Credit Card News Confusion Over Credit Card Claims Triggers Attack On OFT 2997172
Confusion over credit card claims triggers attack on OFT
05 November 2003
The Treasury Select Committee is looking into the transparency of consumer credit. It used yesterday’s session to attack the OFT for not taking legal action to resolve ‘ambiguities’ with a test case.
OFT chief, John Vickers was present to defend the watchdog. He played down talk of legal action against credit card companies, claiming that an agreement can be reached with industry, and that legal action would take a very long time.
Notable among the concerns expressed by MPs were that credit card companies could advertise misleading figures for APR. This has recently seen one product legally advertised as charging 16.9 per cent interest, while some users are charged 31.9 per cent.
Mr Vickers told the committee that there had been an early agreement that this problem should be resolved by discussion rather than a legal case, though MP’s questioned the nature and value of such an agreement.
He also outlined the difference between two different systems for calculating the APR, and stated that the Office of Fair Trading would continue to push for standardisation, using a ‘blend’ of the rates charged.
However, one MP suggested that the OFT was promoting anti consumer practice, as their proposed calculation method can lead to some credit cards advertising a lower rate than alternative calculations.
The Government has committed itself to a white paper to improve transparency of consumer credit. This will be released in December. However, the committee questioned why issues raised as early as 1998 have still to be resolved.
Minister Gerry Sutcliffe also spoke to the committee, to explain the aim of the white paper. He stated that clarity of consumer information would be a key focus of new rules, and even hinted that in order to promote ‘responsible lending’, some activities such as conducting unsolicited credit checks, might be banned.