Credit card companies to visit number 10

Posted in 'Credit Crunch' by Richard Catlin

19 November 2008

Gordon Brown is set to invite the UK’s biggest credit card providers to Downing Street in a bid to encourage more responsible lending and establish better protection for borrowers through the personal banking code of practice.

The move comes in the wake of many lenders actually increasing the APR on their loans and cards, despite the current financial turmoil.

The PM and the Department for Business have said that they will be working closely with lenders to try and establish tougher guidelines on how banks should help consumers who are experiencing difficulty with existing debts.

The ‘voluntary’ Banking Code was revised earlier this year - before the true extent of the banking crisis became apparent - aimed at making the obligations of lenders clearer. This revision stated that lenders should act “sympathetically and responsibly”, and also work closer with organisations such as the Citizens Advice Bureau.

This new proposal will seek to develop voluntary codes further and restore some faith in the UK lending system.

Typical APR’s on credit cards have jumped almost half a percentage point in the last six months, despite cuts to the Bank of England base rate. Despite this, the signs are promising that credit card providers are working hard to improve their customer service levels.

In our 2008 Banking and Credit Card survey, American Express were voted top of the pile, with Tesco and Virgin not far behind. With Amex currently offering by far the best cashback deal – 5% for the first 3 months - and Virgin a generous 0% on balance transfers for 16 months, these cards help demonstrate that there are still great deals to be found.

Even credit cards aimed at people with adverse credit ratings such as Vanquis and Capital One Classic – which have a higher than average APR - fared quite well in terms of customer service.

Whether getting credit card providers to visit ‘No. 10’ will help to promote even better lending policies remains to be seen, but we’ll be monitoring the situation closely, and will announce any news as soon as we hear about it.