OFT sets scope of store card study
‘Informal’ review to decide on action necessary
September 17 2003
The OFT has set out the scope of its investigation into the UK store cards market.
Initially, the study is described as “an informal fact-finding review” which is not being carried out under the OFT’s enforcement powers. Both retailers and store card operators such as GE Capital will be consulted, as will consumer groups.
The study will consider the areas of concern raised by the Treasury Select Committee of MPs during its hearing in July, including the application of competition law; marketing and sales practices used to encourage customer to take up cards; transparency issues relating to the information given on interest rates and interest free credit periods; and the interest rates charged.
The formal investigation follows criticism of store cards by MPs on the committee in July. The commitee has included retailer card offers within the scope of its wider investigation into the credit card market.
The OFT itself was criticised by the committee for not having acted on the issue sooner. OFT director general John Vickers said last week there was enough evidence of unsatisfactory practices to warrant an investigation into whether there is sufficient competition in the store card market, and whether greater regulation is needed.
Following the review, the OFT will issue a report early next year setting out what it believes the next steps should be.
