Credit cards
Changes to the Banking Code scheduled for publication next month are set to require banks to be more cautious in sending out unsolicited credit card cheques to customers.
Stakeholder Response: Association of Payment and Clearing Services
Elanor Cann, corporate policy manager at APACS, said: "The results of the Banking Code review will be published in November.
"The new Banking Code, effective from March 2005, will incorporate APACS best practice guidelines on credit card cheques, which will then become mandatory for all Banking Code subscribers.
"The guidelines are available now on the APACS website at www.apacs.org.uk and cover such areas as an opt-out for new and existing customers; assessing a customer’s ability to repay and checking suitability prior to issuing cheques; information on key features such as interest, charges, and restrictions on use and any other relevant terms and conditions, including consumer protections.
"All card issuers agree with the need for responsible practices. The Banking Code will also stipulate which consumers should not be issued credit card cheques."
Stakeholder Response: Which?
A spokesman for Which? said: "Many credit card companies send their customers credit card cheques even when their customers haven’t requested them.
"In the two recent Treasury select committee hearings with the biggest credit card providers, all admitted to sending out unsolicited credit card cheques.
"Credit card cheques are normally treated as cash advances, and attract interest from the day they are used, plus a minimum charge. As such, they are an easy way for consumers to increase their debt.
"We would therefore like the Banking Code to ban the issuing of unsolicited credit card cheques, and only allow credit card companies to issue them at the customer’s request. Customers would have to opt in to receive them.
"In addition, we would like to see a requirement that even when they’re requested, credit card cheques be accompanied by clear health warnings about the charges, lack of interest free period and loss of Section 75 protection – this could be along the lines of the APACS guidelines for credit card cheques."
Stakeholder Response: National Consumer Council
Claire Whyley, deputy director of policy at the National Consumer Council, said: "Eight out of ten consumers think credit limits should only be increased at the customer’s request.
"We want to see next month’s Banking Code enforcing tough measures on lenders to be responsible and address, in particular, the problem of offering unsolicited credit without first assessing the customer’s ability to repay.
"Vulnerable consumers - including those that are at or above their credit card limit or only ever make the minimum repayment - should not be sent unsolicited offers of further credit.
"Consumers should be given an opportunity to opt out of unsolicited credit offers so that they have greater control over their borrowing."
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