The Government has finally published its policy statement on the final approach to reform of the Consumer Credit Act and its response to its consultation on Phase 1 reform.
It has confirmed:
- it will be repealing most of the information disclosure requirements from the CCA and instead having them housed in FCA Rules, and will repeal the requirements on form and content of agreements and related provisions, on variation of agreements, and on notice requirements. So broadly all pre-contract, post-contract, arrears, default and forbearance requirements will move to FCA Rules – meaning the requirements can be more flexible and will align with the Consumer Duty;
- it will be repealing the CCA provisions on sanctions and disentitlement to interest and relying on the FCA investigation and enforcement regime;
- it will repeal the provisions on early settlement;
- it will retain the current CCA criminal offences relating to canvassing off trade premises, circulars to minors, credit reference agencies, pawnbroking and the debtor or hirer providing information about goods;
- it will repeal several of the remaining CCA provisions (which it had originally proposed to consult on again, but now feels it received sufficient evidence in replies to other consultations to allow it to move forward), and either let them fall away or have them moved into FCA rules. These will include withdrawal and cancellation rights (with some parts being retained), credit-token agreements, small agreements, multiple agreements and liability for misuse of credit facilities;
- it will retain other provisions, including the provisions on consumer credit and consumer hire agreements (including the definitions of different types of credit and agreements) and linked transactions;
- most of the rules on securities and sureties will move into FCA rules; and
- for the time being at least there will be no change to some of the more complex provisions such as s56 (antecedent negotiations), sections 75 and 75A (connected lender liability) and sections 140 A – C (unfair relationships).
The necessary legislative changes will be in the upcoming Financial Services and Markets Bill. The policy statement includes a detailed annex explaining what is happening to various current CCA provisions. And the Government has stressed it absolutely doesn’t want to see the provisions it is repealing simply replicated in FCA Rules.
Separately, the Government plans to review the credit broking regime within the RAO to ensure it remains proportionate, following its decision to exclude broking of BNPL products from regulation.
The FCA says it intends to consult on each relevant element where is has the power to do so, and that its proposals will be underpinned by the Consumer Duty.
As to when all this will happen, the Government is keen to see a smooth transition, and will include an appropriate transitional period when it legislates.