In response to the FCA credit card market study consultation paper issued by the Financial Conduct Authority (FCA) Richard Koch, Head of Policy at The UK Cards Association, said: “We welcome the FCA’s considered proposals and support their view that the overall package is robust, and that the combined effect will address the concerns it has found. Identifying and responding to customers who may be facing persistent debt is an important and complex area, which requires careful consideration. The consultation paper sets out a package of measures and over the coming days we will explore these in more detail.

“While the FCA’s original report found that the credit card market works well for most people, we are not complacent and the industry remains committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interest. The Association has a positive history of working collaboratively with the debt advice sector, and we will continue such engagement as part of this consultation.

“We are pleased the FCA has recognised the industry is well placed to offer solutions that can be practically implemented. The agreement on unsolicited credit limit increases provides customers with the ability to make an informed choice around how they prefer their limit to be managed, providing them with greater control, while ensuring that where a customer is at risk of unaffordable borrowing exclusion rules will apply.

“We will look closely at the proposals and engage constructively with the FCA to ensure the credit card market remains competitive, innovative and responsive to the needs of all its customers and protects them where there may be a potential risk of financial harm.”

Kevin Mountford, banking expert at MoneySuperMarket, said “The FCA recommendations announced are, on the face of it, designed to help customers but really they don’t go far enough and in some cases it could be 36 months before someone in ‘persistent debt’ is really helped to address the problem. “The levels of debt being racked up by consumers is getting bigger and bigger and providers need to help consumers and make sure the situation doesn’t get completely out of hand. There are many tactics that providers could and should consider, to at least help consumers out in the short term. These could include giving customers an ‘interest break’ for a few months to help get their house in order, halving the interest rate for a short period of time or reviewing credit limit decreases. All these features would mean customers could start overpaying each month, rather than just hitting the minimum payment.

“But it’s not just down to the providers – customers have a responsibility to borrow within their means and it’s imperative that when people apply for a card they choose the most appropriate one for their needs and crucially have the means to clear the balance each month or pay more than the minimum amount. “Customers can use our industry leading Smart Search eligibility tool to explore their options, such as a zero per cent balance transfer card or a loan, without their credit score being affected.”