OFT publishes credit card report
By Adam Saville
The Office of Fair Trading has published a report which makes a series of comparisons to help consumers see through the smoke and mirror tactics used by credit card providers.
The report follows a super-complaint from Which? that highlighted that consumers choose credit cards without understanding all the issues that affect the cost of the card. OFT research shows that 70% of credit card holders did not shop around before selecting their current card, and that this meant they were losing out.
John Fingleton, OFT chief executive, said: “No-one wants to throw money away, but consumers who don’t shop around for credit cards are doing that. It is essential that consumers are given the right tools to make comparisons between credit cards more easily, and we can achieve that through some of the recommendations announced today which have received widespread support.”
The report is based on research into issues surrounding the comparative cost of using different credit cards for purchases, cash advances, introductory offers and payment allocation. It followed the work with the credit card industry, consumer groups, other regulators, government bodies and other key stakeholders.
The report’s recommendation of the introduction of an independent credit card price comparison website run by the Financial Services Authority (FSA) has been supported by Nationwide Building Society who sees it as a way of protecting the consumer from the tactics used by many financial services.
James Wood, director for credit cards and banking at Nationwide, said: “For too long many credit card providers have got away with applying an adverse order of payments to their customers and we hope this new comparison site will address this sharp practice.”
The report also calls for an improvement in the way information is presented to consumers, the standardisation of terminology used by credit card issuers and improvements to consumer education about the benefits of shopping around for a credit card.
The introduction of these improvements is aimed to give the consumer an insight into the workings of the credit card industry, allowing them to make better judgements when choosing a credit card.