Store Card Concerns & Probe

The Competition Commission has moved its probe into the UK store card market on by setting out its areas of concern and inviting comments. The commission areas of potential concern include the view that there may be to little competitive pressure on APRs and other card charges. It has also highlighted possible concerns about the competitiveness of the insurance services such as payment protection that are sold with store cards.

Commission chairman Professor Paul Geroski said:"After examining a huge amount of evidence in this inquiry to date, we think there are some areas of concern that we need to explore further and this document focuses on these as well as inviting views from all parties. "We are far from making up our minds, but we are concerned that there may be limited competitive pressure on APRs and other charges and that retailers and credit providers may benefit from the level of APRs to the detriment of consumers.

"Consumer behaviour may contribute to this because consumers appear insensitive to these charges. There may also be a lack of choice for consumers in relation to the insurance services sold with the cards. "There has been considerable activity in the 'upstream' market since we started this inquiry, with new entrants and contracts being renegotiated in favour of retailers but we need to consider whether this has translated into any beneficial effects for customers.

"We also need to consider further whether the nature of the store cards business is leading to outcomes such as excessive profits for providers and APRs being set at a similar level and not responding to changes in the base rate or credit cards' lower APRs." Retailers, card issuers and consumer groups are being asked to respond to by the end of January, with the commission planning a further round of hearings during February.