The Financial Conduct Authority (FCA) has today announced a study into the UK’s credit card market, following research earlier this year that showed the credit card market is not working for consumers.
The UK’s credit card market is huge, with 30 million consumers owning credit cards with a total of £56.9 billion in outstanding debt. UK consumers hold around 70% of credit cards in Europe.
The investigation will focus on how easy it is for consumers to shop around and compare cards by looking at:
- how complex credit cards are
- how much competition is driven by shopping around and switching
- how transparent and fair the terms and condition are.
The investigation will also look at how costs are recovered by credit card companies, whether certain groups are particularly disadvantaged, and into unaffordable lending with particular groups over-borrowing on credit cards.
Its My Report
The news of the investigation has coincided with the launch of a new uSwitch campaign into credit reports. Credit reports determine access to credit products, but our research shows they’re also poorly understood leading many to be rejected for credit or pay higher rates than they could be.
We are calling for:
- Free annual credit reports and scores
- Lenders should give a specific reason if you’re rejected because of your credit report, along with a free copy of the report used
- Standardised credit scoring between the credit agencies
Commenting on the FCA’s investigation, David Mann, Head of Money at uSwitch, said: “The FCA correctly points out that people sometimes don’t get the best deals on credit cards. This is partly because not enough people shop around, but it’s also because many consumers get turned down for the best deals due to avoidable problems with their credit reports.
“Our research shows that 15 million UK consumers have never checked their credit report, and a quarter of these (26%) are unaware that their credit score affects their ability to secure a credit card.
“Consumers are flying blind, unaware how lenders are arriving at critical decisions about them and lacking the ability to do anything about it.
“That’s why we’ve launched a campaign calling for all consumers to get free access to their credit reports. Addressing simple errors on credit reports can help make debt more affordable by allowing consumers to access better interest rates and offers.”