SNP Euro MP calls on British government to “name and shame” rip-off credit companies

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By a Newsnet reporter

Alyn Smith, SNP member of the European Parliament, has called on the UK government to “name and shame” credit companies which supply misleading information to potential customers.  According to a survey of credit websites from the 27 EU member states plus Iceland and Norway, a shocking 70% provided misleading information which could result in borrowers having to repay considerably more than they were led to believe.

The study included 47 credit websites based in the UK, of which 38 were found to be in breach of European consumer law.  However the UK government has refused to identify the companies responsible, and would not confirm whether any belong to state-owned banks or banks which had received taxpayers’ money in bailouts.

The main problems identified in the Europe-wide study lay in advertising failing to include standard information, key information such as interest rates on repayments being omitted from the sites, and the misleading presentation of costs.  46% of websites checked were lacking information required under the European Consumer Credit Directive.

A fifth of all the websites checked contained more seriously misleading presentations of costs. This might include the credit payment being displayed in such a way to dupe the consumer, for example including hidden insurance charges as part of the overall cost without making any effort to explain this.

The national enforcement authorities in each EU member state will now contact the financial institutions and credit intermediaries involved about the suspected irregularities and ask them to explain themselves or to take corrective action.

The online credit business is a rapidly growing sector of the financial services industry.  The European Consumers’ organisation BEUC said that member states must step up their supervision of websites offering credit.  The group’s director-general, Monique Goyens, said:

“Laws to protect consumers do not have any effect when they are not properly implemented.  Unfortunately, BEUC findings clearly show an intolerable lack of financial supervision in too many member states.”

Alyn Smith MEP added:

“The assessment found that that two-thirds of 242 banks and another 2320 companies involved in credit card services offering credit products – such as credit cards, personal loans or car loans – either gave deceptive information, omit essential information or are misleading about costs, with the most common violation being the failure to disclose the annual percentage rate (APR) on credit and whether interest rates are fixed or variable.

“It’s worrying, though sadly not surprising that such a vast number of these companies are falling short of standards required by European law.  I am well aware of these sort of problems with credit companies having campaigned on this issue for some time.

“This study included investigation into 47 UK credit websites- 38 of which failed to comply to EU consumer law.  The Office of Fair Trading (OFT) has refused to disclose details of the 47 websites/companies investigated, and declined to confirm whether any of the 47 belonged to state-owned banks.

“I am now calling on the UK Government to name and shame these companies which are guilty of targeting the financially vulnerable.  Times are tough and when people often sign up to these companies as an act of desperation and often end up with deeper debt and more financial difficulties.  It is shameful that these companies seek to exploit the poorest, most vulnerable in society more than they already have.

“The UK Government has consistently failed to regulate the financial markets and have done absolutely nothing to reform the system despite an almost global agreement that change must happen.  Their ignorance is now leading to misery for thousands of Scots who are turning to these companies as a last resort to make ends meet.”