If you have defaulted on a financial obligation - for example you've not paid something on time - you may be told you need to pay an "administration charge".
Often a business or company will say this is because of the extra costs in sending you a reminder letter to make payment. If the administration charge seems high or disproportionate in relation to the nature of your default you may be able to challenge it as unfair.
Section 62 of the Consumer Rights 2015 Act provides that a notice or term of contract "is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer".
An unfair term of contract has no effect in law and cannot be relied upon by a business. Section 63 and schedule 2 of the 2015 Act make provision for what might be regarded as unfair:
"6. A term which has the object or effect of requiring a consumer who fails to
fulfil his obligations under the contract to pay a disproportionately high sum
If administration charges look more costly than the actual loss or cost of doing something by a business, you can challenge these charges under the 2015 Act.
If a business sues you for payment of a debt plus administration charges you can challenge these in the court or tribunal action. Speak to a law centre solicitor or money advisor for help on how to do this.
If the business is regulated by the Financial Conduct Authority (for products like credit cards, bank accounts, loans and mortgages) you can challenge unfair charges by complaining to the business. If you remain dissatisfied, you can pursue this through a complaint to the Financial Ombudsman Service.
At Scots common law if an administrative charge isn't a genuine pre-estimate of actual loss it might fall into the category of an unlawful penalty.
In Dunlop Pneumatic Tyre Co Ltd v. New Garage and Motor Co Ltd  AC 79, Lord Dunedin set out the tests in relation to unlawful penalty charges at common law: "It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach."