|
|
Credit card cheques and Summary Box - PUBLISHED 1 July 2011Table of contents 1 Introduction...............................................................................................................................................................1 2 Credit Card Cheques: Guidelines for Issuers .........................................................................................2 2.1 Introduction....................................................................................................................................................2 2.2 Guidelines for issuance..................................................................................................................................2 2.3 Guidelines for information provision ...............................................................................................................2 2.4 Guidelines on charges ............................................................................................................3 2.5 Guidelines on other issues ..........................................................................................................3 2.6 Effective date..................................................................................................................................................3 3 Credit Card Cheques Summary Box Example ... .. ...4 1. Introduction Card issuers recognise the importance of providing clear information about this niche product and ensuring they are issued responsibly. A credit card cheque allows customers to draw funds against an existing credit card account. They provide an alternative way to pay, in circumstances where credit cards are not accepted. For example to pay an emergency supplier that doesn't have card accepting facilities, like a plumber, or they are often used to transfer balances between cards at low promotional rates. Credit card cheques can only be written within the customer's agreed credit limit and do not grant new lines of credit. The industry takes every step to ensure that credit card cheques are issued responsibly and that information about them is presented to customers in a clear and transparent manner. Under the guidelines set out below, credit card cheque issuers must ensure that cheques are not sent to all cardholders and that an issuer will check a cardholder's creditworthiness and ability to repay before cheques are issued. Any customer sent a credit card cheque will receive information advising them how they work and what charges are involved. The guidelines were incorporated into the Lending Code. 2. Credit Card Cheques: Guidelines for Issuers 2.1. Introduction Card Issuers recognise the importance of ensuring that customers have clear and concise information on their products and services. Credit card cheques are no exception. The UK Cards Association has developed the following set of Guidelines for credit card cheque issuers. The Guidelines set out best practice to encourage consistency across the industry. They are not legally binding. Any failure to follow them does not give rise to any right of action. 2.2. Guidelines for issuance Card issuers should take an active approach to ensure responsible lending. Before credit card cheques are sent out to a customer the issuer will always assess the customer's ability to repay. In the case of personal customers, the following applies: Credit card cheques may be provided only to a customer who has asked for them. Cheques may be provided only on a single occasion in respect of each request that is made. The number of cheques provided in respect of a request must not exceed three (or, if less, the number requested).2.3 Guidelines for information provision Card issuers will give customers the information they require to make informed decisions. Information should be clear, concise, consistent and consumer friendly. The format and presentation of such information, which will be prominent and accessible for the consumer, should conform to the agreed credit card cheque summary box template. 2.4 Guidelines on charges Issuers should notify customers of the interest rate the cheques will attract (recognising that the rate can only be correct atthe time of cheque mailing and is therefore indicative) and from when interest will accrue. The duration of any promotional rates should be made clear. Issuers should give the customer information on all charges (ie other than interest) and the circumstances under whichthese charges will be applied to the account. This should include any charges relating to unpaid cheques. Representing. Informing. Advancing Page 32. Credit Card Cheques: Guidelines for Issuers 2.5 Guidelines on other issues Issuers will not offer customers specific inducements, such as prize draws, to use credit card cheques. This does not applyto promotional interest rates, such as lower APRs. Issuers should advise customers of the level of protection on purchases made with credit card cheques and highlight howthis differs to purchases made with their credit card. For instance, if credit card cheques are treated as 'cash' transactions, they will not benefit from protection provided on credit card purchases under Section 75 of Consumer Credit Act Issuers should provide the customer with a clear explanation of any exclusions, exemptions or limitations that apply tocredit card cheques eg if they are unable to be used to pay off another account with that organisation; any geographical limitations; or any limitations on the ability to countermand etc. 2.6 Effective date These best practice guidelines are effective from January 2011. Representing. Informing. Advancing Page 43. Credit Card Cheque Summary Box Example Summary Box Credit Card Cheque The information contained in this table summarises key features associated with the use of credit card cheques and is not intended to replace any Terms and Conditions. ** Where promotional rates are relevant, the text in the box must clarify the extent to which the rate applies eg whether it is for the life of the credit card cheque balance or a specified period from when the cheque is written. For general Terms and Conditions of your credit card agreement, refer to XXXXXXXXX or check the Summary Box on the reverse of your statement. Example Promotional rate ** X% per annum before DD/MM/YY; or promotional rate applies before DD/MM/YY; current rates available on monthly statement. Standard interest rate X% per annum after DD/MM/YY; and/or current rates available on monthly statement. Interest period Interest will be charged on a daily basis from the date the cheque is debited to your account and will continue to accrue until full payment is received. Allocation of payments Payments we receive are applied first towards the most expensive debt. Charges Cheques are subject to a fee of X% (minimum amount £X). If a cheque is returned unpaid for exceeding the credit limit, the charge will be £X. Amount available Credit card cheques will be treated as cash advances. The cash advance limit is 'X% of your credit limit. Stopping a cheque You can/cannot stop a credit card cheque. The charge for stopping a cheque is £X. Level of protection Cheques do not offer the same level of protection as credit cards; you will not be covered in the event that the transaction is disputed. Payment of cheques We may pay cheques up to X months/years from the date of issuance. Restrictions Cheques cannot be used for the following purposes: (eg balance transfers)
|
|
|
|