M&S rapped over &More launch

Marks & Spencer​ has had a tough week. Just two days ago it reported weaker than expected sales growth for the latest quarter and yesterday it had its knuckles rapped over the high profile launch of its new credit card, &More.

The &More card was announced last month in a blaze of publicity by the chain, which said that it planned to upgrade all its current store card holders to the new system. This, in theory, is a benefit, as the new card not only offers a lower rate of interest than the store card (1.9 per cent APR compared to 18.9 per cent) but it is also a loyalty card, allowing shoppers the chance to earn points every time they use it.

But in practice, automatically changing the store card for a credit card contravenes the UK Consumer Credit Act, prompting the Office of Fair Trading to take action against the retailer.

Under the 1974 legislation, it is an offence to send a credit token to a consumer unless it has been requested in writing, but M&S claimed that this did not apply as it was not supplying a new credit token, simply replacing the card as a result of a variation to the existing store card agreement. The OFT's view, however, was that the company did not have the right to change one type of card into another in this way, and M&S has agreed to change the scheme.

All store card holders being sent the new &More card will now be told that, if they wish to keep their store card, they need take no action. If they wish to replace the store card with the new credit card, consumers must take positive action to activate it, thus ensuring that the regulations are fulfilled.

The OFT was also concerned about one of the standard terms in the new store card agreement. This, the OF said, would give M&S an unrestricted unilateral right to change the terms of the agreement - a term which the regulator considered to be legally unfair because it gave a "significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers"​.

While M&S did not agree that the OFT's view was correct, it has nonetheless agreed to amend the term to limit its applicability.

But despite these concerns, the OFT broadly welcomed the introduction of the new card. "There may be advantages to consumers in having the choice of replacing a store card by a credit card with a lower APR, as in this case,"​ the OFT said in a statement. It also added that M&S had taken care to make a proper credit assessment of individual cardholders being invited to change to the &More credit card and on deciding credit limits.