The City watchdog today delivered good news for people with a credit card bill as long as their arm, as it confirmed it would push ahead with plans to slash charges on plastic.
The Financial Conduct Authority (FCA)'s proposals, which were first outlined in an April consultation paper, are aimed at helping millions of people get out of expensive long-term credit card debt.
In an updated consultation today the FCA clarified the details of those plans, which suggest that firms should prompt customers to pay back debt more quickly. If they cannot, credit card firms must take further steps such as reducing – or even cancelling – interest or charges.
This may cost businesses more than initially estimated, the FCA warned. It published revised projections of up to £101m in one-off costs, falling afterwards to £18m per year.
But the watchdog added that the benefits to consumers were "significantly" higher than the costs, with credit card users together saving between £310m and £1.3bn in the first few years of the proposed rules. This would then theoretically reduce as customers manage to drag themselves out of persistent debt.
"The proposals we are introducing will save consumers billions of pounds by reducing longer-term borrowing on credit cards, which can be very expensive and can hide real financial hardship," said the FCA's chief executive Andrew Bailey.
"We remain committed to action to protect consumers in the credit card market as soon as possible."
The FCA is asking for responses to its consultation by 25 January, after which it intends to implement the changes as soon as possible.