High Street robbery that's in store for you

Bosses of Britain's biggest high street retailers, under fire for sky-high interest rates on store cards, this week told MPs that their staff are "trained professionals" able to explain the details of how the cards work. But we found a very different story.

According to the Treasury select committee, retailers - who often charge rates up to three times as high as the average credit card and 10 times the base rate - are guilty of "highway robbery".

On Monday the select committee quizzed House of Fraser, Arcadia (owner of Topshop and other names such as Burton) and GE Consumer Finance, the firm that supplies cards to most high street stores. MPs accused them of "fleecing" customers with extortionate interest rates and operating an unofficial policy of forcing customers to sign contracts on the spot so they would "not fully understand what they were signing up to".

The MPs said that card providers are also deliberately burying important financial information in the small print and systematically refusing to let customers take home copies of agreements to look them over before signing.

Retailers said customers were asked to sign in the store because they would be advised by trained "professionals". But this was simply not the case when we visited some of the high street names. We posed as shoppers interested in getting a store card at Debenhams, House of Fraser, Marks & Spencer, John Lewis and Topshop. We asked assistants to talk us through rates of interest and the small print.

All but one of the stores - John Lewis - failed outright to explain their APRs (annual percentage rates) or to adequately advise us on the details of the contract. Debenhams, House of Fraser and Topshop refused to hand over a copy of the credit agreement to take home.

This is what happened at Debenhams:

J&M: "Can we take a copy of the agreement home to look over the small print?"

Debenhams: "I am sorry, we are not allowed to give customers a copy."

J&M: "Why not?"

Debenhams: "I don't know. It's always been policy."

J&M: "But what if I want to take more time to read through it?"

Debenhams: "Well, you can see what the APR is and that's probably the main thing you're interested in."

This was uncannily similar to House of Fraser and Topshop. Each assistant told us that it was policy not to hand any details over but that no one in management had ever told them why this was the case. And the similarities didn't end there. Not one of the assistants was able to explain what an APR was or why rates were so high.

At House of Fraser, the assistant looked genuinely confused when we asked about the APR: "Gosh, I'm not sure what it is," she said.

"There it is, 28%," she finally declared. It looks a bit high we told her, wouldn't it be better just to get a credit card? "Depends which one," she replied. And, when it came to asking about how Fraser Card stacks up against other store cards? "There's not much difference I don't think. I have an M&S card and it's exactly the same."

We went to M&S. Its card was in fact a third cheaper than House of Fraser and Topshop, at 18.9%. They also let us take a copy of the agreement (small print included) home.

Only John Lewis stood out as operating good practice. There was clearly advertised information at the tills - with the APR of 13% in bold. A few feet away there was a rack of leaflets - each including all the small print and also with the APR in bold.

A spokesman for the Consumers' Association, one of the organisations that persuaded the committee to look into store cards, said: "They are a rip-off and have been for years. Retailers are exploiting customer loyalty. Being in a queue for a purchase is not the right time to make a financial decision."

Store cards

Topshop
A neon sign tells customers they can get "all" the information they need at the till, but the staff really didn't understand what they were selling. There was no explanation of the APR (28% to 29.9%) or why small print could not be taken away, only: "We are told not to hand it over".

Debenhams
Among the highest of the high, the APR for direct debit payment is 28%, going up to 29.9% for people paying by other methods. The assistant was unaware of what APR meant or how long the interest-free period was. "Policy" was not to let customers take the forms home, she said.

Marks & Spencer
Not one of the worst offenders, but its rate of 18.9% is still much higher than most credit cards. Customers are not pressured at the tills to sign up, but the so-called experts in customer services seemed to know very little about the product. Could take forms home, though.

House of Fraser
The assistant explained the loyalty points available with Fraser Card, but had no idea how much credit would be given or why the APR - 27.5% to 29.3% - was high. She could not hand over a copy of the small print, she said. We were given a leaflet with no APR quoted on it.

John Lewis
The best rate on the high street at 13% but even better is that the store presents clear information about the card at convenient places in the shop. Customers are encouraged to take detailed forms home and the APR is highlighted.