press release

Press Release - 05/10/05

SAVINGS PROPOSALS TO PROTECT THE POOR FROM PREDATORY LOAN SHARKS DOOMED TO FAILURE UNLESS STATUTORY INTEREST RATE CONTROLS ON CREDIT ARE INTRODUCED, WARNS MONEYNET

* and the sharks are not just confined to the back-street lenders – High Street banks and retailers need to address rip off rates

NEW Government proposals to protect vulnerable families from the clutches of loan sharks are ‘hopelessly misguided,’ according to online data financial comparison site Moneynet.co.uk.

Plans by the Government announced last week to encourage the poorer off to save by raising the thresholds under which savings would attract tax – designed to help discourage the less well off to resort to extortionate loan shark interest rates – will not even begin to work until there is statutory legislation in place to control rates charged for credit, warned Moneynet chief executive Richard Brown.

“We do not believe that these initiatives to encourage savings will help the poorest in the community to avoid the sharks,” he said.

“The most vulnerable families do not have spare cash to save and will unfortunately always be in danger of falling prey to fringe lenders unless a system of statutory control is introduced.”

But Brown also reminded consumers that it is not just the grubby backstreet sharks charging unacceptably high rates.

“Too many of the major High Street names are levying rates more than twice those on offer from the most competitive lenders. The base rate is just 4.5 per cent – so what can the justification be for charging up to three times that amount for personal loans and other services?

“Store card charging structures also need to be radically reformed. The worst offenders are invariably some of the most prominent names on the High Street, and government watchdogs need to properly show their teeth and crack down on these rip off rates – otherwise stores like Dorothy Perkins, Dixons and BHS will continue to make enormous profits from rates sometimes in excess of 30 per cent,” added Brown.

STORE CARD RATES

	Typical APR payment by direct debit	Typical APR payment by other methods	Interest Free
Toys R Us Edge	29.90%	29.90%	56 Days
Harrods	28.90%	28.90%	54 Days
Country Casuals	28.70%	30.70%	56 Days
Dorothy Perkins	28%	29.90%	56 Days

FIVE OF THE BEST

	Typical APR	Monthly Payment	Total Repaid	Rate Type	Early Redemption Penalty
Moneyback Bank	5.50%	£150.68	£5,424.48	Fixed	1 Month
Northern Rock	5.60%	£150.89	£5,432.04	Fixed	None
Abbey	5.70%	£151.11	£5,439.96	Fixed	28 Days
Cahoot	5.80%	£151.32	£5,447.52	Fixed	1 Month
Northern Bank	5.90%	£151.54	£5,455.44	Fixed	Up to 58 Days

FIVE OF THE WORST

	Typical APR	Monthly Payment	Total Repaid	Rate Type	Early Redemption Penalty
Capital One	13.90%	£168.68	£6,072.48	Fixed	Up to 58 Days
HSBC	13.90%	£168.68	£6,072.48	Fixed	2 Months
Black Horse	11.90%	£164.40	£5,918.40	Fixed	2 Months
Goldfish	9.90%	£160.11	£5,763.96	Fixed	None
Marks & Spencer Money	9.20%	£158.61	£5,709.96	Fixed	1 Month

PRESS ENQUIRIES

Richard Brown, Chief Executive, 0208 313 9030

David Andrews/Cathy Tully, David Andrews Media Ltd 07941 255855 / 01273 774109 / 07747196854

Consumer enquiries: info@moneynet.co.uk / www.moneynet.co.uk

Moneynet.co.uk is the UK's longest established online personal finance research and data analyst company. The company offers consumers a choice of thousands of low cost financial services products. From mortgages, personal loans to motor, home and medical insurance, credit cards, savings accounts and best buy fixed rate products, Moneynet is one of the most comprehensive online services of its kind in the UK. Founded by chief executive Richard Brown, the Moneynet brand is destined to become one of the UK's major players in consumer finance products.

A DAVID ANDREWS MEDIA LTD - RELEASE FEBRUARY 2005