Office of Fair Trading
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OFT publishes credit card comparisons report
The OFT has published its report into credit card comparisons, which makes a series of recommendations to help consumers choose a credit card. Download a copy of the report from the OFT website : http://www.oft.gov.uk.
The report follows a super-complaint from Which? that highlighted that consumers choose credit cards without understanding all the issues that affect the cost of the card. OFT research shows that 70 percent of credit card holders did not shop around before selecting their current card, and that this meant they could be placing themselves at a financial disadvantage.
Research into the report involved looking at issues surrounding the comparative costs of using different credit cards for purchases, cash advances, introductory offers and payment allocation. The research followed work with the credit card industry, consumer groups, other regulators, government bodies and other key stakeholders. The main recommendations are :
* the introduction of an independent credit card price comparison website run by the FSA,
* improvement to how information is presented in credit card issuers' summary boxes,
* standardisation of terminology used by credit card issuers in their product literature, and
* improvements to consumer education about the benefits of shopping around for a credit card.
The OFT will work with the card industry to implement the improvements to summary boxes, standardisation of terminology and education campaign.
John Fingleton, OFT Chief Executive said:
'No-one wants to throw money away, but consumers who don't shop around for credit cards are doing just that. It is essential that consumers are given the right tools to make comparisons between credit cards more easily, and we can achieve this through some of the recommendations announced today which have received widespread support from the FSA, APACS and the rest of the financial sector.'
The OFT will work with all the relevant parties to implement these recommendations.
NOTES
1. The right to submit super-complaints was created by section 11 of the Enterprise Act 2002. A super-complaint is defined under section 11(1) of the Act as a complaint submitted by a designated consumer body that 'any feature or combination of features, of a market in the United Kingdom for goods or services is or appears to be significantly harming the interests of consumers.'
2. On 1 April 2007 Which? submitted a super-complaint to the OFT about credit card interest calculation methods. See Which? website for details.
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