to seek further legal advice. The bank said that as far as it was concerned the matter was far from concluded. A final judgement had not been delivered, and Lloyds felt it had a strong defence.

Mr Gold believes the final sum owed to him could be between pounds 1,000 and pounds 1,500. He understands that the Ombudsman has received complaints similar to his. If so, Lloyds' final bill could be considerable and the case could force banks to think carefully in future about how they communicate bad news to their customers.

Lloyds Bank is introducing a number of extra charges for credit card customers. The bank says this may enable it to reduce the interest rate on its cards.

Customers who breach their credit limits by a certain amount, which the bank is not disclosing, without permission will be charged pounds 10.

Anyone who asks for more than six duplicate statements will be charged pounds 5. All the charges take effect in December and customers will be told about them in a leaflet due to go out in the autumn.

The bank's credit card holders will also be charged pounds 5 if they are late paying their bills by 10 days or more.

Card holders will, however, be able to refuse to receive marketing information with statements.

Lloyds was one of the banks where credit card holders were affected by problems in the computer software used by the card processing specialist First Data Resources. Lloyds says about 40 customers were affected and all problems have been rectified.

National Westminster is still trying to discover the extent of problems faced by its gold card customers.