Transparency of credit card charges : first report of session 2003-04, Vol. 1: Report, together with formal minutes

The Committee's report examines a number of issues of public concern regarding how the credit card industry deals with its customers, particular in relation to the lack of transparency in information provision about interest rates and charges made on credit and store cards, and the role which charging and marketing methods are playing in the rise of high personal debt levels.

The report's findings include that the introduction of clearer information about the credit card charges through a 'summary box' giving examples of the cost of different borrowing scenarios should improve transparency and this approach could be extended to monthly statements.

Concerns are also noted about the effects of risk-based pricing on consumers, the current level of penalty charges, and of irresponsible lending practices which encourage people into 'sleep-walking' into a situation of over-indebtedness.

However, not all the fault lies with lenders, and users must also recognise that credit cards are an expensive method of long-term borrowing.

The Committee states its strong support for the OFT's decision to examine the store card market, where evidence suggests competition is not working properly. The Committee expresses hope that the Government's White Paper (Cm 6040, ISBN 0101604025) will promote effective action, and notes that the OFT needs to take a more proactive approach to protect consumer interests.