Competition Commission report on store card industry

The Competition Commission has called for the store card industry to be more transparent when it comes to the provision of credit and the payment options on offer to the UK’s estimated 14 million store card account holders.

In conjunction with retailers and store card companies, the commission has made key recommendations that will improve the level of service on offer to card holders. A key ruling in the report states that store card companies must now provide customers with the option to pay amounts outstanding on their account by Direct Debit.

Welcoming the Competition Commission’s recommendations, Michael Chambers, Managing Director of Bacs - the industry body behind Direct Debit said, “In 2004, following a parliamentary Treasury Select Committee enquiry, the credit card industry agreed to introduce clearer elements to customer billing statements. The Commission's latest recommendations will bring the store card market in line with the wider credit card industry – a move which we welcome.”

He continued, “Over half of the UK adult population has either a regular credit and/or store card commitment. Of these 26 million account holders, roughly a quarter use Direct Debit to guarantee regular payments on their accounts and avoid the risk of late payment fines. Direct Debit is a flexible payment tool which enables account holders to make either the minimum required payment or pay the full balance. 76% of consumers acknowledge Direct Debit can help make life easier. We are delighted that the store card industry also recognises its value and will be encouraging its wider adoption.”

The Competition Commission’s report also stipulates that store card companies must include a clearly identifiable section on monthly statements that tells consumers how to make payments on their store card using Direct Debit. They must also include a Direct Debit Instruction in initial application forms or with contractual information sent out in customer welcome packs.

In the case of application forms, store card providers must ensure that applicants have considered the possibility of paying by Direct Debit. The commission recommends the inclusion of a box on application forms that reads: "Do you want the option of paying amounts owing on your card by Direct Debit?" Potential new customers must provide a "yes" or "no" answer for the application process to continue.

For more information about Bacs and our services visit Bacs key facts.

Contact Bacs press office.


Back to 2006 press releases             Back to press releases