Page 5 - The UK Cards Association Annual Report 2012

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When I became Chair of The UK Cards Association in
September 2009
the UK card industry was facing major
economic and political uncertainty in the wake of worsening
economic conditions and the prospect of a change in Government.
The industry response was to improve its performance in terms
of explaining better to Government, stakeholders and consumers
how it operates and why it operates in the way that it does, and
accepting and instigating change where change was needed.
This new approach was based on three key
principles that now underpin the entirety of the
work of the Association:
• consistently putting the customer at the
centre of the industry’s thinking, and
never being in denial where something
the industry is doing is inappropriate;
• justifying what the industry does, or
substantiating the case for change, on
the basis of robust evidence rather than
anecdote; and
• being proactive rather than waiting for
‘outside’ pressures to mount.
Relationship with Government
2011 continued to build upon the success of
the 2010 Credit & Store Card Review, the last
Government’s major review of core card
industry practices, where the industry set a
new benchmark for consultation responses,
providing a comprehensive, evidence-based
response. This was vital in reaching a balanced
set of outcomes on the key issues raised around
the allocation of payments; the level at which
minimum payments are set; the way in which
credit limits are managed; and the way in
which interest rate changes are applied that
protected the interests of both consumers and
industry. This resulted in improvements to
industry practice that came into effect at the
beginning of 2011, including an alteration
to the order in which payments are allocated;
the introduction of a new minimum
payment calculation for new accounts; new
communications for consumers making
successive numbers of minimum payments
(where this may not be in their best interests
to do so); and additional options when their
interest rate changes. Introducing these
adjustments so quickly across the entire
industry was a major achievement for our
members, who rose to the considerable
challenge. All these amendments have made
their way into the new version of the Lending
Code launched in March 2011.
This work, the outcomes, and the openness
that characterised it, proved vital in making
the industry’s case and raising the Association’s
credibility among Government ministers and
With a change of Government, the political
agenda in 2011 moved on to consider the
case for capping credit card interest rates and
the restructuring of the consumer credit
regulatory regime through the creation of the
Financial Conduct Authority. Once again, the
Association rose to the challenge, providing
firm evidence of the likely impacts of possible
changes such that, in November 2011, the
Government announced that it would not be
pursuing its manifesto commitment to cap
credit card interest rates.
Fraud Prevention
Another traditional core area of work for the
Association is fraud prevention where the
figures speak for themselves. Total industry
fraud losses on UK cards continue to decline
from their peak of £610 million in 2008 to
£365 million in 2010, the lowest annual
total for a decade. Full year figures for 2011
are not yet available but the downward trend
has continued. This success is a result of the
banking industry’s continued investment in
fraud prevention initiatives including the
Dedicated Cheque & Plastic Crime Unit
(DCPCU), a specialist police unit sponsored
by the industry, the Financial Fraud Bureau
(the payment industry’s intelligence unit)
and, in conjunction with the wider fraud
community, the industry’s Fraud Intelligence
Sharing System (FISS) that aids the detection,
deterrence and prosecution of fraudsters.
Further to this, the industry has sought
to increase customer awareness, for
example, of online security through the
‘BeCardSmart’ campaign and delivering, at
member level, increasingly sophisticated
fraud detection systems.