4. STORE CARDS:
Transparency
Recommendation 43: To date there has been in some
cases a cosy arrangement between the store card providers and
the stores involved to prevent customers from gaining the full
facts about their cards. The fact that this has been legal serves
only to underline the urgency of reforming existing consumer credit
legislation.
Recommendation 44: Customers need to be aware
of the extremely high interest rates charged [on store cards].
Some progress has now been made in improving transparency, but
further work remains to be done, in particular concerning the
size of the print giving the APR (which should be minimum 18pt
in all literature) and the provision of further information on
monthly statements, especially the interest rate that applies."
4.1 The proposals for new rules on consumer credit
advertising will apply to store card marketing material. They
will require that leaflets that describe any one of a number of
key financial attributes of a store card will also have to include
the APR (or in some cases the typical APR), and that the APR will
have to be twice the size and more prominent than any other financial
information (except the actual interest rate to be applied).
4.2 The Government is pleased to note that store
card providers will adopt the Summary Box approach by 31 March
2004. Store cards will also have to conform to the requirements
of the DTI's proposals on the form and content of agreements for
both pre-contract information and information on the agreement
itself when these come into force.
4.3 The new primary legislation will include
a requirement for lenders to provide regular statements. The legislation
will also cover what information should be provided on the statement.
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