New Government Reforms on Credit Cards

8th June 2010  

One of the leading UK websites that consumers rely on to compare credit cards deals, cardchoices.co.uk has learned that David Cameron’s new coalition Government is planning tough new legislation for the credit card industry on “unfair charges”. UK consumers have heard this before of course, but there is a new twist to the story.

Tighter regulations for credit card and store card issuers was on the election manifesto of all the major parties, and had been discussed by the previous Government. However, the financial meltdown and the nationalisation of many banks mean credit card companies are now faced with direct competition from Government controlled banks, as well as legislationary pressure to give consumers a far better deal.

The arrival of independent websites like cardchoices.co.uk which allow consumers to compare credit cards easily online also creates a more open market.

Marc Gander from Consumer Action Group, a strident campaigner on bank charges, gave a cautious ‘thumbs up’ to the Governments plans, but said announcements so far were short on detail.

Marc said “It [the government] doesn’t define ‘unfair’ or say what protections will be granted overall”.

In a shrewd move leading UK credit card issuer MBNA Bank has seen the writing on the wall and acted ahead of the legislation by changing the way customers payments are allocated to their accounts.

MBNA which has over 6 million UK customers has announced that from 1st September 2010 it will allocate incoming payments from customers towards paying off the highest interest charges on their accounts first. Customers should be notified of the changes formally any day.

In March this year, the credit card industry announced a series of gentle steps to improve the lot and the rights of customers in a bid to ward off harsher regulation when the Government finally gets round to looking more closely at the industry’s charges.


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