Credit Card Companies Must Do More to Help Long-Term Debtors, Says FCA

April 3, 2017

Credit card companies should do more to assist customers who use their services only to find themselves struggling to escape their resulting debt burdens.

That’s according to the Financial Conduct Authority (FCA), which regulates the UK’s financial services sector and has drafted a set of proposals that it hopes will reduce the number of people who have persistent debt problems.

The FCA’s own figures suggest that there are currently close to 3.3 million UK consumers who can be considered to be in persistent credit card debt, with the authority convinced that the attitudes of their creditors is part of the reason why that number is so high.

“Customers in persistent debt are profitable for credit card firms, who do not routinely intervene to help them,” the FCA has said.

With that in mind, the FCA has proposed that credit card companies should be obliged to step in and provide support to people who are clearly in need of help in handling their finances and resolving their debt problems.

A particular point of focus for the FCA is people who pay out more in charges and interest to credit card companies than they repay of their borrowings over an 18-month period.

As far as the authority is concerned, it is people who fall into this category who can be deemed to have persistent credit card debt problems.

Under its new proposals, credit card companies will be obliged to prompt their persistently indebted customers to pay off their debts more quickly and to suggest repayment plans to anyone persistently indebted for two stretches of 18 months or more.

“Persistent debt can be very expensive – costing customers on average around £2.50 for every £1 repaid – and can obscure underlying financial problems,” said Andrew Bailey, the FCA’s chief executive.

“Because these customers remain profitable, firms have few incentives to intervene. We want to change this situation so that firms and customers will deal with outstanding debt more quickly, and avoid persistent debt in the first place.”

If you live anywhere in Scotland and you have credit card debts totaling over £20,000 then Scotland Debt Solutions can help. Contact any of our offices today to arrange a free and confidential consultation.