The government has today published the Reforming the Consumer Credit Act 1974 Consultation.
The Consumer Credit Act 1974 (CCA) governs the regulation surrounding billions of credit card purchases, personal loans and consumer hire agreements made by UK consumers every year. It is the government’s intention that this reform will facilitate innovation in the credit sector and increase accessibility of credit products, contributing to growth in the sector and the economy more broadly.
This is also an opportunity for the government to bolster existing consumer protections to ensure customers remain adequately protected in a modern and increasingly digital economy.
On 16 June 2022, the government announced its intention to reform the CCA. The consultation published today is the first stage of the reform and asks stakeholders for input on the strategic direction of reform. It also asks questions about how the consumer credit regulatory environment could be changed to ensure optimal performance of regulation surrounding customer communications, consumer protections and sanctions for firms that do not adhere to regulatory standards. Further questions cover how this reform should approach the accessibility of credit and financial inclusion.
The Government invites input from stakeholders by 17 March 2023.
Commenting on the Reform of the Consumer Credit Act consultation, Stephen Haddrill, Director General of the Finance & Leasing Association, said: “The Consumer Credit Act was written back in the 1970s, and subsequent updates have merely nibbled the edge of what needed to be changed.
“We therefore welcome today’s announcement as the first stage of what must be comprehensive reform. For too long, consumers and lenders have had to deal with archaic language, complicated processes and rigid structure.
“We need a modern regime that protects consumers, facilitates innovation and is futureproofed to grow and adapt with the industry.
“The Government recognise the important role that credit plays in the economy, so we look forward to working with them to improve the regulation that underpins billions of transactions each year in the UK.”
