The Office of Fair Trading is to investigate the £4.4 billion market for storecards.

The OFT said on Tuesday it was launching an inquiry after John Vickers, its director general, told the Commons Treasury select committee that the market was "not working as it should".

Forum Response: National Consumer Council

Ed Mayo, chief executive of the National Consumer Council, said: "An investigation into store cards is long overdue. Exorbitant interest charges of up to 30 per cent show that this market is not working in the best interests of consumers.

"Many store cards are pushed by over enthusiastic sales assistants at point-of-sale - offering shoppers discounts on their purchases if they sign up there and then. But clear information about what they are signing up for, and how much the card will cost are downplayed.

"This market is largely monopolised by a single big player, leaving little choice for the consumer who gets ripped off by high interest charges. The sooner the Office of Fair Trading begins a formal investigation into this market the better."

Forum Response: Consumers' Association

Ashleye Sharpe, head of money research at the Consumers' Association's Which? magazine, said: "CA welcomes the OFT's 'fact finding mission' looking at the store card market. With an average interest rate of 26 per cent, most store cards are ripping customers off.

"The best credit cards have rates of around 10 per cent, and even the Big five banks are charging around 17 per cent. The situation is made worse by the marketing of many store cards which majors on introductory discounts and special shopper evenings.

"Interest rates are relegated to the small print of application forms which some stores then don't even allow customers to take home to read. We'd like to see store cards giving customers much clearer information about interest rates and charges, and giving staff who sell these products better training."