Regulators and lawmakers in the United Kingdom are likely to establish credit card rules similar to those recently signed into law in the United States, according to an analyst.
The Credit Card Accountability, Responsibility and Accountability Act, most of which takes effect early next year, requires issuers to give cardholders 45 days' notice of interest rate changes, prohibits double-cycle billing and mandates other measures designed to increase card-policy transparency and to keep customer costs low.
Matt Simester, a director at Auriemma Consulting Group in London, said the United Kingdom typically adopts consumer lending laws that originate in the United States, often about one to three years later.
However, the ongoing recession in the United Kingdom and the credit crisis, coupled with consumer sentiment that has turned harshly against lenders, likely will result in a Card Act-type law in the country by the end of 2010, Simester said.
"All the same [credit card] issues apply, broadly speaking, to the U.K. market," he said. "The 'X factor' in all this is a new government," which could occur as a result of the upcoming general elections scheduled for next year.
Voters could replace the ruling Labour Party with the conservative Tory Party.
The passing of the Card Act, combined with similar pressures in other countries, has led U.K. issuers to consider introducing annual fees and other tactics to increase revenue. Introductory offers on credit cards in the United Kingdom also could disappear, Simester said.
He also said that if the United Kingdom revamps its credit card laws, low-income consumers there could end up increasing their use of payday lending services.