Store Card Decision Is In Retail Sector's Interest

1.06.49pm GMT Thu 18th Mar 2004

Commenting on the OFT's decision to refer store cards to the Competition Commission, Malcolm Bruce MP, Liberal Democrat Shadow DTI Secretary, said: "Customers are potentially paying £350million each year in excess interest payments on store cards alone."

"If you take into account all those who are using credit cards to pay for purchases, excess interest payments compared with competitive market rates could run into billions."

"This money is simply fuelling the profits of banks and credit companies instead of driving the real economy."

"It is in the retail sector's interest to address this as customers are paying off debts instead of buying more of goods and services."

"What the Government must do is place a clear responsibility on the retailers and store card operators to inform their customers about the charges they can expect if they put purchases on cards with often extortionate rates of interest."

ENDS

Notes

The OFT report can be found at

http://www.oft.gov.uk/News/Press+releases/2004/47-04.htm>

The OFT store cards study has concluded that there are features of the sector, both in the supply of store card credit to consumers and in the supply of store card services to retailers, that appear to prevent, restrict or distort competition.

Store cards account for around 2.5% of total consumer credit lending, and new store card lending was about £4.8billion in 2002.

38% of store card holders do not pay off their balance in full every month. Interest rates vary from between 7% and 30%.

There are 22.85 million active store cards and 18.6 million accounts.