[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Tuesday, 8 July, 2003, 13:27 GMT 14:27 UK
Credit probe to examine store cards
Top Shop store
Top Shop owner Arcadia will be quizzed

An investigation into credit cards has been widened to include store cards, following concern expressed by consumer groups and MPs about high interest charges.

The Treasury Select Committee will interview retailer Arcadia, owner of Top Shop and Dorothy Perkins, which offers store cards to its customers, and GE Capital, a consumer finance company, which controls almost half of the store card market in the UK.

Store cards were singled out for criticism in last week's Treasury Select Committee inquiry into credit cards, with MPs attacking the hefty interest rates, which can be up to 30% higher than the cheapest credit cards.

Barclaycard, the oldest and biggest provider of credit cards in the UK will appear before the committee on Wednesday, as part of the committee's ongoing investigations into the credit card market.

Debt burden

The inquiry has been set up following concern that UK consumers are taking on too much debt.

GE Capital's store cards
BHS, Bentalls, Arcadia group, Country Casuals, Debenhams, House of Fraser, Harrods, High & Mighty, Laura Ashley, Monsoon, Mothercare, New Look, Owen Owen, River Island

Its investigation is focusing on whether the market is working against the interests of consumers, particularly in relation to the way charges are advertised and calculated.

The select committee's inquiry is one of a number of high-level investigations into consumer debt.

The Department of Trade and Industry is currently undertaking a review of consumer credit law, and will publish its proposals later in the year.

Meanwhile, the Office of Fair Trading is looking at debt consolidation companies, following concern that consumers do not understand how the loans - which could result in a person losing their home - work in practice.

Store card probe

In last week's committee session, MPs attacked the hefty interest rates on store cards.

George Mudie MP, a Labour member, said: "These are outrageously ripping off consumers. How can they justify these interest rates?"

MPs were also concerned at the way some cards were being sold.

In a statement, GE Capital said it did not want to "pre-empt" the committee's investigation, but it hoped to "redress certain misplaced allegations which have been levied at store cards".

The firm will appear in front of the committee on 14 July with Arcadia.

GE Capital added that store cards were primarily a way for stores to reward their customers' loyalty, and were not designed as a "borrowing tool for larger amounts over the longer-term".




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


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific