MPs to grill credit card bosses
BANK bosses face tough questioning in the next two weeks over allegations of delays in giving credit card customers a better deal.
The chief executives of Lloyds TSB and HBOS will appear on Tuesday in front of a powerful Parliamentary committee. The heads of Royal Bank of Scotland, Barclays and HSBC's UK business will take their turn a week later.
A year ago, the committee gave executives a rough ride for overcharging, reckless lending and not being clear on rates for credit cards. The lawmakers want to know why the banks have been slow to make requested changes.
'I should think it (the committee) will be suspicious,' said Labour MP Nigel Beard. The banks' inaction 'is symptomatic of an industry not attuned to thinking about things from the customer's point of view'.
Credit card spending rose to £120bn last year from £30bn in 1993, according to the Bank of England. The amount owed on cards rose to £52bn from £10bn.
At the committee's request, lenders have agreed to have a 'summary box' in promotions that lists charges and key conditions, but the boxes are not clear enough, and the banks 'have each been producing what they think is the right answer', Beard said.
The lawmakers also want banks to use a single method to calculate the annual percentage rate and to adjust penalty charges to levels that reflect the cost to the lender.
At last year's session, Matt Barrett, then chief executive of Britain's biggest credit card lender Barclays, was accused by a committee member of 'barefaced cynicism' when he said he did not borrow on credit cards because they were too expensive.
Barrett is now chairman of Barclays, and the MPs will face his replacement, John Varley. The committee will also get its first taste of Michael Geoghegan, the recently installed head of HSBC UK.
HSBC, the world's third biggest bank, is expanding in UK credit cards.
Lloyds TSB's Eric Daniels and HBOS's James Crosby will be joined by Fergus Brownlee, executive vice-president for Europe of US lender Capital One, on Tuesday. Varley and Geoghegan line up with RBS's Sir Fred Goodwin and Shane Flynn, chairman of MBNA Europe, at the second session.
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