City watchdog takes on credit card industry

Tim Wallace
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CREDIT card borrowers may be paying over the odds for their loans because of a lack of competition in the sector, the City watchdog warned yesterday.

Although the sector offers a wide range of deals, such as zero per cent balance transfers, the Financial Conduct Authority (FCA) fears the longer-term cost of borrowing is not made clear.

And FCA boss Martin Wheatley warned the industry it needs to work harder to treat the most indebted customers better.

“It is not uncommon for the most ‘at risk’ households to hold multiple cards and revolve multiple balances month-by-month,” Wheatley said.

“There are some obvious questions and challenges here for regulators and industry: why are card issuers providing the means, in some cases, for the most indebted consumers to escalate their way into further debt?”

The probe will ask if there are problems in the sector causing competition to work poorly, rather than benefitting customers.

The FCA is launching the investigation in its first week in charge of consumer credit ­– it gained power to regulate the sector on 1 April.