Government takes aim at "excessive" credit card rates
The government wants to give regulators more power to tackle "excessive" card charges.
Friday, 21, May 2010 10:36
By myfinances.co.uk staff
The government plans to give financial regulators more power to define and ban "excessive" interest rates for credit and store cards as part of its strategy to improve consumer protection in the UK.
In their programme for the next five years, the Conservatives and the Liberal Democrats also said that they oblige credit card firms to provide information to customers in a "uniform electronic format" that will make it easier for borrowers to find out if they are getting the best deal.
Furthermore, the coalition plans to introduce a seven-day "cooling-off period" for store cards.
Other measures in the government's plans include ending "unfair" bank charges and fees for certain financial transactions.
Commenting on the plans, moneysupermarket.com head of banking Kevin Mountford said that while it is good to see the coalition "nail its colours to the mast" regarding consumer protection, its focus for credit card rates should be on improving transparency, rather than capping charges.
"Inevitably, if the banks' bottom line is affected they will find other ways to recoup lost revenue so that consumers will end up paying in another area," he added.
Total consumer credit lending, which includes personal loans and credit cards, stood at £222 billion in March, according to Credit Action.