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Credit card charges: Consumer credit market regulation 'not going far enough'

While the National Audit Office (NAO) has found that regulation of the consumer credit market is bringing benefits to consumers, it is not delivering value for money because dodgy trading practices are continuing to operate.

The NAO has said that the Office of Fair Trading (OFT) delivered £8.60 of savings to consumers for every £1 it spent enforcing regulations in 2010-11. Yet, during the same period, consumers lost £450 million as a result of problems that regulations did not address.

However, consumers often did not help themselves, with the OFT estimating that consumers could have saved up to £120 million on things like credit card charges had they looked for the best deal in the market.

Part of the problem is that the OFT can only act when it receives information notifying it of non-compliant behaviour from a finance firm. It does not monitor companies on a day-to-day basis. This means that someone has had to have lost out before any action can be taken.

"Good value for money in consumer credit regulation means minimising avoidable harm, and doing so cost-effectively," said Amyas Morse, head of the NAO.

"The OFT has achieved a good return for a small outlay, but has not been able to tackle the full extent of harm to consumers in credit markets."

He added that it could do with more resources in order to be able to regulate properly.

Amir Hussain
Amir specialises in personal loans, consumer debt and debt management.ADNFCR-2776-ID-801509418-ADNFCR

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