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FCA Credit Card Market Study

What is this Market Study?

In 2014, the FCA began a study of the credit card sector to analyse how the market is working for consumers and to decide what actions, if any, were needed to make it work better for consumers.

What is the issue?

The FCA published its final findings in July 2016, which found that the credit card market works well for most consumers, but that it still had concerns in respect of customers who had so called ‘persistent debt’. The final findings show:

  • consumers shop around, switch and value the flexibility offered by credit cards
  • competition is focused on certain product features, such as introductory promotional offers and rewards. There is less competitive pressure on interest rates outside of promotional offers and on other fees and charges
  • higher risk consumers have a more limited choice of products and providers, and have concerns about their credit rating when shopping around for credit cards
  • there are groups of customers who are in persistent debt and are paying a high cost to service long term credit card debt.

In April 2017, the FCA published a consultation paper on persistent debt and earlier intervention remedies, as well as setting out details of an industry voluntary agreement to give customers more control over credit limit increases. These measures are part of the FCA’s work to implement the findings of the market study and address its concerns about the minority of cardholders who do not use a credit card in a way which is in their best interest.

What we think

While the FCA’s original report found that the credit card market works well for most people, we are not complacent and the industry remains committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interest.

UK Cards has a positive history of working collaboratively with the debt advice sector, and we are continuing such engagement as part of this process. We are pleased the FCA has recognised the industry is well placed to offer solutions that can be practically implemented.

What we are doing?

We continue to engage constructively with the FCA and other stakeholders to ensure the credit card market remains competitive, innovative and responsive to the needs of all its customers and protects them where there may be a potential risk of financial harm.

We are currently considering our response to the FCA’s consultation on persistent debt and earlier intervention remedies, which closes on 3 July 2017.

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