Thousands Of Credit Card Users In UK Face Account Closures As FCA Deadline Expires In February
23 Jan 2020
Approx Reading time: 3 minutes
- Lloyds Banking Group has issued warnings to its customers about possible actions that can be taken on their accounts in February.
- Those customers who have not been cooperating with their credit providers could be facing account suspension.
- In many cases, banks are expected to offer alternative payment options to customers instead of suspending their accounts.
Warnings have started to come in now that the 18-month timeline set by the FCA back in September of 2018 is reaching its conclusion next month. Three banks, including Halifax, Lloyds, and also the Bank of Scotland, have warned their customers of a possible cancellation of their credit cards in February.
Only those customers that have been maintaining persistent debt on their credit cards have been issued warnings, as stipulated under the new FCA guidelines. These changes have been implemented as a way to bring millions of credit card users out of perpetual debt that has kept them in a credit loop for a considerable period of time.
According to guidelines provided by the FCA to credit card providers, customers who had been paying only the minimum amount over the 18 months prior to September 2018 needed to be sent notifications that they needed to increase their repayments or risk having their credit cards revoked. Credit card companies had 18 months since September 2018 to contact all such customers to notify them. They needed to send at least 3 letters.
Since this 18-month period is due to end in February, banks have now started taking measures to plan the way forward for those customers that have not made the required changes.
For customers of the Lloyd Banking Group, which includes the three banks mentioned above, this included an email that they have received about the possible impact on their account if they have not adhered to the required changes. This may include the cancellation of their cards, although this has not been confirmed by the bank so far.
According to the banking group, it would be evaluating each case on an individual basis to determine the possible courses of action, moving forward, keeping in mind the best interests of the customers. A spokesperson for the bank has commented that the bank has remained committed to improving the financial condition of its customers, especially those in persistent debt for a considerable period of time.
Hence, credit cards might only be blocked for those customers that would benefit from such a blockage, as a way of stopping them from piling on more debt than they need. Banks are also expected to facilitate their struggling customers in their repayment plans, offering them a reasonable time period to make all due repayments. This facilitation could also include cancellation/reduction of any pending interest or charges. In some cases, debts could be wiped off completely.
However, non-cooperative customers could face suspension on their credit card accounts.
Lloyd customers are not the only ones facing the closure of their credit card accounts next month. Barclaycard holders also face similar repercussions. Nationwide is also going to suspend a few accounts, while other banks such as Virgin Money would be enacting closures from March.