Minister blasts credit card firms

A GOVERNMENT minister today condemned the 'outrageous' penalty charges levied on credit cards. Consumer Minister Gerry Sutcliffe also warned the major credit card companies he planned to call them in for an emergency summit to find ways to clean up the market before legislation next year.

A White Paper next month will outline new regulations. Sutcliffe told the Treasury Select Committee that bombarding borrowers with unsolicited card offers was irresponsible.

He said: 'The charges are too great and...the industry has to explain why there are these levies and how they accumulate to make the situation worse.'

His comments - the strongest warning yet to the industry - came after the committee attacked the Government's 'dismal failure' to act on rip-off cards.

Ministers were accused of 'hopeless' complacency in letting six years pass since they were first warned about the scale of Britain's spiralling debts crisis.

The claims came from MPs on the all-party Treasury Select Committee, which has been investigating the booming credit card market.

The MPs said they were appalled to learn that there would be no new laws to protect the consumer until next October at the earliest.

Committee chairman John McFall accused the Department of Trade and Industry of moving at an 'elephantine' pace since the warning by the Office of Fair Trading in 1998. At the time ministers decided new legislation was not needed.

Sutcliffe said the need for consultation meant that October was the earliest possible date for new regulation. The banking industry had demanded an even slower timetable, he added.

The MPs' inquiry is expected to result next year in a damning report on the industry, the Government and the OFT. One member, Labour MP Angela Eagle, said: 'Our inquiry so far has found that the credit card market is full of sharp practice, rip-off interest rates, huge penalty charges and grossly misleading advertising.'

Last month the same committee heard from Barclays chief executive Matt Barrett that he would not borrow on a Barclaycard because it was 'too expensive'.

The latest attacks come amid mounting Government concern about the debt levels of British consumers, ahead of Thursday's expected rise in interest rates.