The credit card industry was thrust back in the dock this morning after the City Watchdog announced details of its market study into the £150 billion market.
The Financial Conduct Authority is concerned that credit cards are being marketed too aggressively pushing consumer to run up debts they can't afford to repay.
It revealed that there are around 30million cardholders who have £56.9 billion of outstanding debt.
Meanwhile UK consumers hold around 70 per cent of all credit cards in Europe.
Christopher Woolard, director of policy, risk and research at the FCA said: “We want to make sure that the market works well for all consumers and that card-holders get a fair deal.”
Its research published in April revealed that the credit card market was not working well for some consumers with many “worn down by continual marketing”.
The study, which runs until January, will examine how easy it is to shop around and understand terms and conditions.
It will also investigate whether certain groups are disadvantaged or over-borrowing and whether consumers can easily switch between different credit card providers.
Mr Woolard said: ”We want to understand in more depth what drives consumers to make the choices they do and how firms develop the services they offer.“
The average total credit card debt of clients of StepChange Debt Charity is £9,047, it said. The average person who turns to the charity has multiple plastic with 2.7 cards.
Mike O’Connor, the charity's chief executive, said: ”Too many people are using credit as a safety net when all too often it is a trap which leads to problem debt. Credit card debt is one of the most common debt problems we see. Many people are struggling with multiple debts, high balances and interest rates.“
Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “The FCA is absolutely right to be looking at all sectors of the credit market. Credit card borrowing remains a hugely significant part of the UK debt landscape.”
The FCA is seeking feedback on the scope of the market study by 5 January 2015.Reuse content