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Response to the FCA's credit card market study interim report

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Our comment on the FCA's credit card market study

We believe that credit cards provide a useful and valued service for consumers and we agree with the findings of this interim report that consumers value the flexibility offered by credit cards. However we also note that the ways consumers can use this flexibility can led to consumer detriment.

We very much welcome this study into the credit card market. Credit cards remain a significant part of the consumer credit debt problems that StepChange Debt Charity clients face. Figures from for first half of 2015 show that 65% of people seeking advice from StepChange Debt Charity had one or more credit cards. Credit card debt made up around 38% of all the debt we dealt with.

Summary of our response

We hoped that the review would deliver a clear view on the scale and nature of credit card debt and vulnerability to credit card debt in the UK. The report appears to do this and the findings on the extent of severe arrears and persistent payment pressures are both important and concerning.

We were expecting analysis on the features of the market and products that can drive credit card debt. The finding that in most of the market competition is working fairly well for consumers is welcome. However it seems clear that some features of the credit card market are failing consumers and that the market is not working as well for some consumers, including those at higher risk of financial difficulty. We hope that the final report will increase the focus on these issues.

We hoped that this review would shed light on the role of multiple credit cards in debt problems and how multiple credit card debt problems build over time. But this is not covered in the interim report in what looks to us like a serious omission. So we strongly urge the FCA to cover this in further research before the final report in published.

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