MPs to condemn store card rates

RETAILERS dubbed 'designer loan sharks' for charging interest rates close to 30% on their store cards face a grilling by MPs on the Treasury Select Committee.

Executives from Arcadia, House of Fraser and finance giant GE Capital, which runs both the Harrods and Debenhams cards, have been summoned by the committee, where they are expected to face allegations of charging excessive interest rates and using misleading sales techniques.

The store card issuers will be under even fiercer scrutiny after the Bank of England last week cut the base rate to its lowest level for 48 years.

Labour MP James Plaskitt, who is on the committee, said: 'With base rate cut to just 3.5%, how on earth can they justify store card interest rates, which are almost ten times that amount? I would describe these people as designer loan sharks.'

Harrods' store card charges shoppers 28.9%. The Debenhams card charges 29.9%.

Card operator GE Capital said it hoped the hearing would allow its executives to 'redress certain misplaced allegations that have been levied at store cards'.

The committee's meeting follows last week's hearing at which bosses of leading banks were accused by MPs of 'complacency' over the burden of debt faced by some households.

The MPs heard evidence from Barclaycard chief executive Gary Hoffman, Nationwide building society chief Philip Williamson and Chris Pearson, head of Apacs, the card payment clearing-service. Afterwards, John McFall, chairman of the committee, said he thought the industry 'needed their heads banged together'.

The bank chiefs agreed to come back to the committee in September with proposals for a standard system for calculating interest and to offer clarity in their charging terms so that consumers could easily compare cards.