On 26 February 2018, the FCA published its policy statement (PS18/4) containing the final rules and guidance on persistent credit card debt and earlier intervention.
The new rules are designed to:
- require credit card providers to monitor a customer's repayment record more closely and ensure it has appropriate policies in place in relation to this;
- help credit card providers identify customers who may be in persistent debt as a result of them paying more in interest, fees and charges over the preceding 18 month period than the amount they have borrowed;
- require credit card providers to communicate with customers who have been identified as being in persistent debt at 18, 27 and 36 month intervals and to encourage them to repay their debt more quickly if this would not have an adverse effect on their finances, by explaining that increasing their payments will ultimately help reduce the cost of the borrowing and the time it would take to pay off the balance; and
- look at ways in which the credit card provider can assist the customer where they may be experiencing actual or possibly financial difficulty by referring them to debt advice organisations and treating them with forbearance, which may include reducing, waiving or cancelling any interest or charges.
The new rules were added to CONC 6.7 as from 1 March 2018. Lenders will need to ensure that they have appropriate policies and systems in place in order to be fully compliant with the new requirements by 1 September 2018.