Regulation  

Regulator reveals credit card review terms

The Financial Conduct Authority has revealed that shopping around is one of three main focuses of its credit card market study as part of its evaluation of whether the market is working effectively for consumers.

At the start of April the regulator announced plans for a competition review into the UK’s £150bn credit card market and today it has published the terms of references of the study.

It will be focused on, but not limited to:

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• how easy it is for consumers to shop around, compare cards and find one that best meets their needs, including the extent to which consumers drive competition by switching, product complexity, transparency and fairness of terms and conditions, and behavioural drivers;

• how firms recover their costs across different cardholder groups and the impact this has on the market, for example whether certain customer groups are disadvantaged, the impact on innovation or whether it prevents new products coming to market; and

• issues around unaffordable lending, so whether particular groups of consumers are over-borrowing or under-repaying their credit card balances.

The FCA says the study will enable it to build a detailed picture of the market, covering credit card services offered to consumers by banks, “mono-line” issuers, and their affinity and co-brand partners.

Christopher Woolard, director of policy, risk and research at the FCA, noted that UK consumers hold around 70 per cent of all credit cards in Europe. “We want to understand in more depth what drives consumers to make the choices they do and how firms develop the services they offer.

“We want to make sure that the market works well for all consumers and that card-holders get a fair deal.”

The FCA is seeking feedback on the scope of the market study by 5 January 2015.

peter.walker@ft.com