FICO UK Credit Market Report – May 2020

Benchmarking data can help you evaluate strategies, identify focus areas for your portfolio, and provide information to auditors and regulators

2-cycle balances growing for cards raise issues around Persistent Debt

My last two posts on persistent debt in the UK focused on compliance and prevention. Here’s a different angle: Can issuers actually compete in this area?

Following on from my previous post on persistent debt, here I’m tackling the topic of preventing customers from falling into persistent debt.

While issuers have already started the actions prescribed by the FCA's persistent debt regulations, there is still a sizeable amount of work to complete and opportunities to be identified.

With over £40 billion of unused exposure on inactive UK cards and over £50 billion on active UK cards there is the potential for huge losses if consumers start to eat into these limits.

Our analysis of UK cards data from the FICO Benchmarking Service has revealed some troubling trends in UK cards delinquencies. All average delinquent balances reached over two-year highs in the fourth quarter of 2018.

Following on from evaluating the roll rate results, this blog looks at the static delinquency levels, accounts remaining at the same level of delinquency.

Balance roll rates — overdue balances on UK cards that go from one 30-day cycle to the next without repayment — moved sl...

The introduction of IFRS 9 will mean focus is placed on pre-delinquency — treatment of accounts before they exceed limits or miss payments.

UK cards on books 1-5 years are showing signs of debt stress - here are the facts, as well as recommendations for issuers.

Consumers who are concerned about their level of credit card debt can use a number of options and tactics to keep their credit healthy.

In reviewing our data from the FICO Benchmarking Service, for users of FICO TRIAD Customer Manager, I saw some interesting long-term trends and some signs of potential debt stress, particularly among accounts 1-5 years on book.

The introduction of two initiatives in the UK credit card market may see an increase in the promotion and take-up of Directs Debit, and greater flexibility offered to those paying this way.