Seminar on FCA’s Credit Card Market Study – interim report

On 9 December 2015 the APPG held a meeting to discuss the Financial Conduct Authority’s credit card market study.

At a well-attended meeting, the Group heard first from Mary Starks, who is Director of Competition at the FCA and responsible for the Study. While she said that the market was working ‘fairly well’ for consumers, she raised concerns over the extent of unaffordable credit card debt.

She also pointed out that firms seemed to be reluctant to offer assistance and forbearance to customers who were making only the minimum monthly repayment, seemingly because such customers were a useful source of profit.

Ms Starks went on to outline proposals to realign market incentives and to make sure firms intervene earlier where customers are struggling with minimum payments or with persistent high levels of debt.

She also committed the FCA to taking a more detailed look at how firms deal with customers with multiple credit cards, something that StepChange has been calling for since the Study was first announced.

Speaking for UK Cards, which represents the credit card industry, Richard Koch welcomed the interim report. He said that the organisation would be looking carefully at the findings and recommendations and would continue to work with both the regulator and advice providers on solutions, including more help for people struggling with potentially problematic debt.

Wrapping up the meeting, Peter Tutton, Head of Policy at StepChange Debt Charity, pointed out that credit card debt is the single biggest type of problem debt the charity sees; and that two thirds of their clients have at least one card and that their average debt is more than £8,000.

He said that StepChange debt Charity welcomed the Study and in particular its emphasis on unaffordable credit card debt. Mr Tutton particularly welcomed the recommendation to promote the use of ‘quotation’ searches, in which prospective applicants can get an idea of the how a credit card product would work for them without leaving a ‘footprint’, as well as the new commitment to look at multiple credit card debt in the final report.

Yvonne Fovargue MP, who chaired the meeting, made reference to her 2012 Private Members’ Bill, which proposed intervention to limit the total amount of interest paid on credit card borrowing and so prevent debts from spiralling.