Credit Cards (Hansard, 13 November 1972)

§ 17. Mr. David Stoddart
asked the Secretary of State for Trade and Industry if he will introduce legislation providing that the users of bank credit cards must pay in full the retailers' costs of administering the service.

§ Sir G. Howe
No, Sir.

§ Mr. Stoddart
Is the Minister aware that that is a most unsatisfactory and very unhelpful answer? Retailers are charged between 3 per cent. and 5 per cent. for the service given to the holders of bank credit cards. Does he realise 22 that the charges are spread over consumers generally, which affects lower-paid workers and working people in general who have to bear them? They are the people who are always wanting and always waiting because they have no access to bank credit cards. Does the right hon. and learned Gentleman agree that it is not so much the workers and trade unions who are causing the inflationary pressures but the banks, which are demanding 18 per cent. for lending money? Will he tell these corporate Shylocks to moderate their demands on society?

§ Sir G. Howe
I cannot accept the general proposition of the hon. Gentleman that the provision of a credit card service must involve increased costs in the way he describes. Some retailers may well find that the costs of handling credit card trade are offset by additional custom, by the elimination of the risk of bad debts, by a reduction in the amount of cash handled and the security thereby involved, and by discontinuing other credit arrangements which carry administrative costs. I am not satisfied that the matter can be approached in the blanket way suggested by the hon. Gentleman.

§ 19. Mrs. Knight
asked the Secretary of State for Trade and Industry if he will seek to place restrictions on the unsolicited issue of credit cards.

§ Sir G. Howe
I am considering doing so as part of proposed consumer credit legislation.

§ Mrs. Knight
Will my right hon. and learned Friend accept that that is an entirely satisfactory answer and will he, when pondering over this matter, consider that there are great dangers relating to this practice, partly over the possibility of fraud and partly in the positive encouragement to shopping on extended credit? Will he suggest to the banks that it might be wise to invite customers to show they want these credit cards rather than send the cards out to customers who have not asked for the service?

§ Sir G. Howe
On the second point in relation to the unsolicited issue of credit cards, to which the Question is directed, and to which my answer is directed, I entirely agree as to the nature of some dangers inherent in the mass mailing of credit cards, which were pointed to by the 23 Crowther Committee, and that is why the matter is now under consideration.

§ Mr. William Price
Is not the Minister aware that the public appear to be becoming more and more subject to inertia selling generally and that everything from sex literature to Harry Wheatcroft roses now comes through my postbox? What has happened to the inertia selling Act? If it is not working, can we have amendments to it?

§ Sir G. Howe
The Unsolicited Goods and Services Act has been on the Statute Book for only a short time and it is early yet to judge how effective it will be. Plainly, the question of unsolicited credit extends beyond the subject of credit cards and all the matters in this field are under consideration.