Lord Bishop of St Albans: To ask Her Majesty’s Government whether they intend to introduce measures to prevent the automatic increase of credit card limits.
Lord Bates: The regulation of consumer credit including credit cards is a matter for the Financial Conduct Authority.
Last year, the Financial Conduct Authority (FCA) published the results of its Credit Card Market Study. As a result of this study, the FCA has taken action to tackle persistent debt in the credit card market. As part of this, the industry has also developed a voluntary agreement to give greater control to customers and to restrict offers of credit limit increases.
We have passed the Lord Bishop’s question on to the FCA, who will reply directly to him by letter. A copy of the letter will be placed in the Library of the House.
The Lord Bishop of St Albans: To ask Her Majesty’s Government what steps they intend to take to offer individuals relief from persistent debt; and whether they intend to introduce a statutory breathing space scheme.
Lord Bates: The government is committed to supporting all those affected by problem debt, and has a range of measures in place.
The Financial Conduct Authority (FCA) regulates the consumer credit market, and has introduced binding rules to strengthen consumer protection. They are based on the principle that money should only be lent to a consumer if they can afford to repay it; lenders must show forbearance if there is evidence of financial difficulty.
The FCA also capped the cost of payday loans. As part of a review of this price cap, the FCA will examine the high-cost credit market more broadly (such as rent-to-own), and consider whether further interventions are necessary to address the risk of consumer harm.
The Money Advice Service (MAS), which was set up by the government, coordinates the provision of free-to-client debt advice. In 2016/17, MAS spent just under £49 million on its debt advice work, directing around 90% of this to fund frontline services. This led to more than 440,000 free-to-client debt advice sessions being delivered face-to-face, over the phone and online across the UK.
In the Queen’s Speech, the government announced the Financial Guidance and Claims Bill. This will legislate to restructure the financial guidance landscape and bring debt advice, money guidance, and pensions guidance together in a single body, and give consumers better access to the financial information they need. This Bill is currently going through Parliament.