The Financial Conduct Authority (FCA) has published the the reports of it’s credit card market study. The main suggestions of the study were as follows:
- timely prompts before promotional periods end
- timely information to prompt consumers to take into account how much they are borrowing and avoid over limit charges, and
- giving consumers the ability to choose the payment due date
Christopher Woolard, Director of Strategy and Competition at the FCA, said:
‘Our final findings show that competition is working fairly well for most consumers, with firms competing strongly for custom, and the market offering a range of products to meet consumers’ needs.
‘However, we remain concerned about persistent and potentially problematic credit card debt. We will continue to work closely with consumer groups and industry to deliver changes to help consumers gain more control over their finances.’
The FCA will publish further information on proposed rules and voluntary remedies later in the year.
Following the Financial Conduct Authority’s (FCA) publication of the credit card market study final findings report, Peter Tutton, Head of Policy at StepChange Debt Charity said: “The FCA’s final report highlights its increased concerns about credit card debt. With over 115,000 people having contacted us for help with credit card debt already this year, the FCA will need to act quickly with effective solutions to help not only the millions already struggling, but to prevent many more from suffering the same problems.
“We welcome the FCA’s intention to act on unsolicited credit card limit increases to give greater control to borrowers. Our research has shown people’s debt problems can get much worse when they are given credit they didn’t ask for or even decide they needed. “We also welcome the attention to responsible lending and the recognition that firms need to intervene more quickly to spot people in financial difficulty and offer better help for those struggling, including with multiple credit card debts. We urge the FCA to deliver quick and effective improvements.
“We have previously called for action on low minimum repayments that can lock people into expensive and long term debt. The FCA’s proposal to test different ways to encourage people to pay their debt down is welcome, but will need to be backed with further action if they do not deliver better outcomes than previous voluntary approaches.
“With the current economic uncertainty and consumer credit at its highest for over a decade, the FCA has fulfilled a vital role in highlighting some of the problems credit cards can cause. It must now act quickly on its evidence to ensure that credit cards are used for short term, affordable borrowing and to avoid seeing even more people are dragged into severe problem debt.”