Bank chiefs face grilling over credit cards

CREDIT card users look set for a major victory against big name lenders, including Royal Bank of Scotland and HBOS.

John McFall, chairman of a powerful committee of Westminster MPs, told The Scotsman yesterday he was "hopeful" of sealing wide-ranging concessions from the industry on Thursday.

Consumer groups have accused credit card lenders of employing a mass of hidden charges and failing to provide borrowers with enough data to make informed comparisons between cards. Their complaints prompted the Treasury select committee to launch an investigation into the industry earlier this year.

McFall has summoned five of the biggest names in the industry to appear before him this week. Fred Goodwin, chief executive at RBS, and James Crosby, head of HBOS, will appear alongside the bosses of Barclaycard, MBNA and Lloyds TSB.

McFall said: "When we held meetings in June it was obvious that the industry’s progress [towards greater transparency] was far too slow. So we asked the industry to come back in October with clear proposals regarding increased transparency, marketing material, APRs and [charge summary] boxes.

"I’ve invited the industry’s leaders so we can examine their proposals in detail and satisfy ourselves they will increase transparency. We’ll get into the fine print on Thursday and, hopefully, we’ll be able to dot the Is and cross the Ts."

Asked if he expected any major disagreements with the chief executives, the MP for Dumbarton said: "I would hope not. They’ve already written to me saying they’re moving forward on our agenda." McFall added that he has received written submissions from each of the five lenders in the past week, offering various proposals to make their charges clearer.

These include the announcement last week by the Association for Payment Clearing Services, a trade body for credit card lenders, that it will include "consumer boxes" on all marketing material from March 2004. The boxes will spell out all the charges that can be applied to any given credit card.

A spokesman for HBOS said yesterday that the bank will present a range of initiatives on Thursday, "which we hope the committee will welcome".

He added: "We’re going a big step further [than the consumer boxes] by placing a mini- summary box of charges on all our monthly statements for next year. We’ve moved heaven and earth to make sure we’ve addressed the issues of substance in the committee’s [criticism of] credit card lenders."

A spokeswoman for RBS said it would be inappropriate for the bank to comment on the matter until the committee had completed its investigation.

McFall’s committee has previously accused the credit card industry of "remarkable complacency" and suggested the managements "needed their hands banging together".

It has also claimed that the industry is using "APRs" as a smokescreen for hidden charges. "We’ve exposed the limitations that have applied in the past," McFall said yesterday.

The Office of Fair Trading, meanwhile, has launched an inquiry into the interest rates charged on store credit cards. Consumer groups have also called for loan sharks, who charge APRs up to 1,500 per cent, to be more heavily regulated.