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New rights for credit card customers

15 March 2010

Below is the joint commitment by UK credit card companies and the Government.

The UK Cards Association, which represents the credit card industry, is pleased to have reached a joint commitment with the Department for Business, Innovation & Skills (BIS) as a result of its consultation “Review of the Regulation of Credit and Store Cards”.

The credit card companies are committed to supporting developments which are demonstrably in customers’ interests – making sure that customers are in control of their own finances.
Melanie Johnson, Chair of The UK Cards Association says:

“We are pleased that our evidence on unsolicited credit limit increases and the re-pricing of existing debt has conclusively shown that existing practices do not need to be overhauled. We believe that, overall, the outcome of the review is balanced and will give consumers the greater control and convenience that the industry and the Government wish to provide.

“Now that we have agreement in place we can focus on the important task of implementing these changes so that customers can benefit. The key changes will be in place by the end of this year and will become part of The Lending Code.”

The range of commitments include:

  • Ensuring that the highest cost debt on a credit card is paid off first (this will benefit around a quarter of all credit card accounts). This practice is known as allocation of payments
  • Measures strengthened to prevent any customer facing financial difficulty being offered an unsolicited credit limit increase. Any other customer offered a credit limit increase will be offered a new 30-day notice period and simple means of ‘opting-out’. (Around 8% of the 58 million credit card accounts in UK had a credit limit increase in 2009)
  • Minimum payments – card companies will contact any customer who repeatedly only makes the minimum repayment to make clear that this is the most expensive way of paying off a debt (an estimated 3% of customers pay the minimum for 12 consecutive months). For new credit card customers the minimum repayment will always cover at least interest, fees and charges, plus 1% of the principal to encourage them to change their repayment behaviour
  • Re-pricing of existing debt – building on the changes already made by the industry – a 60 day notice period will be introduced, and consumers will be notified twice before any increase occurs. (Between January and October 2009, 10.6 million accounts, a sixth of all credit card accounts, were risk-based repriced, with around 40% of those being repriced downwards)
  • In keeping with the ongoing commitment to improve transparency and to simplify customer information, the industry will work with consumer groups and government to assess the case for an annual credit card statement for consumers
  • Card companies will also work with debt advice agencies to agree how they might further identify consumers at risk of financial difficulties

The changes announced today represent a substantial cost to the industry estimated to be in the region of £533 million over the first two years, doubling the cost of the package of proposals put forward by the industry on 19th January. The industry’s proposals were based on an analysis of 44 million customer accounts covering cardholder behaviour over the last two years. These industry commitments will involve a variety of system changes across the UK’s credit card companies.

Latest industry data shows that in the UK in 2009 there were 30.3 million credit cardholders holding 58 million credit cards; demonstrating a real shift away from multiple cardholding (in 2008 there were 30.2 million adults holding 66 million credit cards). In 2009 61% of credit cardholders paid off their bill in full every month, up from 55% in 2007.


For further information contact The UK Cards Association Press Office on:
020 3217 8251/8340/8316

Notes to editors:

1. The UK Cards Association is the leading trade association for the cards industry in the UK. With a membership that includes all major credit, debit and charge card issuers, and card acquiring banks, the role of the Association is both to unify and represent the UK card payments industry. It is responsible for formulating and implementing policy on non-competitive aspects of card payments including codes of practice, card fraud prevention, major infrastructural changes, development of standards and other matters where cross-industry benefits are identified. The UK Cards Association was formed in April 2009 as the successor body to the APACS Card Payments Group.

2. The Department for Business, Innovation and Skills published its consultation paper in October 2009 entitled “A Better Deal for Consumers: Review of the Regulation of Credit and Store Cards: A Consultation”.

The consultation looked at four main issues:

  • Unsolicited credit limit increases
  • Allocation of payments
  • Minimum repayments
  • Re-pricing of existing debt

3. The UK Cards Association’s response was based on evidence from extensive independent research conducted by Oxera, Argus Information & Advisory Services and GfK. The full document Credit and Store Cards Review: A Response along with a summary is available from Working with Government and our other key stakeholders over the past few years, the industry has delivered significant improvements to transparency and data sharing. The industry continues to support consultation and remains committed to making change where there is evidence that it will be in the best interests of our customers. The industry remains entirely committed to lending responsibly, to being transparent and to help its customers take responsible borrowing decisions. Should a customer get into financial difficulty, they can be expected to be treated sympathetically and fairly.

4. The Lending Code was launched on 1st November 2009 to cover the credit and debt elements of the old Banking Code. The Lending Code covers good practice in relation to unsecured loans, lending aspects of credit cards and charge cards and current account overdrafts. The Lending Standards Board is an independent body. The Code is sponsored by the BBA, the BSA and The UK Cards Association and copies are available from

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