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14/09/2005
Store card providers ‘overcharging’ customers
Consumers are being overcharged by as much as £100 million as a result of the high interest rates on store cards.
A report by the Competition Commission (CC) found evidence suggesting that there was an “adverse effect” on competition in connection with the supply of consumer credit cards and estimated that store card APRs were, on average, 10% to 20% higher than they would be, had they merely reflected providers’ costs.
The CC said that there was little competitive pressure in the store card market, which resulted in APRs, which averaged around 30%.
CC Deputy Chairman Christopher Clarke said: “Consumers’ sensitivity to APR levels and other charges is low. This results in store cardholders who take up credit, and associated insurance, paying more than they would in a fully competitive market.”
The CC identified around 70 retailers who operated store cards, with the majority of cards being provided by just six issuers. At the end of 2004, there were almost 14 million active store card accounts, with outstanding balances of about £2,500 million.
The CC found that around 57% of cardholders who used their card in a particular month, took on interest-bearing credit, while the remaining 43% paid their balance in full and did not incur interest charges.
The CC recommended that better information, regarding interest rates, payment methods and related insurance be placed on statements in order to keep consumers better informed.
The Finance and Leasing Association, whose members includes all the major store card providers, said that the market had begun to improve, since regulators began examining store cards two years ago. Ashley Holmes, head of legal affairs at FLA, said: “We are now seeing lower store card APRs, the move to store branded credit cards and greater consumer transparency.
“FLA continues to consider initiatives which could address the Commission’s concerns, particularly those on transparency, and also shares their interest in consumer protection. We will continue to work with the Commission to ensure all areas are fully explored and that the proposed remedies are targeted and proportionate.”
(KMcA/SP)
A report by the Competition Commission (CC) found evidence suggesting that there was an “adverse effect” on competition in connection with the supply of consumer credit cards and estimated that store card APRs were, on average, 10% to 20% higher than they would be, had they merely reflected providers’ costs.
The CC said that there was little competitive pressure in the store card market, which resulted in APRs, which averaged around 30%.
CC Deputy Chairman Christopher Clarke said: “Consumers’ sensitivity to APR levels and other charges is low. This results in store cardholders who take up credit, and associated insurance, paying more than they would in a fully competitive market.”
The CC identified around 70 retailers who operated store cards, with the majority of cards being provided by just six issuers. At the end of 2004, there were almost 14 million active store card accounts, with outstanding balances of about £2,500 million.
The CC found that around 57% of cardholders who used their card in a particular month, took on interest-bearing credit, while the remaining 43% paid their balance in full and did not incur interest charges.
The CC recommended that better information, regarding interest rates, payment methods and related insurance be placed on statements in order to keep consumers better informed.
The Finance and Leasing Association, whose members includes all the major store card providers, said that the market had begun to improve, since regulators began examining store cards two years ago. Ashley Holmes, head of legal affairs at FLA, said: “We are now seeing lower store card APRs, the move to store branded credit cards and greater consumer transparency.
“FLA continues to consider initiatives which could address the Commission’s concerns, particularly those on transparency, and also shares their interest in consumer protection. We will continue to work with the Commission to ensure all areas are fully explored and that the proposed remedies are targeted and proportionate.”
(KMcA/SP)
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08 October 2003
M&S backtracks over &More credit card after OFT probe
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M&S backtracks over &More credit card after OFT probe
Marks and Spencer Financial Services (MSFS) has changed the way it will offer to replace its store cards by the &More credit card after action by the Office of Fair Trading. MSFS had sent out letters to many card holders saying that its store card would automatically be replaced by the &More credit card unless card holders objected.
27 October 2009
Credit Companies Must 'Give Consumers A Better Deal'
The Government has today announced new proposals to ensure that credit and store card companies give people a fairer deal. Consumer Minister Kevin Brennan said card companies have to "get their act together" in order to help consumers. "The Government is putting forward new measures today which we believe will give consumers a better deal.
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The Government has today announced new proposals to ensure that credit and store card companies give people a fairer deal. Consumer Minister Kevin Brennan said card companies have to "get their act together" in order to help consumers. "The Government is putting forward new measures today which we believe will give consumers a better deal.
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The Financial Conduct Authority (FCA) has reached an agreement with Card Protection Plan Limited (CPP) and 13 high street banks and credit card issuers, that will pave the way for redress to be paid to customers who were mis-sold CPP's Card Protection and Identity Protection policies.
Customers To Be Reimbursed Following Mis-Sold CPP Card Protection
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16 June 2008
Store Cards Are 'The Devil In Disguise'
A finance website has found that "store cards are the devil in disguise". According to Ed Bowsher of Fool.co.uk, they "initially offer attractive benefits and bonuses which can be hard to resist" but "there is a downside to grabbing these discounts and rates".
Store Cards Are 'The Devil In Disguise'
A finance website has found that "store cards are the devil in disguise". According to Ed Bowsher of Fool.co.uk, they "initially offer attractive benefits and bonuses which can be hard to resist" but "there is a downside to grabbing these discounts and rates".
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