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The HM Treasury policy statement on reform of the Consumer Credit Act (CCA) 1974 outlines a major transformation in the way consumer credit is regulated in the UK. At its core is the recognition that the current framework, originally designed in the 1970s, is no longer suited to a market shaped by digital technology, innovative lending products, and changing consumer behaviour. Over time, the Act has become complex and overly prescriptive, making it harder for both consumers to understand and firms to operate within effectively.
To address this, the government proposes a fundamental shift in regulatory design. Instead of relying heavily on detailed provisions in primary legislation, much of the remaining CCA will be repealed and replaced with rules set and maintained by the Financial Conduct Authority (FCA). This reflects the broader UK approach to financial services regulation, where Parliament establishes the overall framework while the regulator develops the detailed requirements. The intention is to create a more agile system that can evolve quickly as markets and technologies change, without requiring frequent legislative updates.
One of the most significant elements of the reform relates to consumer information requirements. Under the existing regime, firms must comply with highly detailed and prescriptive rules governing the format and content of disclosures. These often result in long, technical documents that are difficult for consumers to navigate. The proposed reforms would replace these rigid requirements with a more flexible, outcomes-based approach under FCA rules. The emphasis will be on ensuring that consumers receive information that is clear, relevant and provided at the right time, so that it genuinely supports informed decision-making rather than simply meeting legal formalities.
The policy statement also signals a major change in how non-compliance is treated. The current system includes strict statutory sanctions, such as rendering agreements unenforceable in cases of technical breaches. The government considers these consequences to be disproportionate in some cases and not well suited to a modern regulatory framework. As a result, it proposes removing many of these statutory sanctions and instead relying on the FCA’s supervisory and enforcement powers, alongside its Consumer Duty, to hold firms accountable. This represents a move away from a system driven by technical compliance towards one focused more on outcomes and overall consumer protection.
At the same time, the reform does not seek to remove core consumer protections. Key rights—such as the ability to withdraw from agreements, cancel within certain periods, settle loans early, or terminate agreements—will largely be retained. However, many of these protections are likely to be recast into FCA rules rather than set out directly in legislation. This change is intended to preserve the substance of consumer protections while making them easier to adapt over time as market practices evolve.
Not all elements of the CCA will be removed from statute. Certain foundational aspects, including core definitions and the overall structure of the regime, will remain in legislation to provide legal certainty. In addition, some specific areas—such as provisions relating to credit reference agencies, as well as certain niche or technical elements of consumer credit law—are expected to stay within the statutory framework. Importantly, criminal offences under the CCA will also remain in legislation, reflecting their seriousness and the need for clear legal boundaries in these cases.
The reform programme is underpinned by a set of guiding principles. It aims to be proportionate, balancing strong consumer protection with the need to avoid unnecessary burdens on firms. It is designed to be forward-looking and adaptable, ensuring that the regulatory framework can keep pace with innovation. It also seeks to align closely with existing FCA initiatives, particularly the Consumer Duty, which emphasises good customer outcomes across the financial services sector.
In practical terms, the changes are expected to benefit both consumers and firms. Consumers should experience clearer, more meaningful communications about credit products, helping them better understand costs, risks and their rights. Firms, in turn, should benefit from a more flexible regulatory environment, enabling them to design products and customer journeys that make better use of digital technologies without being constrained by outdated and overly detailed legislative requirements.