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Last Updated: Wednesday, 9 July, 2003, 16:29 GMT 17:29 UK
Credit card charges attacked by MPs
John McFall MP
John McFall MP, chairman of the Treasury Select Committee

Representatives of the credit card industry have been grilled by members of the Treasury Select Committee, as part of its investigation into credit cards.

Barclaycard was singled out for criticism for charging interest rates of up to 24.9% at a time when the Bank of England base rate is so low.

John McFall MP, chairman of the committee, accused representatives of the Association for Payment Clearing Services (Apacs), an industry body, for "not living in the real world".

He has ordered industry and bank chief executives to appear before the committee in September.

"We want the chief executives to come along. They are at the top of the house. When they give the word things move," Mr McFall told the committee.

Committee probe

The committee questioned a submission from Apacs which said that lifestyle changes - such as divorce or redundancy - were the main cause of indebtedness.

"Your submission seemed tremendously complacent on the issue of indebtedness...It seems that you are not living in the real world," Mr McFall said.

Apacs said it did have a responsibility to people who were in debt, but reiterated that it was not credit cards alone that caused the problem.

"Of course we have a responsibility to those people in financial difficulty, but what we are saying is credit card lending alone does not cause them to get into debt," a spokesman replied.

Honesty boxes

The committee also questioned Apacs about plans to introduce so-called Schumer or honesty boxes next year.

The boxes, named after an American senator, make credit card charges more transparent and easy for consumers to understand.

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

"It has to be right, chairman - that's the big issue here," replied a spokesman.

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

Inquiry mushrooms

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

But the investigation has been extended to include store cards, and after Wednesday's meeting is expected to continue into the autumn.

As well as bank chief executives, the committee now wants to 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.

The committee is particularly interested in looking at the way charges are presented, and how hidden charges may be incurred by credit card holders.

There is growing concern about the level of consumer debt in the UK and its social and personal consequences.


SEE ALSO:
Credit probe to examine store cards
08 Jul 03  |  Business
Loan companies face probe
17 Jun 03  |  Business
UK tourists' credit card woe
10 Jun 03  |  Business
Britons 'in debt spiral'
21 May 03  |  Business
Probe into credit card charges
22 May 03  |  Business


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