Consumers still deserve a better deal from credit card companies

04/02/05

A committee of MPs from the Treasury Select Committee have told credit card providers to offer consumers clearer information and fairer deals. A report into the credit card market said card penalties should be reasonable and interest rate charges made clear.

The Treasury Select Committee has been investigating the credit card market for the past two years. During that time the Committee has questioned the chiefs of the UK's major credit card providers. MPs have been concerned over what they see as confusing marketing techniques and irresponsible lending.

John McFall MP, Treasury Select Committee chairman, remarked that consumers found it "virtually impossible" to compare card deals due to confusing marketing techniques. He said "Consumers still deserve a better deal from credit card companies... they have some way to go to make their deals easier to understand and compare". Mr McFall also accused card firms of being secretive about the money they made from card penalty charges.

The report made the following recommendations:

Companies should share more data in order to prevent consumers being able to get deep into debt by borrowing massive sums of money across several cards

Penalty charges to be made clearer

Interest charge calculations (APR) to be clearer, with the possible introduction of a single method of calculating the APR across the industry

Card companies should stop sendin out unsolicited credit card cheques to their customers, as this encourages debt

Payment protection insurance sold alongside credit cards should be investigated by the Financial Services Authority (FSA).

The Treasury Select Committee did acknowledge that the industry had taken on board some of the recommendations made in the committee's first report which was published in 2003. For instance, the introduction of summary boxes which provide details on terms and conditions in plain English and the length of time it will take to pay off debt if consumers repay only the minimum repayment each month.

Representing the card industry, Sandra Quinn of the Association of Payment Clearing Services (Apacs), said card firms were committed to giving consumers a fair deal. She remarked "It is good that the committee have recognised the strides the industry has taken in improving transparency for consumers but we are not surprised they have given us more to do."