Stores are to be banned from offering free gifts and instant discounts to entice customers to take out their store cards. This move follows complaints from shoppers that finance companies and retailers are using hard sell tactics to tempt consumers to spend money that they simply don’t have.
This crackdown also comes in the wake of mounting concerns regarding the level of the UK’s personal debt, which currently stands at £1.451 trillion. Shoppers are now to have a 7 day cooling off period after they have agreed to sign up for a store card, under the new proposals that have been announced by the British Retail Consortium and ministers.
Direct commission is also to be banned to stop pushy sales staff trying to talk customers into taking on a card they neither want nor can afford., and stores are also going to have fully reveal the hidden costs of using the cards too.
According to Mervyn King, the Governor of the Bank of England, families are currently facing the biggest financial squeeze in living memory. As a direct result of this, shoppers are more vulnerable than ever to the likes of vouchers, free gifts and tempting discounts and sign up for store cards. There are also concerns that both the stores and their financial partners are failing to make the checks necessary to ensure that the repayments can be met.
Which? the consumer group, has in the past highlighted how it was possible for a debt ridden graduate with a yearly income of only £1000, to get a store card within 2 days that carried a credit limit of £2750.
Mark Hoban is the Financial secretary to the Treasury and he says that the public has told them that they are being tempted into taking out store cards by being offered discounts when they get to the till and they have listened to these concerns and are working with the industry to develop strong measures in a package as a response to these worries.