The Financial Conduct Authority (FCA) in the UK has raised concerns over additional credit card charges levied by the lenders.
The regulator, in some cases, found that the financial institutions are charging customers additional fees in a single billing cycle.
Go deeper with GlobalData
It also identified that customers with lower credit limits face a higher proportion of credit card charges or fees.
Subsequently, FCA asked credit card firms to change their procedures in order to eliminate such malpractices. The move is expected to deliver around £80m in savings for the consumers.
FCA executive director of supervision Retail and Authorisations Jonathan Davidson said: “It is unacceptable for firms to ignore signs of customers struggling financially and continue to charge them fees for missed payments which they likely can’t afford.
“Our research showed that a large number customers were often missing payments but continuing to be charged fees.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“In some cases, customers ended up being charged multiple fees as a result of each missed payment. This may suggest that firms are not adequately identifying and dealing appropriately with signs of actual or possible financial difficulties.”
The implementation of the new rules is expected to benefit the consumers facing financial difficulties and trapped in persistent credit card debt.
