More needs to be done to tackle the UK's "potentially problematic" levels of credit card debt, the financial sector watchdog has warned today.
A report by the Financial Conduct Authority (FCA) found that although competition in the credit card market generally works in the favour of consumers, there is little incentive for providers to help out those who are struggling under mountains of debt.
"Our final findings show that competition is working fairly well for most consumers, with firms competing strongly for custom, and the market offering a range of products to meet consumers' needs," said Christopher Woolard, director of strategy and competition at the FCA.
"However, we remain concerned about persistent and potentially problematic credit card debt. We will continue to work closely with consumer groups and industry and to deliver changes to help consumers gain more control over their finances."
In light of what it discovered, the watchdog is now considering how firms could help customers. Suggested actions include doing more to remind customers when promotional periods are about to expire, providing people with information on their borrowing and how to avoid going over their limit in a timely manner, and giving consumers more choice over payment due dates.
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The measures will be introduced through a combination of FCA rules and voluntary industry action.
It is hoped the measures will help consumers to shop around for the best deals, budget better and, if they need to, repay their debts quickly.
The measures will also be designed to encourage firms to be more proactive about preventing customers from getting into debt in the first place, rather than having to dig them out once their finances have spiralled out of control.
Richard Koch, head of policy at The UK Cards Association, said:
We are pleased that the FCA has carried out more detailed analysis, looking at how individual credit card holders’ balances have changed over time, which has resulted in the refining of the group of customers they are most concerned about.
The credit card industry will continue to engage constructively with the regulator in the coming months to ensure that effective and proportionate remedies are developed for these customers.