The Financial Conduct Authority (FCA) has published the terms of reference for a credit card market study that revealed that the credit card market was not working well for consumers who were over-borrowing and paying unexpectedly high interest rates.
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The regulatory body will conduct an in-depth study of the retail credit card market including those issued by banks, those that are run as stand-alone businesses and those that are co-branded.
FCA will also look into the consumer behaviours and the product complexity to ensure that the market, worth £150bn a year with total debts of £60bn, supports all consumers to get a fair deal.
The market study will help FCA to comprehend the marketing and recovery patterns by the firms besides gaining a detailed idea about unaffordable lending, i.e. over-borrowing or under-repaying credit card balances by particular groups of consumers.
Christopher Woolard, director of policy, risk and research at the FCA said: "The credit card market is well-established and hugely important for UK consumers, who hold around 70% 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."
