John Glen is Economic Secretary to the Treasury, and is MP for Salisbury.
I am delighted that as the new Economic Secretary to the Treasury and City Minister, one of our first announcements is a ban on credit and debit card surcharges that comes into force today. The latest figures indicate that surcharging cost consumers £166 million in the UK in 2015. But from today there will be no sneaky last minute fees when making payments online or anywhere.
For far too long, customers have been the victim of stealth fees which penalise people simply for their favoured method of payment. As Conservatives, we need to be doing all we can to demonstrate we are on the side of hardworking consumers.
As a Party, we will of course always be strong supporters of dynamic, private enterprise that is not choked by over-regulation. But that does not mean we look the other way when companies create an opaque environment for their customers with hidden charges and penalties for the use of specific credit or debit cards. It is not always possible for people to know at the time whether the charges that are passed on to them are the genuine costs that are being imposed on firms by banks and credit card companies.
The new ban that comes into force today will create a fairer purchasing environment in two key ways. Firstly, consumers will not have hidden payment charges that suddenly appear when they checkout. And secondly, people will not be penalised for wanting to pay in a particular way.
The ban on surcharging will be enforced by Trading Standards, who are empowered with the authority to take civil enforcement action against any merchants who choose to flout the new regulations. Customers who fall victim to surcharging from today will be also be able to receive a refund or take legal action to recover the amount from a company that ignores the ban.
The prohibition on surcharging comes in across the EU from today and covers every purchase where both the retailer and consumer are located inside the European Economic Area. But we are not just copying and pasting the bare regulatory minimum from Brussels: we are going well beyond what is legally required. We want to send a clear message that the Government takes the interests of consumers very seriously. So we will be banning surcharging not just on mainstream credit and debit cards, but on payment methods including American Express, Diners and JCB cards, and other payment systems such as PayPal.
I’m not naïve to think that all retailers will absorb this cost; there will be some that pass it on in their headline price. But that’s their decision as a business, the crucial point here is that consumers will be fully informed of how much something will cost before they get to the very end of the checkout process. This also should help people more accurately compare across retailers and give confidence that they are purchasing at a competitive price.
My new role as City Minister will obviously be heavily dominated by Brexit and the need to secure the best possible deal for our world-leading banking and financial services sectors. I’m very excited about getting stuck into the detail of the challenges and opportunities in regards to this and meeting the industry’s leaders. But the ban on surcharging right at the start of my tenure is a useful reminder that we need to be building a conservatism that goes into bat for consumers across the country, as well as our finest financial institutions in the Square Mile.