We’re still sizing up the Financial Conduct Authority (FCA), which has been pretty busy since it took over trying to whip the financial sector into shape. But we like the fact that it’s already managed to upset some of the big players. Way to go FCA. Way to go.
Today they announced a competition review into the UK’s £150bn credit card market (although not until the end of the year).
FCA chief executive Martin Wheatley says that given 30 million people hold at least one credit card it was right that the regulator explores whether competition in this market was working and how the industry dealt with those people who were in difficult financial situations already.
Recent research showed 9 million Britons were considered to be in serious debt and that a considerable number of people, “survival borrowers”, often feel they have no option but to borrow money through payday loans or using a credit card.
“The key priority here has to be those in the most vulnerable circumstances,” says Wheatley. “Many of whom are struggling to manage their credit card commitments, as well as other bills.”
Among the UK’s cardholders, something like 3.7% make minimum payments for 12 months. That’s about a million people paying of the minimum each month for a year. It’s not uncommon for the most ‘at risk’ households to hold multiple cards and revolve multiple balances month-by-month.
The words ‘water’,’bucket’ and ‘drowning’ come to our mind but as Wheatley puts it: “Why are card issuers providing the means, in some cases, for the most indebted consumers to escalate their way into further debt?”
The Charity StepChange say around 10pc of the people who visit for advice, with an average £27,000 of total debt, arrive with five or more credit cards.
Okay Wheatley – impress us.