FCA tell of concern over “persistent” credit card debt

November 6, 2015

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By Lucy Palmer-Richeson.

The Financial Conduct Authority (FCA) has raised concerns about the scale of credit card debt and has said that it believes more can be done to help people struggling with such debt.

The regulator warned that borrowers with persistent debt who make only minimum repayments, which amounts to about 1.6 million Brits, are receiving little help from credit card firms.

The FCA said that such borrowers are profitable to credit card companies, and therefore banks and firms are less likely to offer any assistance.

It said customers should be encouraged to pay off their debt as quickly as possible, as well as be urged to shop around for a better deal.

In response to the report, Joanna Elson, chief executive of the Money Advice Trust, which runs National Debtline, said: “The FCA is absolutely right to be concerned about the 1.6 million people who are just about surviving by making minimum payments, often on multiple credit cards.

“As the report highlights, credit card companies usually intervene effectively to help customers who begin to miss payments, and many work closely with debt advice charities to make sure customers get the free advice they need.

“A more consistent similar approach to customers who are routinely making minimum payments would be enormously beneficial.”

Christopher Woolard, director of strategy and competition at the FCA, said more could be done to help those struggling with credit card debt, stating: “This is a really important market in the UK. Around 60% of adults have at least one credit card, and there is an estimated £61 billion in outstanding balances.

“Our study suggests that the market is working reasonably well for most consumers, with a range of cards on offer. However, for a significant minority who are in persistent levels of debt, the market could potentially work better,” he said.

The regulator’s findings come as a result of a review of the credit card sector started in November 2014.