Select Committee Criticises Credit Industry
Credit and store cards criticised by MPs for lack of transparency, and lack of standards in calculating APRs
18th December 2003
The governmental Treasury Select Committee has called for reform of the credit industry, singling out credit and store card companies for particular criticism.
The group of MPs have carried out a long investigation into the industry, and have concluded that customers are not being clearly informed about how much their credit use is costing them.
The report has revealed that the 'standard' APR measurement of interest rates was anything but standard, being calculated in many different ways, making it difficult for customers to compare different offers.
Among the changes the committee demanded was a 'summary box' on all advertising material, giving interest rates and charges details in a standard, easy to compare format.
Store cards in particular came in for heavy criticism. The report summary states that
"To date store card providers and the stores involved seem to have prevented customers from gaining the full facts about the store card necessary to make an informed choice. Customers need to be aware of the high interest rates charged. There is evidence to suggest that competition is not working properly, leading to high rates. We strongly welcome the OFT's decision to undertake a preliminary examination of the store card market."
Read More: Treasury Select Committee Report
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