March 12, 2006

The recent announcement by the Competition Commission to force store card providers to make charges and fees more visible to consumers has come under fire from some consumer groups.

The National Consumer Council say that although they welcome any move to enlighten and encourage consumers to take a firmer control of their finances, not enough is being done. The NCC argue that the recent moves to make store card providers include a “wealth warning” in their store card statement and prominent warnings that the store card APR is over 25 per cent, is not enough.

It was hoped that the Competition Commission would tackle the problem of store cards at the point of sale. In many cases consumers are encouraged to take out a store card when making a purchase, in order to benefit from a 10% discount on anything they purchase the same day. Many of these points of sale store card introductions do not fully explain to the consumer the high level of charges their store card would incur.

The Competition Commission’s report stated that store card providers must include a wealth warning indicating how much interest they would expect to pay if they only kept to the minimum payments required, a warning that the interest APR is over 25% and the abolition of joint store cards with payment protection insurance, allowing the consumer to shop around for a better insurance deal.

There are currently over 70 retailers offering store cards with 70% of these provided by GE Consumer Finance.