UK regulator may force credit card firms to cancel charges
Following a credit card market study, the FCA said it has "significant concerns about the scale, extent and nature of problem credit card debt".
The regulator estimated around 3.3 million people in the UK are in "persistent debt", defined as paying more in interest and charges than they repaid over an 18 month period.
The FCA noted these customers are profitable for credit card firms, which "do not routinely intervene to help them". The regulator is therefore proposing a series of steps to force card issuers to help such customers.
The key measures proposed would require firms to prompt faster repayment from customers in 'persistent debt' over an 18 month period. If customers remain in persistent debt for a further 18 months, firms will have to take steps to aid them, such as proposing a repayment plan. Customers who do not respond to such plans would have their cards suspended.
If a customer cannot afford any of the repayment options, the regulator proposes that firms will have to take further steps, including the possible reduction, waiver or cancellation of interest and charges.
The FCA said it expects savings for customers of between GBP3.00 billion and GBP13.00 billion by 2030 from the proposals, peaking in the first few years.
The regulator's consultation paper also sets out measures voluntarily agreed between the FCA and the industry to give customers more control over increases to credit limits. The FCA's consultation on its proposals will close on July 3. ■