Competition Commission publishes final report on store cards
The UK Competition Commission (CC) today published its final report on store cards, almost two years after the UK Office of Fair Trading (OFT) referred the case.
The CC has concluded that there are two relevant economic markets: an upstream market, where providers compete for retailers' store card contracts; and a downstream market for the supply of credit and insurance through store cards to retailers' customers. The upstream market was found to display no feature that prevents, restricts or distorts competition and that it is competitive.
In contrast, the downstream market was found to exhibit a combination of features which created an adverse effect on competition in that market. As a result, the CC felt that consumers were paying excessive prices for credit and had limited choice and transparency over the provision of insurance cover sold in association with store card services.
The CC has now set out four types of remedy. Store card providers must:
- where APRs are 25 per cent or above, warn cardholders on monthly statements that cheaper credit may be available elsewhere;
- give more and better information on all monthly statements;
- offer option to pay the balance of account by direct debit; and
- offer payment protection insurance separately from other elements of store card insurance.
These remedies are expected to come into force within 12 months.
Frontier (London) advised HSBC throughout the inquiry.
Versión para imprimir