21/12/2017
Updated consultation on new rules to help struggling credit card customers (UK)
While the projected costs to businesses of proposed new rules to help credit card customers in persistent debt has been increased by up to £101 million in one-off costs and £18 million pa thereafter, in a market where 30 million consumers have an estimated £65.7 billion in outstanding balances the Financial Conduct Authority considers the benfits to consumers ‘remain significantly higher’.
The cost to businesses projected in the original consultation – ‘Helping Consumers in Persistent Credit Card Debt (UK)’, CPA News, 4 April 2017 – was revised upwards to take account of new data and data that had been omitted.
In addition to publishing feedback from the April consultation that shows widerspread support for the proposals, ‘CP17/43: Credit card market study: persistent debt and earlier intervention remedies – feedback to CP17/10 and further consultation’ seeks views on the revised cost.
It also seeks views on an approach developed by the industry as part of a voluntary agreement to restrict the circumstances in which customers would be offered credit card limit increases.
Already accepted in principle by the FCA, it would involve the industry excluding customers who meet the FCA’s proposed definition of persistent debt for 12 months from offers of credit limit increases.
Considered by the FCA to be easier for firms to implement and explain to customers than the previously proposed restriction in relation to making minimum repayments that it would replace, it would also result in at least 50,000 additional accounts pa being ineligible for credit limit increases.
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