Treasury publishes CCA reform plans

Treasury has published the outcome of its consultation on reforming the Consumer Credit Act 1974 (CCA).

The Government’s intention is that reform will facilitate innovation in the credit sector and increase accessibility of credit products. Stakeholders were supportive of the Government’s plans to move forward with an ambitious overhaul of the CCA.

Consultees were generally supportive of the objective to align consumer credit regulation with modern financial services regulation by transferring many CCA provision to the FCA rules. However, views differed as to how the Government should seek to achieve this. The divergence of stakeholder views on were based on underpinning tensions related to:

  • FCA enforcement vs a ‘self-policing’ regime;
  • Prescriptions vs outcomes; and
  • Legislation vs rules.

On the subject of net zero, several stakeholders argued that certain CCA provisions make lending to support sustainable consumer choices more challenging. However, others cautioned against changes to incentivise the take up of green products, arguing that adding additional objectives could compromise consumer protection. The Government will consider how its regulatory approach might support the provision of finance for renewable energy solutions and contribute to net zero goals without hindering such protections.

Following positive feedback, the Government will proceed with using the five principles to underpin CCA reform proposed: proportionate; aligned; forward-looking; deliverable; and simplified.

The consultation also sought stakeholder views on the following categories of CCA provisions:

  • Scope;
  • Definitions;
  • Information requirements;
  • Rights and protections; and
  • Sanctions.

The paper sets out responses on each of these categories, but given the early stage in policy development, the Government did not yet come to any firm conclusions on how these areas will be reformed.

The Treasury will now undertake policy development to produce more detailed proposals, with second stage consultation expected in 2024.

Laura Wiles