Credit Card News Companies Respond To Store Card Ruling 17064008

Companies respond to store card ruling

09 March 2006
HSBC has responded positively to the Competition Commission’s verdict that the majority of store cards charge consumers too much interest.

A spokesperson for the bank said that the commission was “quite right” to be concerned that that store cards could be costing consumers an additional £55 million in interest every year.

The spokesperson said that HSBC would also “amend” its statements in line with the commission’s instructions “in those few areas” where it does not already meet the requirements.

The commission’s report requires all lenders to include “warnings” on statements for store cards where the annual percentage rate (APR) exceeds 25 per cent.

Statements should clearly explain that there are cheaper source of credit available elsewhere, as well as including details of interest rates, late payment charges and additional fees.

However, price comparison website uSwitch had said that the commission’s decision “missed a big opportunity”, placing the onus “on the consumer” rather than the market to change.

Instead of statement warnings, uSwitch is calling for greater clarification at the point of sale, with training and clear guidelines for all staff selling the products to advise customers.

The company has also requested application forms to contain clear summary boxes stating store cards’ key features.

Nick White, head of personal finance at uSwitch, said the commission’s ruling was “the equivalent of closing the stable door after the horse has bolted”.

To read more about store cards and their alternatives, click here.

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Written by Editorial Team