Some travellers who use their credit cards abroad should be better protected, following an agreement between banks and the Office of Fair Trading (OFT).

Cardholders of these three companies can now shop abroad with greater confidence and I warmly welcome the assurances

John Vickers, director general of fair trading

The watchdog said that HSBC, Bank of Scotland and Sainsbury's Bank had all agreed to extend consumer protection to purchases made abroad or through overseas-based internet sites.

This means cardholders with these banks will be in a better position to make a claim, if the purchase goes wrong and goods or services fail to materialise.

In the past, many banks and credit card companies have told their customers that existing consumer protection rules did not extend to overseas transactions, although in some cases ex-gratia payments were made.

The OFT is negotiating with a number of other banks to seek assurance that the same rules will be applied.

Flexible friends

Under Section 75 of the Consumer Credit Act 1977, the card issuer is "jointly and severally liable along with the supplier for the supplier's misrepresentation or breach of contract."

In practice, this means that in certain cases when a supplier does not deliver as advertised, the customer can make a claim against the supplier or the credit card company.

Under current rules, people have the right to their money back from credit card companies if they use their card to buy individual goods worth between �100 to �30,000 which turn out to be "faulty".

John Vickers, director general of fair trading, said: "Cardholders of these three companies can now shop abroad with greater confidence and I warmly welcome the assurances.

"We are currently talking to other credit card companies and I urge them to offer equal protection to their customers, as we believe the law requires."

Complaints procedure

Consumers are advised to complain first of all to the supplier as it may rectify the complaint. For example, refund the goods or replace defective goods.

However, having the ability to seek compensation through the credit card company is particularly useful if the supplier goes bust or refuses to pay up.

The same rules do not apply to debit cards or charge cards.

The OFT said it would like to hear from bank customers with concerns about credit card companies and banks, which were refusing to apply Section 75 rules to overseas transactions.

It believes that the rule should apply across the board.

The OFT can be contacted on 0845 7224499 or on e-mail to enquiries@oft.gov.uk.

HSBC, Bank of Scotland and Sainsbury's Bank were not immediately available for comment.