Charges should be clearer to credit card customers

The Treasury Select Committee has turned its ire on Barclays, the Royal Bank of Scotland, HSBC and MBNA Europe over unfair practices in their credit card divisions and credit card loans.

The committee is concerned over failures to make charges more clear to consumers, and to standardise policies across the industry, as well as dubious charging practices.

Quoting from a letter from the Office of Fair Trading, committee member John McFall was reported by The Telegraph newspaper as saying "we have found that different card issuers use different accounting policies and bases for charging, some of which, on our preliminary analysis, are of questionable validity under the regulations on unfair terms in consumer contracts."

Sir Fred Godwin, chief executive of RBS defended the information disclosed to customers: "People know how much a tin of beans costs but they would not expect to know how much profit Tesco makes on each tin."

There was praise, however, for Barclays, which the committee said had led the way in introducing the 'summary box' on its literature, clearly defining monthly charges.

Credit card debt has leapt in the UK, with Bank of England figures showing that plastic debt had reached £52 billion by 2002.