The FCA has announced it is launching a study to look into how easy it is for customers in Europe’s biggest credit card market to shop around, how card providers recover costs and the extent of unaffordable debt.
This comes amid concerns that the credit card industry is falling short on the service it provides to its customers who have to over borrow and pay unexpectedly high rates. It is feared that some credit providers profit from keeping borrowers in debt and offering them credit they don’t want.
FCA Director of Policy, Christopher Woolard comments:
“Britons hold 70 percent of all Europe’s credit cards, with around 30 million consumers sitting on a combined 56.9 billion pounds of debt. We want to make sure that the market works well for all consumers and that card-holders get a fair deal.”
The FCA is focusing its study on the use of credit cards as a means of ‘revolving credit’ – a method used to keep high levels of debt at bay, often at high cost. This is of serious concern as lenders stand to make excess profit from those who over-borrow and under-repay. This means consumers remain in a level of debt that creates interest and other fees for the lender, but without making the repayments to clear the debt. The FCA said a ‘significant’ number of consumers appear to have a limited understanding of how to manage their cards in a sustainable way.
“We want to understand in more depth what drives consumers to make the choices they do and how firms develop the services they offer.” FCA Director of Policy, Christopher Woolard said.
The FCA are concerned that some customers could be over-borrowing and taking on too much debt, and that there are signs that some issuers may profit more from higher risk borrowers. As is prevalent in the Payday Loans sector, the FCA can and will enforce changes to ensure consumers are protected.
If you are struggling to pay off your credit cards, here at The Debt Advisor we can help.
Whether it’s business or personal debt, The Debt Advisor can advise you on a range of solutions to help you get your finances back on track.
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