How Brokers Support Clients with Persistent Credit Card Debt. Liz Syms, CEO and Founder of Connect for Intermediaries, highlights the vital role that brokers play in supporting individuals struggling with persistent credit card debt. This need became even more urgent following a major regulatory shift in 2018, when the Financial Conduct Authority (FCA) introduced new rules to protect consumers in the credit card market.
Effective from March 1, 2018, and enforced by September that year, these regulations were designed to strengthen protections for financially vulnerable borrowers and ensure more responsible lending practices.
The changes followed an in-depth market study that examined the behaviour of 34 million credit card holders over five years. Feedback from nearly 40,000 consumers revealed troubling statistics:
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In 2014, 5.6 million people were identified as being in problematic debt.
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Of these, 2 million had defaulted or were in arrears.
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Another 2 million had maxed out over 90% of their credit limit for at least a year.
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1.6 million were only making minimum repayments, putting them at risk of long-term debt.
These findings underscored the need for proactive financial support. Brokers, with their comprehensive knowledge of debt solutions, are uniquely positioned to help clients navigate these challenges.
By offering tailored advice, access to specialist lending options, and referrals to relevant debt management or credit repair services, brokers act as crucial intermediaries. Their role extends beyond mortgages—they help clients regain control of their finances and build toward future stability.
In a regulatory environment focused on customer protection, brokers are more essential than ever. With a deep understanding of credit risk, evolving policies, and access to a wide panel of lenders, they can guide borrowers through even the most complex financial scenarios.
Regaining Financial Control Through Regulatory Support
In line with evolving FCA regulations, credit card companies must now take active steps to support customers caught in persistent debt, defined as making low repayments for over 18 months and paying more in interest and fees than towards the actual balance.
Once a customer reaches the 18-month threshold, firms must proactively engage and encourage changes in repayment behaviour. Customers must be informed that failure to act may result in suspension of their credit card.
For those who’ve already spent 12 consecutive months in persistent debt, companies are no longer permitted to offer automatic credit limit increases to ensure greater transparency and financial protection.
This initiative is expected to affect over 1.4 million accounts annually and aligns with broader efforts to foster responsible credit management. It gives individuals greater control over their borrowing without exposing them to unchecked lending practices.
For tailored funding solutions that prioritise financial well-being and accountability, explore our development finance options designed to support structured growth and debt control.
How Mortgage Advisers Can Support Clients in Debt Management
Mortgage advisers play a crucial role in providing expert debt management advice, particularly for clients navigating financial uncertainty or struggling with credit card debt. As the economic landscape continues to shift, many individuals face challenges that increase the urgency for tailored mortgage and refinancing solutions.
When borrowers experience failed repayment arrangements with credit card lenders, their credit ratings can be adversely affected, making future mortgage approvals more difficult. In these cases, advisers can assess alternative funding options, such as remortgage or second-charge mortgages, both of which can help restructure debt on more manageable terms.
One effective method is to consolidate unsecured debts into a single payment plan over a fixed term, using a capital-and-interest repayment schedule. This disciplined approach can improve cash flow and ensure consistent repayment, provided all scheduled payments are met. However, it’s essential to explain the risks of converting unsecured debt into secured borrowing, as missed payments on secured debt could put the client’s home at risk.
Despite this, secured solutions typically offer lower interest rates, enabling clients to reallocate funds from expensive credit repayments toward faster debt repayment. Advisers can also reassess their clients’ protection plans to ensure long-term affordability, even amid unexpected life events.
With lenders and credit providers increasing communication with financially vulnerable customers, this is a prime opportunity for advisers to position their services. Highlighting their ability to guide clients through complex financial circumstances not only builds trust but reinforces the adviser’s long-term value.
Ultimately, today’s economic pressures present an opportunity for proactive mortgage professionals to demonstrate leadership. By offering strategic debt solutions, tailored funding advice, and personal guidance, advisers can help clients regain control and plan confidently for the future.
Thank you for reading our publication “Credit Card Debt | Opportunity For Brokers To Help Clients.” Stay “Connect“-ed for more updates soon!