What Is Persistent Debt — Credit Card Claims
Persistent debt is a specific FCA concept that applies to credit cards. It happens when, over an 18-month period, a customer pays more in interest, fees and charges than they have paid off in principal. The FCA’s rules require credit card lenders to identify these customers and to intervene — first with prompts to increase payments, eventually with proposals to clear the balance over a reasonable period. Where lenders fail to follow this framework properly, a complaint can succeed.
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Where the rule comes from
The persistent debt rules sit in CONC 6.7.27R to 6.7.40G, introduced in March 2018 following the FCA’s Credit Card Market Study. The rules were a direct response to concerns that millions of customers were sitting on credit card debts that were never meaningfully reducing because they only ever made low or minimum payments.
The 18-36-month framework
The rules work in stages. They are sometimes called the “18, 27, 36” framework after the months at which each intervention is triggered:
- After 18 months — if the customer has paid more in interest, fees and charges than principal, the lender must contact them, explain the position, and prompt them to consider increasing payments.
- After 27 months — if the customer is still in persistent debt, the lender must contact them again with a similar prompt.
- After 36 months — if the customer remains in persistent debt, the lender must propose a way to repay the balance over a reasonable period, typically three to four years. If the customer cannot afford the proposed repayments, the lender must consider forbearance — which can include reducing or waiving interest and charges.
The lender is also required to monitor for persistent debt continuously, not just at these specific milestones, and to adjust its approach where it has evidence of the customer’s financial difficulty.
Persistent debt is not the same as unaffordable lending
These are two related but distinct issues. Unaffordable lending is about whether the credit should have been given (or extended) at all, given the customer’s circumstances at the time of the lending decision. Persistent debt is about whether the lender properly handled an account that subsequently fell into a long-term low-payment pattern, regardless of whether the original lending was affordable.
Many credit card complaints involve both. A card opened with inadequate affordability checks, then left to accumulate years of minimum payments while the lender did nothing, can fail on both counts.
When a persistent debt complaint can succeed
The Financial Ombudsman has upheld persistent debt complaints in cases where:
- The lender failed to identify the customer as in persistent debt at the 18-month point.
- The lender sent the required communications but they were unclear, generic or buried among marketing material.
- The customer reached the 36-month point and the lender did not propose any repayment plan.
- A repayment plan was proposed but the customer indicated they could not afford it, and the lender did not engage with forbearance options.
- The lender continued to apply interest and charges in circumstances where the rules required it to consider waiving them.
- Credit limit increases were applied to a customer the lender already knew or should have known was in persistent debt.
Typical redress
Where a persistent debt complaint succeeds, the typical remedy is to refund the interest, fees and charges that accrued from the point at which the lender should have intervened — often the 36-month point at which forbearance should have been considered. As with other unaffordable lending complaints, 8% statutory interest is added on top, and any adverse credit-file entries linked to the unfair handling can be removed.
How this connects to a wider credit card complaint
A complaint about a long-running credit card often combines several strands: was the card affordable when it was opened; were credit limit increases proportionately reviewed; was the persistent debt framework properly applied. A complaint to the lender doesn’t need to be neatly labelled — it just needs to set out the facts. The Financial Ombudsman is well-used to looking at all of these issues together when deciding what is fair and reasonable.
Related guides
- What is unaffordable lending?
- The CONC rules on affordability — a plain-English guide
- What affordability checks should a lender carry out?
- How the Financial Ombudsman handles unaffordable lending complaints
- Do I have an unaffordable lending claim?
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