Competition appears to be focussed very much at the front end of the relationships, with promotional offers and rewards, for example for balance transfers. Beyond the honeymoon period, there is less competition between providers, and little evidence of interest rates being used as a method of attracting or retaining customers.
Much of the report is directed towards an analysis of consumers with problematic credit card debt, and the FCA remains increasingly concerned about the scale, extent and nature of this and how it should be addressed by firms. The FCA considered that firms should be doing more to identify customers with persistently high credit card debt and to help them to reduce debt burdens before problems arise. Firms should also be prompting those customers repeatedly making minimum payments to repay their balances quicker when they are able.
The FCA is proceeding with a package of remedies, to include a combination of FCA rules and guidance (subject to consultation and cost-benefit analysis), and some industry agreements. These industry-led initiatives will include customers being reminded before promotional periods end; information to help customer avoid over limit charges; and giving customers the ability to choose their payment due date. The FCA will monitor the success of industry agreements over time, and if they are not effective, will consider further action.
The FCA intends to publish further information on proposed rules and voluntary remedies later in 2016.