“Wealth warning” to be issued
- 4TH MAY 2007
The Dally Record newspaper (3 May) reported that consumers will receive a "wealth warning" on store cards which are seen to be charging "extortionate" interest rates.
Alongside the wealth warning, providers of store cards must now list payment protection insurance (PPI) cover separately away from other elements of the card cover and costs.
These new measures follow two investigations carried out by the Competition Commission. The first took place last year and looked at the interest rates charged on credit and store cards.
The second investigation, which is still ongoing, is in to the payment protection insurance sector which has been in the spotlight for quite some time with reports of mis-selling of policies and over inflated premiums.
In respect of the former, card providers who charge Annual Percentage Rates (APRs) that are more than 25 per cent must now inform their customers that cheaper borrowing may be available elsewhere. They will have to do this on the front of their customers’ monthly statements.
Others requirements include more and better information also on monthly statements.
Speaking to the Daily Record, spokesman for the Competition Commission said:
"We are trying to make it clear to people exactly what they are paying”
These new recommendations have been applauded by Simon Burgess, an industry expert and MD of ethical payment protection insurance provider British Insurance. He says: “Sadly, many consumers trust their bank or other financial institution, believing that they are getting the best deal. These new measures – particularly that in relation to the payment protection insurance sector – are a positive step in the right direction towards customers being better informed when it comes to their financial choices.”
