Store cards 'scam' probe

An inquiry into 'rip-off' store cards has been ordered by MPs who fear shoppers are being saddled with billions of pounds in debt.

Seventy per cent of cards for stores including Laura Ashley, Bhs, Debenhams and Mothercare are provided by one bank, which charges annual interest rates of up to 30 per cent.

US-based GE Capital has not changed its rates since April 1999 - even though the Bank of England has halved its base rate in that time from seven to 3.5 per cent.

The Office of Fair Trading was told to act yesterday by the Commons Treasury Select Committee after hearing that Britons owe £2.5billion on store cards.

'We will be looking at competition issues and that will include GE Capital's position in the market,' said an OFT spokesman. 'We will also be looking at consumer regulatory issues, such as selling practices.'

The OFT has already forced credit card companies to change the way they advertise interest rates.

The latest inquiry, dubbed a 'fact-finding' mission, could lead to a formal investigation, with any bank found in breach of the Competition Act fined.

The Consumers' Association said: 'Store cards charge some of the highest interest rates there are. They are sold by staff who are not properly trained and some shops do not allow customers to take the terms and conditions home to study them properly.'