New credit card laws do not go far enough to protect people from debt
It has been claimed that new rules brought in for credit card firms do not go far enough to achieve what they originally set out to do.
The Financial Conduct Authority (FCA), the organisation that regulates the UK’s financial services and markets, introduced the changes in order to help people struggling with debt, but some say the changes are too little, too late.
The new rules require credit card firms to take action once someone has been identified as being in persistent debt. A series of escalating steps must be applied to assist that customer. These are:
- Following 18 months of persistent debt – The customer must be contacted and informed of how increasing their repayments would be beneficial, warning that their card could be stopped if they maintain the same level of payments
- Following 27 months of persistent debt – The customer will be contacted again and reminded of the information they were given after 18 months
- Following 36 months of persistent debt – The customer must be offered a reasonable method of repaying the outstanding balance on their card. In the event they are unable to pay, the lender must demonstrate forebearance and look for ways of reducing or waiving any fees, charges or interest accrued.
Critics say that three years is too long a time to wait before any actual measures are taken. With no firm action in the interim, the customer is free to continue with their minimum repayments.
Meanwhile, interest will continue to mount, driving them deeper and deeper into debt.
- If debt is causing your business financial difficulties, contact Gibson Hewitt. Speak to our Business Insolvency department today.