Proposals to make credit card firms help struggling customers

The Financial Conduct Authority (FCA) is proposing new rules to help people in persistent credit card debt.

This follows the FCA’s study of the UK credit card market, which found significant concerns about the scale, extent and nature of problem credit card debt. 

Customers in persistent debt (who have paid more in interest and charges than they have repaid of their borrowing) are profitable for credit card firms, who do not routinely intervene to help them. About 3.3 million people are in persistent debt, with over half of these being for two consecutive periods of 18 months.

Today’s proposals require firms to take steps to help customers repay their balances more quickly and to offer further assistance to those who can’t.

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