On 3 April 2017, the FCA proposed new rules intended to help customers who are in persistent credit card debt. The proposal follows the FCA’s recent study of the UK credit card market.
Under the FCA’s definition, a customer is considered to be in persistent debt if they have paid more in interest and charges than they have repaid of their borrowing in an eighteen month period. Under the proposed rules:
- after eighteen months in persistent debt, firms must prompt customers to make faster repayments if they can afford to do so;
- after a further eighteen months in persistent debt, firms must take steps (such as proposing a repayment plan) to help the customer repay their outstanding balance more quickly;
- if the customer cannot afford any of the proposed options to repay their balance more quickly, firms must take further steps to assist the customer repay the balance within a reasonable period (for example, by reducing, waiving or cancelling any interest or charges).
The FCA’s consultation paper can be viewed here.
Responses to the consultation are required by 3 July 2017.