Page 15 - The UK Cards Association Annual Report 2012

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Legal, Regulatory and Policy Matters
Legal, regulatory and industry policy matters
have become a cornerstone of the Association’s
work in recent years as what the industry
does and how it does it has been thrust into
the spotlight by increasing external interest
and detailed scrutiny. In response the industry
has delivered a raft of changes, always seeking
to ensure an appropriate balance between
the interests of customers and the interests
of the industry, whilst avoiding inadvertent
The beginning of 2011 saw the introduction of
the changes agreed with Government as a
result of the 2010 Credit & Store Card Review
(see box below), with the industry delivering
against an extremely challenging deadline set
by Government. By the end of 2011 we will
see the commencement of the rollout of Annual
Credit Card Statements with most members up
and running during the first quarter of 2012.
Work in this area is varied and wide-ranging,
from issues central to the core of the card
business – whether related to payments or to
credit – to those no less important that touch at
the periphery of the industry. During 2011 The
UK Cards Association has been closely involved
in activities in the following broad areas:
Making Changes to Industry
Policies and Practices
2011 has seen a continuation in improvements
for consumers with industry policies and
procedures being developed to benefit
consumers and clarify expectations. During
2011 The UK Cards Association has been
instrumental in:
• Revising and updating the Lending Code,
with a new version coming into force in
March 2011;
• Publishing useful documents such as the
summary of credit card changes
implemented at the beginning of 2011
(Good News for Credit Card Users published
in conjunction with Citizens Advice), a guide
to credit card re-pricing (crystal-marked by
the Plain English Campaign); a ‘Your rights
– Credit Cards: A Consumer Guide’ leaflet;
and various advice guides;
• Tying up remaining actions from the 2010
Credit & Store Card Review, including the
specification and implementation of the
Annual Credit Card Statement;
• Working with debit card issuers to define
the proposed Account Switching Service
from 2013;
• Expanding the suite of industry best practice
guidelines in areas such as pricing,
unauthorised transactions, and increases
to minimum payments;
• Co-ordinating industry efforts to improve the
customer experience relating to recurring
transactions on credit cards;
• Investigating the possibility of developing a
complement to the APR for credit cards with
noted academics.
Summary of key changes
introduced at the beginning of
2011 as a result of the 2010 Credit
& Store Card Review
• Consumers’ highest interest balances
will always be paid off first. Previously
most credit card companies allocated
payments to the lowest interest part of
the balance first;
• A new way to calculate the level of the
minimum payment for new credit card
accounts, where the minimum will cover
the interest, fees and charges, plus 1% of
the outstanding balance, ensuring that the
balance is always reducing;
• Consumers will have more control over
their credit limit. They will be notified in a
separate letter at least 30 days in advance
when their credit card company is
planning to increase the limit so that they
can decide whether or not to decline the
higher limit. It will also be easier for them
to opt-out of such increases altogether or
reduce their existing limit at any time;
• Consumers will be notified at least 30 days
in advance of any interest rate increase by
means of a separate communication. They
will also then have 60 days to decide to
decline the new rate whereupon the
account will be closed and they can pay off
their balance at the existing rate.
Consumers can also request a fact sheet
which explains why re-pricing happens,
what they can do to reduce the chances of
it happening, and their options when it
does occur;
• Consumers are able to set up regular
automated payments for any amount,
rather than just for the minimum payment
or the full balance;
• Consumers who regularly pay the minimum
payment (or close to it) will be proactively
contacted and provided with guidance on
the consequences of their current payment
choice and source of free debt advice.
Outstanding debt on credit cards
accounts for less than 4% of the total
amount borrowed by UK consumers.