Climbdown over disaster cash

BANKS and credit card companies today agreed to repay up to £300,000 in profits they have made from the tsunami appeal. They bowed to pressure after charities accused them of cashing in on public sympathy for victims of the Asian disaster.

The windfall arose because financial institutions charge a fee of up to 3% on donations made by credit card on the phone or internet.

While the industry agreed last week to waive its fees for donations to the main Disasters Emergency Committee collection, it continued to charge individual charities, including Oxfam and the British Red Cross.

Today's climbdown follows urgent talks this morning between banking chiefs and the main aid agencies. Apacs, the industry body representing credit card providers, said: 'The charges will be waived.'

The move will be backdated so that individual charities can reclaim fees paid on donations already received totalling more than £11m. The banks were forced to retreat in the wake of a barrage of criticism from Downing Street, MPs and charities. The Prime Minister's spokesman said: 'Clearly, we would like as much money as possible to go to the people so badly affected by this crisis.'

Aid agencies had said that the £300,000 could pay for 140 water tanks, providing clean drinking water for 420,000 people, or 180 classrooms.

Total donations from the public reached £76m today, with the Government having signalled it would match the total pound for pound.

An Oxfam spokesman said: 'Every pound contributed to this appeal is needed urgently. The public response has been fantastic and I am sure that donors want to see the maximum amount put to good use.'

Oxfam, which to date has collected £4.5m, will benefit from the return of fees by the two companies which provide it with credit card processing services, WorldPay and Streamline, both owned by the Royal Bank of Scotland-Christian Aid said the charges would have given the banks 'a huge amount of money' in windfall profit. Spokesman Jeff Dale said of the fee waiver: 'I am sure that the PR benefit will make it worth their while.'

Apacs said the decision had taken a long time because it had been difficult to contact many of its members over the Christmas and New Year holidays.