The Financial Conduct Authority (FCA) has written to firms reminding them they have a duty to help people who have been in spiralling debt for at least 18 months to reduce their credit card debt “more quickly”.

It said firms are not allowed to suspend credit cards of struggling customers without having an “objectively justifiable reason”.

The FCA introduced rules in March 2018 aimed at helping people who pay more in interest, fees and charges than their starting balance.

Under the rules, when someone’s been in persistent debt for 36 months, the provider needs to offer a way to repay the balance in a reasonable period.

Jonathan Davidson, executive director of supervision for retail and authorisations at the FCA, said: “Under our rules, firms must help customers to reduce the level of debt they have on their credit card more quickly.

“If a customer cannot afford the firm’s proposals for how to do this, the firm must offer forbearance, potentially including reducing, waiving or cancelling any interest, fees or charges.”

The FCA estimates that the rules – if implemented properly – could save customers up to £1.3bn a year in lower interest charges.

However, following a review of how firms were putting the rules into practice, the FCA said it identified some areas of concern.

It is concerned that some customers may not respond to letters from their credit card provider, advising that they have been in persistent debt for three years.

It also said some firms were proposing repayment options “not reasonable and sustainable for customers”.

Peter Tutton, head of policy at debt charity StepChange, said: “It is helpful to see the FCA reminding firms of their responsibilities under the new rules.

“The FCA is unequivocal that firms should not cancel people’s cards wholesale. We particularly welcome the regulator telling firms to include in their letters a reminder that forbearance is available if people cannot afford what is suggested, and that they should signpost to independent advice, especially for those receiving letters from more than one card provider.”