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T O P I C R E V I E W
BankruptcyNews
Posted - 29 June 2007 : 09:54:52 Watchdog acts over credit card maze
Finding the best credit card deals should become easier as a result of a new initiative by the Office of Fair Trading.
The OFT has today announced a new programme of work with plastic card providers and consumer groups to make the cost of credit cards easier to understand.
The move follows a so-called super-complaint from consumer group Which? It said consumers are choosing credit cards without understanding all the issues that affect the cost of the card. OFT research shows that the majority of card holders do not compare cards at all.
OFT chief executive John Fingleton said: 'Credit card pricing has become increasingly complex, with many new dimensions such as interest-free periods. While these . . . give additional choice and value to consumers, they can make it harder for consumers to make informed decisions.
'This work will consider how pricing information might be improved so as to enable better product comparison by consumers, without stifling valuable competition and innovation that benefits consumers.'
The programme, which is expected to take six months, will explore the issues surrounding the cost of credit on purchases and cash advances, plus the effects of introductory offers and the way payments are allocated by the card companies.
Peter Vicary-Smith, chief executive at Which? was disappointed by the OFT proposals. He said: 'We presented the OFT with a simple problem - that multiple interest calculation methods were preventing consumers from picking the best credit card - and instead of tackling this head on it has chosen to do a wider review.
'While this is a positive step, why not take the bull by the horns and address this super-complaint first? We can only be sceptical about the OFT's proposed negotiation plans with the industry - with no legal threat and no ambitious goals what can the OFT expect to achieve?
'Perhaps this demonstrates that a super-complaint to the OFT was not the right platform to achieve a breakthrough on this issue.'
The right to submit super-complaints is confined to recognised consumer bodies. A super-complaint is defined as one that covers a feature of a market for goods or services that is harming the interests of consumers.
