The FCA has published a letter it has sent to UK Finance from Mary Starks, FCA Director of Competition and Economics, relating to the development of a voluntary industry agreement to give credit card customers greater control over credit limit increases.
The letter notes that voluntary industry agreement has two components: (i) an agreement to give greater control to customers; and (ii) an agreement to further restrict when customers would be offered credit limit increases. Further details of the agreement were set out in chapter 4 of Consultation Paper 17/10: Credit card market study: consultation on persistent debt and earlier intervention remedies.
UK Finance has suggested aligning the proposed restrictions on when customers are offered credit limit increases with the FCA’s proposal on persistent debt. This relates to the second component of the industry agreement only.
The industry, via UK Finance, made a proposal to exclude customers who meet the FCA’s proposed definition of persistent debt for 12 months from offers of credit limit increases.
Having considered the proposal, the FCA agrees that this would be a more sensible approach as it would be easier to implement, easier to explain to consumers and would increase the number of accounts that were subject to restrictions on offers of credit limit increases.
The FCA also agrees that it would be unreasonable for it to expect firms to build systems until the regulator finalises the definition of persistent debt. The FCA proposes to work with the industry to finalise the restrictions element of the voluntary industry agreement when it makes final rules later this year.
View Change to credit card industry voluntary agreement on credit limit increases, 31 July 2017