The UK credit card market is failing people who struggle to repay their bills, an investigation from the financial watchdog has revealed.
The Financial Conduct Authority (FCA) said the credit card market was generally working well, making it easy for people to switch provider and pay back balances over long periods – but warned little was being done for people who found it hard to pay back spiralling bills.
The FCA has analysed five years’ worth of transactions from 34 million credit card accounts, in addition to extensive consumer research. It recommended a package of measures to give consumers more control over credit limits and utilisation; to encourage consumers to pay off debt quicker when they can afford to; and for companies to do more to identify consumers who may be struggling to repay and take action to help them manage their payments.
The report said consumers with persistent levels of debt or who make minimum payments are profitable, therefore firms have fewer incentives to helpthem.
Martin Lewis, founder of MoneySavingExpert.com, said: “We need better communication from lenders, so people know what they’re getting into.”
Richard Koch, head of policy at the UK Cards Association, said: “We are pleased the report has found that credit cards work well for the vast majority of customers.”