Examination of Witnesses (Questions 500-519)
MR JOHN
VARLEY, SIR
FRED GOODWIN,
MR SHANE
FLYNN AND
MR MICHAEL
GEOGHEGAN
26 OCTOBER 2004
Q500 Mr Plaskitt: For Barclaycard I have
to make a telephone call?
Mr Varley: Yes.
Q501 Mr Plaskitt: Sir Fred, how do I
opt out of ever receiving any more credit card cheques from you?
Sir Fred Goodwin: I think it is
a phone call but we definitely give customers the right to opt
out.
Q502 Mr Plaskitt: Mr Flynn?
Mr Flynn: You can tick a box and
you can also phone.
Q503 Mr Plaskitt: The box appears on
which document?
Mr Flynn: It goes out in the first
package of cheques the customer receives.
Q504 Mr Plaskitt: It just goes out the
once?
Mr Flynn: Yes.
Q505 Mr Plaskitt: Otherwise it is a telephone
call?
Mr Flynn: Yes.
Q506 Mr Plaskitt: Mr Geoghegan, how do
I opt out of ever getting any more of yours?
Mr Geoghegan: Firstly, HSBC does
not offer them. It is only HFC that offers them. I believe it
is a phone call. The most powerful way is to throw it in a dustbin
if you do not want it.
Q507 Mr Plaskitt: Is that secure? Is
that a wise thing to do, to put a credit card cheque in a dustbin?
Mr Geoghegan: I am not here to
judge how you put it in a dustbin.
Mr Plaskitt: It is very irresponsible
advice. I think all of you have been responsible for a huge boom
in the market for domestic shredding machines because that is
the only safe thing to do with a cheque you do not want to use.
Q508 Chairman: Mr Flynn, the MBNA are
alone and to be congratulated for putting 18 point type into their
summary box. The Committee recommended that the summary box should
also appear on monthly statements so that consumers are reminded
of the key rates and charges each month and can compare these
with other offers available elsewhere. That was supported by the
Consumers' Association and also research from the OFT which stated
that other general observations from focus group discussion said
that this kind of information, displayed in the summary box, is
seen as useful on monthly statements as well as promotional literature.
To HSBC, RBS and MBNA: why should the consumer have to wait until
the next review of the banking code due in 2006 before being able
to see clear and comparable information regarding their terms
and conditions on monthly statements? Is it a systems issue or
are you against the principle of putting the summary box on monthly
statements? Mr Flynn, I will start with you. Did you have a change
of heart?
Mr Flynn: We said in our letter
to you that we were looking at it and I think it was clear that
we were not against it in principle, but it was a technical issue.
We expect we will be able to do it before the end of 2005. I cannot
be more precise than that.
Sir Fred Goodwin: We have had
the information in our statements for some time, on the back of
them. The one issue we are looking at—
Q509 Chairman: This is a summary box
on monthly statements.
Sir Fred Goodwin: The information
is there. It will go into summary box format.
Q510 Chairman: I do not see the summary
box on the back. It is very packed and really dense for people.
The idea of the summary box is to put it in clearly.
Sir Fred Goodwin: I understand
that but there is more data there than just the terms and conditions.
Q511 Chairman: It is not on, Sir Fred.
Sir Fred Goodwin: The data that
is in the summary box—
Q512 Chairman: The summary box is not
on.
Sir Fred Goodwin: The data that
is in the summary box is on the back of the statement. The summary
box is not on the back of the statement yet but it will be going
on. The one issue we are looking at is whether we could put the
rate of interest the customer pays on the front of the statement
rather than on the back of the statement, which I think would
be helpful, apart from anything else, and makes it easier from
a systems point of view.
Q513 Chairman: My question was why should
the consumer have to wait until the next review in June 2006.
When are you going to put the summary box on monthly statements?
Sir Fred Goodwin: It is in the
course of being done in the first quarter of next year.
Q514 Chairman: This still looks a bit
dense.
Sir Fred Goodwin: This is part
of the trade off. Some people only get one page in a statement
so it is trying to get all the stuff into one.
Mr Varley: As you saw from the
exhibits we gave you, there are summary boxes on the back of our
statements.
Mr Geoghegan: We are already introducing
summary boxes on some of our card providers. We will do it for
the whole lot. We are consolidating our cards.
Q515 Chairman: When would you do that?
Mr Geoghegan: As soon as the system
can do it. We have already done it for one. I see no reason why
it cannot be continued to be rolled out for all our cards. Earlier
on, I misled you when I said that we needed a phone call for cancelling
the cheques. We actually say, "Don't need them at all? If
you don't use all the cheques we send you, just tear them up and
dispose of them securely."
Q516 Chairman: Mr Geoghegan, you said
in your submission that you have as yet seen no demand from your
customers for the inclusion of a summary box on monthly statements.
You are saying now that you are going to put them on.
Mr Geoghegan: That is correct.
Q517 Mr Cousins: Somewhat earlier, one
of you made reference to the fact that people in difficulties
are now at an all time low. I wonder what percentage of your customers
with credit cards you regard as being in difficulty?
Mr Flynn: At any particular time
it is somewhere in the area of 3 to 4%.
Mr Varley: We think it is about
2%.
Mr Geoghegan: For HSBC it is just
over 1%.
Q518 Mr Cousins: That would amount to
a fairly large number of people on the basis of the information
you have given us—probably half a million people across
the users of credit cards? It is a lot of people, is it not? Do
you have any particular marketing techniques in terms of the areas
you select to promote your cards? Post codes?
Mr Flynn: We make no cut on the
basis of post codes.
Sir Fred Goodwin: We accept applications
from anyone and they go through the scoring process.
Q519 Mr Cousins: I am talking about the
promotional material.
Sir Fred Goodwin: A lot is through
adverts in newspapers and so on so anyone replying to that will
be put through the process for assessment. In terms of targeted,
outbound, we tend to compile lists or go after people based on
particular attributes that usually have to do with perhaps their
occupation or membership of clubs or societies. If you are a member
of the Institute of Chartered Accountants or whatever, we might
write to you. It is not generally geographic.
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