Press Release

FLA RESPONDS TO CONSERVATIVE PROPOSALS TO TACKLE PERSONAL FINANCE ISSUES

24 November 2006

At the recent Conservative Debt Summit, George Osborne suggested that a seven day “cooling-off” period was needed in the store card market to allow people to consider whether their decision to apply for credit was the correct one.

While FLA were supportive of the other measures announced by the shadow chancellor, FLA believes that implementing this measure would distort competition in the consumer credit market away from store cards, and in favour of other forms of credit, a measure which would go against the Conservatives’ belief in a free market.

FLA statistics show that in 2005, the average balance on a store card was £140, compared with more than £1,600 on a credit card. Initial limits are low for the majority of store cards granted, and while APRs on some store cards are higher than on credit cards, the lowest APR on a store card is just 12.9 per cent.

FLA Director General, Martin Hall, commented:

“The Conservatives have shown a real commitment to tackling the problems experienced by people who are over-indebted. Increased financial literacy and increased data sharing are the bedrock of a more sophisticated credit market.

“However, the proposed seven day cooling-off period when a person takes out a store card is regulatory overkill. FLA believes in empowering consumers to take personal responsibility for their own finance decisions, a view surely in line with the Conservatives’ vision for their programme of increased financial literacy.”