All posts by Stacey West

Stacey West is a Senior Consultant within Fair Isaac Advisors, FICO's consulting arm. She works closely with clients in the financial sector across the EMEA region and is responsible for delivering innovate risk management solutions to address their customer management goals and objectives. Stacey has a further 12 years of experience in the UK financial services sector, which includes working in the Credit Card Risk Department of NatWest responsible for their account management strategies. Previously, Stacey had various roles in the Credit Card Operations Department of The People’s Bank of Connecticut covering the credit life cycle.

Risk & Compliance FICO Data: Have Premium Cards Lost Their Edge in the UK?

Gold card

Are Premium cards becoming harder to distinguish from Standard Classic cards? Is there still a place for them in the market? Traditionally, Premium* cards (gold and platinum) were perceived as reserved for the lowest-risk, best-quality accounts, and so had higher limits. Spend was thought to be greater, though a larger proportion of full-balance payers made them less profitable than Classic cards. However, over time the FICO Benchmark Reporting Service data for the UK reveals that the Premium customer is changing and so is the performance, particularly of the more mature accounts. In July 2017 25% of the accounts in the FICO Benchmark Reporting Service were Premium accounts, along with 25% of balances. With the exception of New accounts (<12 months on book), which were 20% of accounts and 20.4% of balances, Established (1-5 years on book) and Veteran (5+ years on book) accounts were about 25% of the relevant vintage population in the service. Common Beliefs... [Read More]

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Risk & Compliance FCA’s New Rules for UK Credit Line Increases

FCA logo

My last two posts in this update on UK cards discussed the growth in unused credit and the rising delinquencies in New cards. Both of these posts discussed credit line increases, but there’s one more factor that could weigh heavily on issuers’ plans. The FCA is preparing to introduce new guidelines for credit cards that will impact line increases. It is anticipated that all new accounts will have to opt in for any offered increases, and this is expected to reduce the number of increases that take place. The approach for existing customers should remain as per today, where customers have to reject the offer. However, customers who display a sustained propensity to pay the minimum payment (on non-promotional balances) will either have to opt in or be excluded from increases. Customers showing signs of persistent debt (based on how much they have paid in fees and interest versus reducing their balance)... [Read More]

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Risk & Compliance Early Warning Signs on New UK Card Accounts

Pile of credit cards

As noted in my previous post, over the last five years there has been significant growth in exposure, card balances, sales and, to a lesser extent, cash usage on UK cards. This is despite a decrease in the number of total accounts, as acquisitions have not outpaced attrition. Looking at our March 17 report, less than 1% of total card accounts were booked that month, and just under 8% of accounts had been on the books 12 months or less, showing slow growth rates. Fortunately, payments growth has exceeded these metrics and total 1 to 3 cycle accounts and balances decreased over this period. That reduction in delinquent balances isn’t true across the board, though. If you look at the vintage level, you see a different story. Veteran accounts (5+ years) are responsible for the positive news above, and to a lesser extent Established (on the books 1 to 5... [Read More]

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Risk & Compliance Unused Credit Card Lines Are a £90 Billion Problem in UK

Pile of credit cards

As the UK’s Financial Conduct Authority proposes that issuers reduce or waive interest rate charges for persistent credit card debt, it raises the question: Just how much credit card debt do Britons carry? The answer is: a lot more than they used to. FICO has just done research based on our FICO® Benchmark Reporting Service data, which includes the vast majority of cards issued in the UK. Our analysis shows that: Average credit lines on “Classic” cards (which excludes Premium cards, Student cards and Irish-issued cards) have grown 50% since 2002 to £5,062. The largest growth has been accounts which are 1 to 5 years on book (Established) and this vintage have the highest percentage of inactive accounts, 35%. Veteran (5+ years on book) has the highest % of unused credit on accounts which are spending. In January 2017 the average balance on accounts with limits £5,001 to £10,000, which... [Read More]

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Risk & Compliance Good and Bad Signs for UK Credit Card Performance

Chart of UK credit card performance

FICO’s latest data on the performance of UK credit cards shows a difference between mature and new accounts that card issuers would be well advised to note. In June, the percentage of current (non-delinquent) accounts that have been on the books for 12 or more months reached its highest value over the last two years. In addition, the average current balance among mature accounts was £49 higher than in June 2014, and £106 higher than in June 2013. But there were also warning signs for new accounts, those that are less than a year old: The percentage of new accounts that are two cycles delinquent has risen 14 percent since December 2014. Average delinquent balances have risen 7.5 percent year on year. The average amount overlimit for new accounts reached its highest point in more than two years — this figure has been rising since January 2015. The percentage of... [Read More]

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Customer Engagement Are Annual Fees Back on the Cards for the UK?

Credit cards in wallet

Over the last few years, UK credit card issuers have been facing the challenge of shrinking revenue opportunities due to tighter regulations that capped overlimit fees and late payment fees. There has also been a continual reduction in interchange rates, with further imminent cuts. Consumer and media perception that banks are “penalizing” people who are less able to afford fees may result in further reductions, or even complete removal of some charges that are based on poor payment performance. Card issuers could make up this shortfall by raising interest rates. But many issuers appear to be considering annual card fees to recoup lost income. FICO has seen this done effectively, but there are pros and cons: Pros of annual card fees 1) Stable annual revenue income 2) More active book due to consumers closing dormant cards to avoid fees 3) Higher chance of being front of wallet with increased customer loyalty, as less... [Read More]

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Risk & Compliance UK Card Delinquencies: The “Bad Growth Ratio” Is Shrinking


As UK card spend picks up in a healthier economy, is this balance growth healthy? To investigate this issue, our team that manages the FICO Benchmark Reporting Service did some digging. The measure we looked at compares growth in delinquent balances vs. growth in current balances. The higher this “bad growth ratio”, the bigger the difference. Delinquent balances have been growing at a faster rate than current balances, but this ratio has been falling —  in other words, improving — over the last year, continuing the previous year’s trend. This improvement has taken place for delinquent balances at 1 cycle, 2 cycles and 3 cycles. For example, in November 2013 the growth rate of 3-cycle balances was 1.63 times the growth rate of current balances. In November 2014, the ratio was 1.57. The ratios for 1-cycle and 3-cycles reached their lowest point in more than two years. Year on year... [Read More]

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