Consumer Focus welcomes the Government announcement on measures to ensure that the most expensive debts on consumer’s credit cards are paid off first. This will put vital pounds back in to the pockets of consumers.
However, the Government has not gone far enough to tackle unsolicited credit card limit increases. It should be for consumers to request credit limit increases, if and when they need them, not have them drop on the mat and possibly encourage them to take on more debt. We are also concerned that stronger action is not being taken on store cards, despite a wealth of evidence that they are uncompetitive, often sold in a pressurised environment, and are charging excessively high interest rates.
Consumer Focus thinks that introducing the measures announced today through a voluntary code rather than legislation means they will not be adequately monitored or enforced and therefore these measures must be made statutory as soon as possible. If consumers are to have rights in this area, in more than name alone, providers must be obligated to meet them or face meaningful sanctions if they fail. Putting new consumer rights on a statutory footing must be a priority.
Linda Weatherhead of Consumer Focus, said:
‘There is some good news here. Making sure customers’ most expensive credit card debts are paid off first is a welcome move and there are other important safeguards especially for vulnerable consumers. However, the Government has missed a major opportunity to help consumers, in particular to address the industry practice of unsolicited and irresponsible credit limit increases.
‘Consumer rights principles are all well and good but they should be written into law as soon as possible if consumers are to have real power. Of all markets, regulation of financial services must focus on consumer’s needs.
‘Rigorous interrogation of the success of these measures is needed. If they fail to remedy the problems customers are experiencing then further reforms will clearly be needed to make the system work fairly in consumers’ interests rather than in industry’s favour.’
ENDS
