Credit card companies have been warned that they could face an official investigation if they fail to stamp out unfair practices. Lord Mandelson, the Business Secretary said that he would have 'no hesitation' in requesting the Office of Fair Trading to investigate firms which take inadequate action over complaints from consumers about unreasonable behaviour.
In an interview with GMTV, he warned that if credit card companies did not step into line and start treating people in a consistent, fair and responsible way, then he will ask the Office of Fair Trading to look into their practices, report to him. He would then be prepared to take further remedial action.
Peter Mandelson's remarks came before he and Gareth Thomas, the Consumer Affairs Minister, held a 'summit' with credit card chiefs to discuss mounting claims that in the economic downturn, clients are getting a very raw deal. They have also raised complaints about the failure by credit card firms to pass on interest rate cuts and various irresponsible practices.
The ministers did not say that all credit card lenders were guilty but it is clear that there are pockets of bad behaviour. History has shown that there will always be situations where lenders step outside what is reasonable practice. They probably do not step outside the law but they do step outside what the public regards as fair and normal behaviour.
These political moves are probably the precurser to moves to get the credit card industry to accept voluntarily a code of good behaviour. But the industry has been warned that if they do not get their house in order, and if they still insist on stepping outside what is fair, the government will take further action.
The Consumer Affairs Minister said, 'The Government is really concerned that credit card clients are not getting a fair deal. That is why the government has taken swift action to bring them in to look at how costs are being applied to people's accounts. We want to work with the industry to constructively draw up principles that will enable the indusrty to keep lending and which will also ensure borrowers are treated fairly. And in ways that best help them, repay their debts.'
The Government has also brought in laws to tackle unfair practices and has strengthened the enforcement powers of the Office of Fair Trading so that it can take swift action to ensure borrowers are being treated fairly.
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