We aim to make our website as accessible as possible. However if you use a screen reader and require debt advice you may find it easier to phone us instead. Our phone number is 0 8 0 0 1 3 8 1 1 1 1. Freephone (including all mobiles).
StepChange Debt Charity logo
Go

New FCA credit card rules welcome - but action needed to break cycle of debt build up

27 February, 2018

StepChange Debt Charity welcomes the FCA’s policy statement today on its actions in the credit card market but urges the regulator to keep a close eye on the effectiveness of its new requirements, especially for new borrowers.

The charity believes the steps being taken to address the problem of persistent debt among existing borrowers need to be matched by action to reduce the risk for new borrowers of building up the same problems. New rules will take effect in March and firms must implement them by September – but it could still be years before people currently building up persistent debt see the benefit.

Under the FCA’s plans, there is a welcome onus on firms to help customers with persistent credit card debt to take steps to pay more than their minimum requirement. This will enable them to clear their debt in the medium to long term rather than risk it building up indefinitely. However, the proposals fall short of requiring firms to change the way that they offer credit card borrowing to new borrowers. The risk of building up expensive, long term debt remains.

Among clients of StepChange Debt Charity, two thirds have credit card debt owing an average of around £8,000. Credit card debt accounts for around 40% of all the debt the charity deals with.

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

“We welcome the FCA’s recognition that solutions are needed for the 3.3 million people trapped in persistent credit card debt. But we remain concerned that the FCA has not yet taken adequate steps for the flow of new borrowers who may be heading towards persistent debt. There is a need to break the cycle of firms allowing customers to build up expensive long-term debt on what is meant to be a short-term borrowing facility.

“The new rules do not address the continuing risk that firms will allow new profitable customers to rack up expensive debt for a long period - only to inflict unattractive compulsory action on them further down the line. The regulator will need to keep this under scrutiny. The FCA says it plans to review the effectiveness of the new rules in 2022 or 2033 but we would urge earlier intervention if needed.”

Related media coverage

Media enquiries

Get in touch with our media team for more information about our work.

Social media

Connect with us through social media and get all the latest news about our campaigns.

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

We link to external websites where they contain relevant information for our visitors. We're not responsible for the content of these websites, or any infringement on your data rights under data protection regulations by any external website provider.

*This is the average rating of our service based on the StepChange reviews on Feefo by DMP and DRO clients three months into their solution.

© StepChange Debt Charity 2018