The Treasury Committee says there is a ‘fair way to go yet' before banks and credit card companies make sufficient reforms to benefit consumers.
Representatives of Lloyds TSB, HBOS and US-based Capital One were called in front of the committee yesterday to assess the progress made on credit card charges and interest rates.
Following its report published in December 2003, entitled ‘Transparency of Credit Card Charges’, the committee is also seeking answers on the number of different methods the industry uses to calculate the annual percentage rate (APR) charged on card balances.
All three banks said they have committed themselves to working closely with the Association of Payment Clearing Services (Apacs) and believe they have complied with most of the questions raised at the end of last year, while there are still areas still to be regarded as a ‘work in progress’.
Proceedings quickly ignited yesterday morning with Angela Eagle MP from Wallasey, attacking European executive vice president at Capital One, Fergus Brownleee, for ‘deliberately’ trying to hide information from customers through small print and complicated literature not sensitive towards ‘customer comfort’.
The US bank was isolated for failing to:
Committee chairperson, John McFall added Capital One UK has no online link to a summary box, to which Brownleee stressed the matter would be addressed.
While CEO of HBOS, James Crosby, and Eric Daniels, CEO at Lloyds TSB agreed to comply with providing vetter ‘scenarios’ to make information easily understood to customers, Brownlee laboured somewhat before agreeing to look into it.
With regards to transaction and penalty fees, the policy held by all three banks is to recover costs of default when customers break the terms of agreement with banks.
When asked to disclose how much money is made on transaction penalty fees and charges to customers, all three men declined, before pointing out that around 95% of customers don’t pay penalty fees, with no real profit being made in ‘bringing accounts back into good order’.
All three banks are under agreement information is currently shared between them as well as to Apacs, yet evidence still suggested it is not done so completely.
The TSC accused Lloyds TSB's Daniels of being "a barrier to the system" in this respect.
While the meeting may not have entirely convinced the committee, for the most part there seems to be willingness from banks to comply with and address any current issues of concern within the industry.
A further meeting has been scheduled for next week to address other matters, including cash machine charges, says TSC chairman John McFall.
The Treasury Select Committee is set up by the House of Commons to examine the expenditure, administration and policy of the HM treasury and its associated public bodies.IFAonline
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