We comment on FCA's letter to firms on credit card fees and charges

_{6 March, 2019}

StepChange Debt Charity is pleased to see the FCA’s letter to firms on credit card fees and charges, and the regulator’s concern about whether firms are doing enough to consider whether multiple, repeated fees and charges could be an indication of financial difficulties.

Credit card debt is the most common type of consumer credit debt seen among the charity’s clients – in the first half of last year, over two thirds of new clients had credit card debt with an average of £7,603 of credit card borrowing outstanding at the time they sought advice.

StepChange welcomes the regulator’s prompt that “Firms should consider whether their policies and procedures in relation to fees and charges result in fair consumer outcomes”, and its encouragement for firms to consider questions such as “What does your firm regard as signs of actual or possible financial difficulties? Are (multiple) fees and charges considered as one of those signs? Does your firm flag on its systems those customers who are repeatedly incurring fees on their account? What are the range of actions your firm takes when identifying a sign of actual or potential financial difficulty?”

Peter Tutton, Head of Policy at StepChange Debt Charity, says:

“It’s clear that reducing harm in the credit card market remains a work in progress. We’re still concerned that despite recent regulatory intervention, credit card customers can still build up a significant potential debt problem before the interventions to address persistent credit card debt kick in. Early warning signs such as regularly incurring fees and charges should be a wake-up call to the possibility of financial distress. We hope that card providers will renew their efforts to spot early signs of financial difficulty, and if firms don’t address this the regulator shouldn’t be reticent about taking further action.”

StepChange Debt Charity has specific information available for people who have received information from their card provider about their persistent credit card debt. The charity is also undertaking new client research this year about experiences of credit card debt, especially in the sub-prime card market, and hopes to publish a report on the findings in the summer.