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The UK Cards Association’s view on the government’s white paper

Paul Rodford, Head of Cards, The UK Cards Association

The UK Cards Association fully supports change that delivers benefits to consumers, building on the considerable work undertaken by our Members in recent years to deliver greater transparency and tangible improvements which support responsible lending.

We are committed to working with Government through the White Paper’s consultation phase. The series of issues relating to credit cards are complex. They potentially put significant pressure on business models and in some cases test the commercial viability of operating in the UK market, whilst inadvertently reducing customer choice and increasing costs. We have emphasised these risks in our constructive dialogue with the Department for Business, Innovation & Skills. As we fully assess the White Paper, our focus will be on the cumulative impact of regulatory changes and interventions – because it is these which can bring significant unintended consequences and lead to unforeseen consumer detriment.

To take an example, unsolicited credit limit increases have been much maligned in the media due to the assumption that additional credit will lead customers into financial difficulties. This overly simplistic view however, overlooks the underlying fact that lower limits are often initially set by lenders and increased incrementally when data suggests that customers are borrowing responsibly. Lender experience is that this is a highly responsible approach that results in lower delinquency rates.

Ultimately we need to achieve the right balance between ensuring protection for customers and acknowledging the legitimate interests of the industry.

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