The FCA has announced that, by the end of 2014, it intends to launch a market study comprising a full-scale competition review of the credit card market.

Martin Wheatley, Chief Executive of the FCA, announced the FCA’s intention to conduct the market study in his speech The growth of the UK credit card market.

In his speech, Mr Wheatley highlights the FCA’s immediate priority which is to make sure all providers of credit as well as satellite services like credit broking, debt management and debt advice have sustainable and well-controlled business models supported by a culture that is based on doing the right thing for consumers. Mr Wheatley places an emphasis on firms not only being compliant with the rules from day one but also on the necessity of revisiting more fundamental questions of culture, ethics and  business models. Thus part and parcel of the immediate priority for firms is to adjust not only to the new rules, found within the threshold conditions, guidance and principles of businesses but also to meet the FCA’s high expectations of good conduct.

Further, Mr Wheatley observed that the UK credit card market has now some 56m credit cards in issue. Gross spending on those cards was £150bn last year with £57bn in outstanding balances. The FCA will therefore be asking whether this surface competition is reflected more deeply in the value offered by products. Even though the credit card market ballooned into this vast industry that so many customers from different walks of life engage with, the FCA will be asking whether this industry has always moved and focused on the interests of the consumer.

Finally, the driving force behind the market study is the FCA’s statutory responsibility to consider an area like the credit card market as part of its competition remit. Ultimately, consumer credit firms owe a duty of care to consumers and Mr Wheatley emphasises that it is important for there to be clarification of whether such competition is actually working in the interests of consumers.

View FCA announces competition review into credit cards particular focus on how industry works with those in difficult financial situations, 3 April 2014

View The growth of the UK credit card market, 3 April 2014