Credit card companies are being allowed to mislead customers with confusing terms, conditions and interest rates, according to an influential committee of MPs.

In a new report, the Treasury select committee argues that issues such as different methods for calculating interest and misleading marketing literature made choosing the best card difficult for consumers.

A spokeswoman for the DTI told ePolitix.com: "We will obviously study the report in detail before responding in due course. Many of the points raised by the committee are covered in the consumer credit White Paper which was published earlier this month."

Forum Response: APACS

A spokeswoman for the Association for Payment Clearing Services said: "APACS welcomes the publication of this very important report, which is the result of lengthy engagement between the industry, regulators and consumer groups.

"APACS will take the recommendations of the committee seriously and will undertake a detailed review of the report in the coming days.

"As we made clear in our evidence to the committee, the credit card industry is already committed to the Summary Box and we announced at the beginning of October 2003 further details of our progress in this area.

"We will work closely with consumer groups and the committee to keep them involved in and informed of our progress. We have pioneered the Summary Box and are pleased that the committee welcomes it as such an important part of addressing the improvements which are needed to achieve greater transparency. It will appear on marketing literature by the end of March 2004.

"APACS will continue to work with the committee and regulators to improve transparency, which the credit card industry believes to be critically important."

Forum Response: Consumers' Association

Mike Naylor, senior researcher at Which?, said: "This is great news for consumers and throws light on the opaque credit card market. We hope that the verdict will force the industry and regulators to drive out the underhand practices used to hoodwink its customers.

"At last the industry will have to prove that it needs to use ten different ways to calculate interest.

"With the forthcoming review of the Banking Code in 2004 and white paper on consumer credit, there is a real opportunity to make the Committee's recommendations a reality. We will be keeping a close eye on how the industry takes forward these recommendations over the next six months.

"In the run up to Christmas don't be tempted to borrow on store cards and if you are borrowing on a credit card and paying more than 14 per cent APR you are throwing money down the drain. Take action and switch to a better deal."

Forum Response: Barclays

A spokesman for Barclaycard told ePolitix.com: "We welcome the report. Our chief executive is on record as saying that the inquiry has been a 'much needed wake-up call for the industry.'

"We have already started to take significant steps to improve our service and not it is just a question of maintaining the momentum and making sure that some of our competitors come along for the ride."

Forum Response: British Retail Consortium

A spokeswoman for the BRC told ePolitix.com: "Stores do not set the interest rates on the cards they provide. Retailers offer store cards as an additional customer service and it is for the customer to decide whether they want to take advantage of any particular package offered to them.

"To criticise retailers for providing choice is not only patronising to consumers but shows a complete ignorance of the balance of power between stores and their customers.

"As with everything else in retail, the consumer's ability to choose to buy or not to buy is the ultimate power."

Forum Response: National Consumer Council

Diane Gaston, spokeswoman for the NCC, told ePolitix.com: "This report from MPs empasises only too graphically how ineffective our out-dated consumer credit laws are at protecting borrowers, and how practised lenders have become at treating their customers with contempt.

"So it is vital that the reforms outlined in the government's credit white paper are implemented to timetable and the OFT gets the resources needed to enforce the new laws energetically and proactively.

"In the meantime, the industry should demonstrate its commitment to a fair, clear and competitive credit market by introducing many of the planned reforms immediately, without waiting for new regulations and laws."