Reaction to the government's new credit card rules

22 March 2010 09:06:40

Industry figures react to the new credit card regulations.

Five new measures to offer better protection to credit card customers in the UK were announced amid great fanfare last Monday (March 15th). The regulatory changes, which are set to be given statutory force later this year, have provoked considerable reaction from right across the financial services spectrum.

Balanced outcome

The UK Cards Association, which provided the Department for Business, Innovation and Skills with relevant evidence for its consultation, was particularly satisfied by the announcement. The body maintained that the need for a complete overhaul of the regulation of credit limit increases and the re-pricing of existing debt was unnecessary. Chair Melanie Johnson welcomed the new measures as a "balanced" outcome and stated her satisfaction at consumers being given more control.

'Whip them into shape'

Saga Personal Finance sounded an even more emphatic note of support, suggesting that the changes will benefit millions of credit card customers. Chief operating officer Ali Crossley said that she welcomed the opportunity to "whip the rest of the industry into shape".

"Finally, the government has not just acknowledged the unfair treatment of credit card users that has been going on for years, but has actually taken action on the outrageous state of affairs," she commented.

More work on the horizon

However, not everyone has been completely pacified by the announcement. Consumer Focus was happy with the scope of the new laws, but also urged the government to concentrate more on tackling 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," the organisation said.

The watchdog also expressed its concern that stronger action was not taken on store cards, which it claimed are "uncompetitive, often sold in a pressurised environment and are charging excessively high interest rates".

Meanwhile, Liberal Democrat shadow business secretary John Thurso explained that credit card interest rates are now at their highest levels since June 2006. He suggested that a maximum level must be put in place by the government in order to end "profiteering" by credit card companies.

The first step

The obvious conclusion to draw from this snapshot of how the changes were received is that the majority are happy that the government has taken action to help consumers. However, this endorsement has largely been tempered by a realisation that the battle is far from over. As a result, the government may look upon this as a first step on the road to a greater overhaul of the UK credit card industry.

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