The FCA require firms to help people who have been caught in a cycle of persistent debt for three years, by proposing and agreeing plans with customers to resolve the situation. Ahead of firms issuing letters setting out proposals to customers who have been in persistent debt for three years, and to make sure the firms’ approaches to the rules are working in the best interest of consumers, the FCA is outlining a number of areas firms need to review and ensure their approach is in line with expectations. This includes:

  • a concern that customers may not respond to letters from their credit card provider, advising that they have been in persistent debt for three years. Firms must encourage customers to speak with them to discuss potential repayment arrangements. If customers can’t afford the options proposed by the firm, they must be treated with forbearance and due consideration, for example, by reducing, waiving or cancelling any interest or charges.
  • a concern that firms may cancel or suspend credit cards for everyone in persistent debt, including those willing to engage and come to an agreement. In these circumstances, firms are not allowed to suspend a credit card without having an objectively justifiable reason.

Jonathan Davidson, Executive Director of Supervision for Retail and Authorisations at the FCA, said: 

'Under our rules, firms must help customers to reduce the level of debt they have on their credit card more quickly. If a customer cannot afford the firm’s proposals for how to do this, the firm must offer forbearance, potentially including reducing, waiving or cancelling any interest, fees or charges.  

'My advice to consumers is don’t bury your head in the sand. If you can’t afford to meet the repayment schedule that the credit card firm is suggesting, don’t be afraid to tell them. If we find firms are not offering their customers the appropriate level of help, we will not hesitate to take action. 

'If the firms do this right, we estimate that this could save customers up to £1.3bn a year in lower interest charges.'

If consumers are concerned about persistent credit card debt and/or have multiple credit cards they are dealing with, they can find information about free debt advice from Money Advice Service.

Notes to editors

  1. Dear CEO Letter: Persistent Debt: Your approach to customers who have been in Persistent Debt for 36 months (PD36)
  2. PS18/4: Credit card market study: persistent debt and earlier intervention - feedback to CP17/43 and final rules
  3. The changes were introduced following a comprehensive study of the credit card market. The study analysed the accounts of 34 million credit card customers over a period of five years, and surveyed almost 40,000 consumers.
  4. Infographic: Help for consumers who are in persistent credit card debt
  5. Infographic: Helping customers in persistent debt
  6. Infographic: Persistent credit card debt – our expectations of firms

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