Date issued: 26 Sep 2003

NATIONWIDE IS FIRST TO PRODUCE NEW, AGREED CREDIT CARD TABLE
The Society calls for further steps to improve clarity

Nationwide Building Society will become the first financial services organisation in the UK to publish the new Summary Box* in all of its credit card information. The new table, which all credit card providers in the UK have agreed to produce next year, will be available in Nationwide’s point of sale material and on www.nationwide.co.uk on 1 October 2003.

The Society is delighted that the credit card industry has made a commitment to produce this uniform comparison table. It is a significant step forward for transparency in the credit card market, giving much needed clarity to consumers in the UK.

Nationwide launched its own Summary Box in October last year. Since then, the Society has been encouraging the industry to follow suit, and has received widespread support from consumer groups and MPs including the Treasury Select Committee and the Consumers’ Association. The Society believes industry wide adoption of this table will significantly improve clarity by:

• highlighting fees and charges which providers often hide in the small print of their leaflets, enabling consumers to avoid unnecessary costs and nasty surprises
• helping consumers to compare cards from different providers, allowing them to make a more informed choice

However, the Society believes that in order to provide true clarity for customers, there is still a great deal of work to be done. For example, Nationwide would like to see all credit card providers;

• publish examples of how much it would cost to clear a debt if the cardholder only made the minimum payment every month.** As the very people who consistently pay just the minimum balance are likely to be the least affluent, this may help to reduce some causes of being in too much debt.

• introduce a cost calculator. This would allow consumers to get an indication of the cost of using that provider’s credit card – Nationwide is already in the process of testing its own calculator.

• move towards a single method of APR calculation which has been approved by the OFT

Nationwide will be working with the industry to achieve this.

Nationwide’s chief executive, Philip Williamson, said: "We produced our first table back in October last year and since then have been working with the industry to get a uniform box agreed. I’m delighted that Nationwide has been able to play its part in improving clarity for credit card users. Consumers will be the real winners and we are pleased we can release our new table from 1 October. We hope consumers do not have to wait much longer for the rest of the industry to follow suit.

"The industry must continue to work towards a single APR calculation and double its efforts to introduce both cost calculators and minimum repayment examples so consumers can make properly informed decisions. We are committed to achieving a fair and transparent market for everyone who holds a credit card in the UK."

John McFall, Chairman of the Treasury Select Committee, said: "This is an early start for Nationwide in response to the Committee’s call to industry to improve clarity. I look forward to other providers following suit."

Notes to editors

Background

• As part of its inquiry into Banking, Consumers and Small Business in 2001-02, the Treasury Select Committee contacted a professional mathematician to attempt to unravel the 'calculus' behind credit card payments. The Committee concluded that "even the banks appeared to have difficulty understanding this aspect of competitors' products", and urged "all banks to review their promotional material with a view to achieving genuine transparency."
• Committee Chairman, John McFall MP said: "We believe that customers should not have to engage in 'assiduous research' to understand financial products" and said that the Committee would return to look more closely at credit card transparency. This inquiry is now underway, and Nationwide gave oral evidence to the Committee on 9 July 2003.
• In October 2002, Nationwide created a table which provides consumers with information enabling them to compare cards and their features on a like for like basis, in addition to APR. The 'Consumer Box' is based on the Schumer Box which credit card providers in the USA are legally required to publish in all marketing material.
• John McFall welcomed Nationwide's Consumer Box, saying: "The Committee concluded that the lack of transparency in the credit and charge card industry acts against consumers’ interests. It recommended that credit and charge card companies publish, with equal prominence, details of all the factors that make up the actual cost of credit. The Nationwide’s ‘Consumer Box’ is indeed a welcome first step towards improving clarity for consumers in this complex and competitive market area."
• A number of MPs have spoken about the merits of a credit card comparative table, most notably Barry Gardiner's adjournment debate on the credit card industry in February 2003.

*Summary Box PDF is attached BANKING

**E.g, Minimum repayment example - assuming a fictitious credit card charge of 17% with a 6 month introductory rate of 0% and a minimum repayment of 3% or £5. Assuming the customer spends £1,000 and pays the minimum each month, the balance would take 146 months to clear at a total cost of around £1600.00