Simpler card charges 'next year'

Complex charging can add to problems for consumers

Plans for so-called "honesty" boxes, aimed at making card charges more transparent, are to be brought forward following criticism by MPs.

Apacs, a credit card industry body, has told BBC News Online it plans to introduce the tables, also known as Schumer boxes, in early 2004 - two years earlier than planned.

John McFall MP, chairman of the Treasury Select Committee, had written to leading card issuers asking them to hurry up with their plans, originally not expected until the end 2005.

The Treasury Select Committee is currently conducting a wide-ranging investigation into credit card charges - and had been very critical of the delays.

Mr McFall said better information for consumers was essential, as he believed lack of transparency could contribute to some cardholders' building up unaffordable debts.

What is a 'Schumer' box? Schumer Boxes are a statutory requirement in the USA under the Truth in Lending Act. They are named after Senator Charles Schumer who led the passage of a bill through the US Congress in 1988. A Schumer Box draws together all the disclosures spread throughout the small print of a credit agreement into a box format, the idea being that such presentation makes it easy to understand and make comparisons between products.

"There have been discussions in the industry for some time as to how to address these problems, but not enough has been done.

"I want the industry to bring specific proposals to the Committee in September, so that we can get a public commitment from the main issuers at a hearing in October to a way forward.

"I hope this will include the use in promotional and contractual material of a form of 'Schumer Box' giving key information in easily intelligible form, as required in the USA."

The National Consumer Council welcomed Mr McFall's intervention.

Ed Mayo, chief executive at NCC said: "It is all too easy for credit companies to say they are going to do something - but talking is cheap.

"We have a serious problem on our hands. Easily available credit is pushing people deeper into debt."

Honesty boxes

Mr McFall was highly critical of how long it was taking for the boxes - currently offered only by Nationwide building society - to be introduced across the industry, when his committee questioned card issuers and Apacs in July.

Mr McFall enquired: "Why has it taken so long? This has been around since 1974."

We would be stupid to say we were not in favour of transparency Sandra Quinn, Apacs

He added: "So we have got thirty years to get it right...that is the biggest pregnancy we have ever heard of," Mr McFall jibed.

The prime minister has also given his backing to the boxes, which make it easier for consumers to understand charges and fees.

"I have got no doubt at all this will be an important way of ensuring that people, when they borrow, borrow responsibly," Tony Blair told MPs earlier this year.

Inquiry grows

The Treasury Select Committee originally planned a short inquiry into the credit card industry.

The committee will resume its inquiry in the Autumn, when it will interview the Department of Trade and Industry, and the Office of Fair Trading - the bodies responsible for formulating consumer credit law and enforcing consumer protection measures.

A spokesman for Apacs, said introducing the boxes had been delayed because it was waiting on regulatory changes expected from the government in the Autumn, but it had now decided to go ahead before they came in.

"We are prepared to go forward now rather than wait for regulatory change," she said.

She said the industry had also approached consumer bodies, such as the National Consumer Council and the Consumers' Association to ask consumers for their views.

"We would be stupid to say we were not in favour of transparency," she added.