Reactions to credit card industry changes
By UK CreditCards.com
Credit card customers received a boost earlier this week after the government announced five new regulations designed to protect them. The changes, which are the result of a consultation launched last year by the Department for Business, Innovation and Skills, will be given statutory force in the near future. But how have they been received by companies involved in the credit card industry?
'Outrageous state of affairs'
After announcing the news, British prime minister Gordon Brown said: "We want not only to empower and protect you as consumers, but also to make banks and credit card companies behave responsibly and act fairly. And so we will re-write the rules on lending to end the sharp practices which sting so many credit card holders."
Saga Personal Finance was particularly pleased with the move, explaining that it should represent a major step forward for the industry and offer support to millions of financially pressured consumers. Chief operating officer Ali Crossley explained that the company is welcoming the overhaul with "open arms" as the new measures should "whip the rest of the industry into shape."
"Finally, the government has not just acknowledged the unfair treatment of credit card users that has been going on for years, but has actually taken action on the outrageous state of affairs," she said.
A note of caution
Banking specialist Defaqto also expressed its satisfaction at the changes, drawing particular attention to the measure addressing allocation of payments. The company noted that 79% of credit cards currently see repayments focused on the cheapest debt first, but the new rules will see the opposite occurring.
However, despite the generally positive reaction to the news, a number of industry players have sounded a note of caution. Consumer watchdog Which? also highlighted the importance of allowing consumers to tackle their most expensive debt first, but noted that the government must do more to protect the "vulnerable" individuals.
"It's now time for industry to step up to the challenge and offer credit card users clearer and fairer terms and conditions, and weed out irresponsible lending practices," said chief executive Peter Vicary-Smith.
Similarly, Citizens Advice director of policy Teresa Percherd was pleased with the changes, but explained that consumers who "engage with their creditors, get advice and pay what they can afford are protected from harsh and aggressive debt collection and enforcement".
Looking to the future
While the government's latest attempts to redress the balance of credit card industry practices back towards the consumer are being widely approved, it is clear that the overall feeling is that more needs to be done in the future. As a result, Mr Brown can expect to come under pressure to tackle more issues facing credit card customers, particularly against the backdrop of a difficult economic climate.
Published: 19 March 2010
- Equifax suffers major breach - are you affected? – A breach at Equifax exposed details of millions of US consumers - and some UK consumers. Here's what you need to know ...
- Your credit limit: use it or lose it – Thanks to new rules, you may find unused credit cards or credit limits taken away in the next few months ...
- What's safer: your card details or your health details? – According to a study, more Brits trust their doctor than their card issuer. But is that mistrust unfounded? ...