Plea for curbs on credit card charges

The Department of Trade and Industry was yesterday accused by a prominent member of the Treasury select committee of "sleeping on the job" instead of cracking down on misleading and excessive charges by credit card companies.

During the latest in a series of hearings looking at credit card transparency, both the DTI and the Office of Fair Trading were accused of a "dismal failure" to bring the credit and store card industry to account on a range of "anti-consumer" practices.

After the hearing, Liberal Democrat committee member, Norman Lamb vented his frustration. He said: "The DTI and OFT have perpetuated the confusion people experience when looking at their credit card interest rates by ignoring suggestions from the industry that one single system for the calculation of APR [annual percentage rate] interest should be used.

"There seems to be little sense of urgency to get things right when they could solve the problems at a stroke."

MPs are angry that no agreement has been reached with the credit card industry on a method for calculating APRs even though both the DTI and OFT were aware of potential problems five years ago.

How APRs are calculated has emerged as a key issue for the committee. They are supposed to make it easy for customers to compare cards but MPs and consumer groups have argued that the different methods of APR calculation make them misleading.

Competition minister, Gerry Sutcliffe and John Vickers, chairman of the OFT who were giving evidence, were also grilled about why they had failed to take credit card firms to task on late payment charges, unsolicited credit card cheques, and "grossly misleading" advertising.

During a heated session MPs told Mr Vickers that the OFT was "reactive" and that it could have used new "stop now" powers to tackle the worst offending card providers. Mr Vickers said the organisation had done its best with "finite resources".