AN IMPARTIAL credit card comparison website is set to be launched by the UK's financial services watchdog.
The Financial Services Authority (FSA) is preparing to establish the new public service in an effort to improve consumer choice.
FSA officials said yesterday that they were taking the first steps toward setting up the site after the move was recom
mended by the Office of Fair Trading (OFT).
Last night the move – aimed at tackling the problem that 70 per cent of consumers do not shop around for the best card deals – was welcomed by the trade association that represents banks and building societies.
However, it prompted a warning from the largest commercial comparison site that the initiative could be anti-competitive.
The OFT's recommendation followed a "super-complaint" made by consumer group Which? last April about the different methods used by credit card companies to calculate interest repayments.
Which? put forward the idea that card issuers should all use a standard means of calculation.
But the OFT said its subsequent research found the problem was much wider than that because so few people fully consider their options before choosing a card.
As a result, many consumers could have been placing themselves at a financial disadvantage, the OFT found.
The credit card market has grown significantly from £17.9 billion in 2002, so the amount people lose out by not shopping around has spiralled.
A spokesman for the FSA said: "We will look into setting up a site in the second quarter of this year, subject to resources and funding. This would help customers shop around. We already offer a number of other comparison sites, including pensions, annuities, mortgages and savings."
Other recommendations from the OFT include: improving how information is presented in credit card issuers' summary boxes; standardising terminology in produce literature and consumer education on shopping around for the best deal.
John Fingleton, the OFT's chief executive, said: "No-one wants to throw money away, but consumers who don't shop around for credit cards are doing just that.
"It is essential that consumers are given the right tools to make comparisons between credit cards more easily."
Apacs, the UK trade association for payments – which represents banks and building societies which move money around the financial system – has given its support the OFT's recommendations.
Sandra Quinn, Apacs' director of communications, said: "We are backing the OFT in hoping that these proposals will spur customers on to make better decisions by building upon the work already undertaken by the industry to make credit card products more transparent."
But Moneysupermarket.com, the biggest commercial financial comparison site – with 50 per cent of the market – last night hit back, saying the move could raise competition issues.
Steve Willey, head of cards and payments at Moneysupermarket, said: "If this goes ahead, it could be deemed as anti-competitive. Why would the regulator provide something in competition with commercial companies?"
Willey added he would consider raising this with the Competition Commission, depending on how the site is presented by the FSA.
He admitted that Moneysupermarket.com could potentially lose customers to a FSA site, but believed they would return to a recognised brand.
The full article contains 536 words and appears in The Scotsman newspaper.
