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Thousands of people may lose credit cards under new FCA rules

Thousands of credit card customers are at risk of having their accounts suspended in the new year due to the City regulator’s new affordability rules.

Credit card providers – including UK banks such as Barclays, Lloyds and Royal Bank of Scotland – were last year forced to identify customers who had been in persistent debt for at least 18 months, and have had a further 18 months to convince customers to increase their payments.

Customers who fail to respond or cannot afford hiked payments risk having their credit cards suspended as early as February 2020 – as the first 36-month period draws to a close.

The Financial Conduct Authority’s regulations are targeted at customers in persistent debt for at least 36 months, who end up paying more in interest fees and charges than the original amount they borrowed. Most have made a long-term habit of only making minimum payments each month, which often masks underlying financial troubles.

About 60% of the UK’s adult population – about 30 million people – have credit cards. The FCA has estimated that about 5.6m credit card accounts may be held by customers who are struggling financially, and that nearly 2 million may fail to raise their payments before the 36-month period is up.

It is difficult to predict how many customers may end up having their credit cards suspended as a result, but it is understood that banks are still contacting thousands of customers as the first 36-month period comes to an end. An account suspension could affect a user’s credit scores.

Credit card companies have been ordered to send at least three letters to customers, warning them to raise their payments or risk having their credit card suspended.

About 60% of the UK’s adult population – about 30 million people – have credit cards. The FCA has estimated that about 5.6m credit card accounts may be held by customers who are struggling financially, and that nearly 2 million may fail to raise their payments before the 36-month period is up.

It is difficult to predict how many customers may end up having their credit cards suspended as a result, but it is understood that banks are still contacting thousands of customers as the first 36-month period comes to an end. An account suspension could affect a user’s credit scores.

Credit card companies have been ordered to send at least three letters to customers, warning them to raise their payments or risk having their credit card suspended.

The rules are expected to cut into revenues for credit card companies, but the FCA said it will save customers up to £1.3bn per year. “Furthermore, consumer stress and related financial difficulties would be reduced by resolving debt problems sooner. The total cost savings were expected to have reached between £3bn and £13bn by 2030,” the watchdog said in its original policy paper.

UK councils' benefits pages push credit card adverts



A BBC investigation found more than 950 advertising cookies - small text files that track people on the internet - embedded in council benefits pages.

The regulator said it would assess the findings, which showed the majority of councils do not use the correct form of consent under privacy laws.

The advertising industry denied using data from vulnerable residents.

The BBC Shared Data Unit used the open source software webXray to take a snapshot over two days last October of more than 400 council benefits pages.

This found:

• More than half of UK councils had third-party advertising cookies on their benefits pages - a total of 950 cookies
  
• More than two-thirds of councils did not appear to ask for the correct form of consent under privacy laws
  
• Examples of targeted adverts on benefits pages seen by the BBC included high-interest credit cards, Black Friday deals, sports cars with features for disabled people and private funeral care plans

Disability charity Scope added: "These targeted trackers are cause for concern.

"Being served an advert for a credit card or low-cost loan while applying for state financial support could lead to debt and financial insecurity.

"Everyone needs to do all they can to make sure disabled people are not unfairly targeted when trying to seek out support."

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