Credit card marketing has again been blasted by the Treasury Select Committee, which has accused the industry of “being addicted to profit through deception”.
The attack comes ahead of stringent new credit advertising rules, intended to clean up the industry, which become law at the end of the month. The Office of Fair Trading this week published a 59-page guidance document about the new rules, but denies this is a response to widespread confusion about the new rules.
Senior industry figures were grilled by the Select Committee yesterday (Tuesday). Chairman John McFall MP said the new summary box on Capital One’s credit card marketing was “hard to read” and “of no value to customers at all”.
HBOS chief executive James Crosby admitted to the committee that his company needed to do better, following the suicide of one of its credit card holders who fell into serious debt.
Many current marketing tactics will become difficult under the regulations, which will standardise the way APRs (annual percentage rates) are calculated. Companies will not be able to give different APRs for different parts of the product, as is current practice for “0 per cent” balance transfers. Introductory rates for credit agreements will also have to be disregarded when calculating APRs. Instead, a single APR, taking in the full features of the credit card or loan, will have to feature more prominently than any other figure in any marketing communication.