27 February 2018
GoCompare comments on new FCA rules to tackle problem credit card debts
New FCA rules aiming to tackle ‘persistent’ credit card debt and help those at risk of financial difficulty are being introduced on the 1st of March 2018. Credit Card companies have until 1st September 2018 to comply. Georgie Frost, consumer advocate at GoCompare, comments:
“At last, the FCA is addressing the issue of automatic credit card limit increases for those in persistent debt, something we know only increases financial problems for those already struggling. But why should all other consumers have to actively inform their card companies that they don’t want their limit to go up? We know from our own research into consumer behaviour that the rate of those consciously opting-out will be lower than if they were asked to consciously opt-in. For most people credit cards are another useful tool to manage their finances and will not be tempted by the extra cash. But for those who are just about keeping their heads above water, the extra money could be seen as a lifeline, but will only delay them from seeking much needed help at an earlier stage. The default should be to not increase credit limits without express permission, for everyone, rather than to assume an increase will be welcomed unless indicated otherwise.
“Three years is still a long time to be in persistent debt before any meaningful action plan is proposed. How long will it actually be before a customer gets relief, not only financially but psychologically? Problem debt is a significant contributor to mental health issues and it would be good to see help come sooner for people only just managing to keep their account within the terms and conditions.
“Finally, it remains to be seen how the credit reference industry will react to someone being classified as in ‘persistent debt’ even if they are keeping within their card Ts&Cs. Will credit card issuers report this categorisation to credit reference agencies? Will customers be pushed to default by credit card issuers following FCA rules by encouraging repayment arrangements outside of their standard terms and conditions? If a customer is tagged as being in persistent debt, and that subsequently impacts their credit score, a well-intentioned move by the FCA may well lead to even greater problems for customers as they struggle to get prime rates for other forms of credit such as personal loans and mortgages in the future.”
For further information please contact:
Anders Nilsson or Martyn John at GoCompare on 01633 654 054 / 01633 654 725
Gordon, Jason or Liz at MAW Communications on 01603 505 845
Keep up-to-date with GoCompare on Twitter; @GoCompare
Notes to editors
GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.
GoCompare does not charge people to use its services, and it does not accept advertising or sponsored listings, so all product comparisons are unbiased. GoCompare makes its money through fees paid by the providers of products that appear on its various comparison services when a customer buys through the site.
GoCompare does not sell its customers’ data.
When it launched in 2006, it was the first comparison site to focus on displaying policy details rather than just listing prices, with the aim of helping people to make better-informed decisions when buying their insurance. GoCompare has remained dedicated to helping people choose the most appropriate products rather than just the cheapest, and has teamed up with Defaqto, the independent financial researcher, to integrate additional policy information into a number of its insurance comparison services. This allows people to compare up to an extra 30 features of cover.
GoCompare is the only comparison website to be invited to join the British Insurance Brokers’ Association (BIBA) and is authorised and regulated by the Financial Conduct Authority (FCA).