Fifty years on: HM Treasury’s vision for a reformed consumer credit regime

On 13 May 2025, HM Treasury published its policy statement on the reform of the Consumer Credit Act 1974 (CCA), setting out the Government's decisions following a Phase 1 consultation that closed in July 2025. The policy statement confirms the Government's intention to repeal large parts of the CCA and replace them with rules made by the Financial Conduct Authority (FCA), as part of a broader effort to build a more agile and proportionate regulatory regime that enables innovation and drives growth while ensuring robust consumer protection. In parallel, the FCA has also published a statement setting out its broad approach to CCA reform, with further stakeholder engagement on specific rules to follow at a later date.

The policy statement recognises the importance of consumer credit to the UK financial services landscape, providing consumers with flexibility, the ability to spread costs, access to funds in emergencies and broader economic participation. The Government acknowledges the importance of the CCA as a landmark piece of legislation providing vital consumer protections at the time it was enacted, but it is now seen as out of date with market developments, technology and consumer behaviour.

Whilst previous reforms in 2014 transferred consumer credit into the broader financial services regime under the Financial Services and Markets Act 2000 (FSMA), with a number of CCA provisions being repealed, the remainder of the CCA has continued to sit alongside the FCA regime. This has created a complex regimegoverned both by FCA rules and the CCA, as well as associated secondary legislation. To address this, the Government's approach is anchored around five principles: that reform should be proportionate, aligned with the broader FSMA framework, forward-looking, deliverable and simplified. 

In this blog post, we set out the key changes the Government is taking forward as part of the reform.

What is changing?

Information requirements. One of the key concerns with the current CCA is the prescriptive and inflexible information requirements, which firms struggle to communicate effectively to consumers. The Government has concluded that the FCA should deliver a less prescriptive and more flexible regime via the FCA Handbook, focusing on good consumer outcomes and alignment with the Consumer Duty. The FCA will consider how best to deliver the information regime and will consult on its broad approach to the CCA reform in due course.

Sanctions. The CCA's automatic sanctions of unenforceability of agreements and disentitlement to interest and default sums will be repealed. While consumer groups opposed this change, viewing the sanctions as a crucial self-policing deterrent and an automatic protection, the Government concluded that they are disproportionate given the robust consumer protection available through the FCA regime and court processes. This is further supported by the consumer’s ability to complain to the Financial Ombudsman Service. Automatic sanctions (which would generally need to attach to prescriptive rules) would not be compatible with the prevailing direction of the FCA’s proportionate and outcomes-based approach.

Criminal offences. The CCA's criminal offences will be retained in primary legislation. These cover canvassing off trade premises, sending circulars to minors, credit reference agency offences, pawnbroking offences and offences relating to debtors or hirers providing information about goods. Consumer groups favoured retention, viewing the offences as a clear deterrent even where prosecutions are rare. Industry stakeholders largely favoured repeal, arguing the offences are obsolete. However, the Government sided with retention, emphasising the need for robust consumer protection and the value of criminal offences in deterring against harmful business practices.

Other provisions repealed and recast. A further range of provisions will be repealed and either be recast into FCA rules or fall away entirely. These include certain withdrawal and cancellation rights, early settlement and rebate rights, voluntary termination rights, and securities and sureties provisions. A core set of protections will be retained in primary legislation (subject to any necessary amendment), including those relating to pawnbroking, land mortgages and consumer hire agreement. 

What is not yet decided?

Three significant areas have been set aside for further policy work due to their complexity and wide-reaching implications: section 56 (antecedent negotiations), sections 75 and 75A (connected lender liability) and sections 140A to 140C (unfair relationships). The Government has indicated that further policy work, data analysis and stakeholder engagement will be carried out before any proposals are brought forward. 

Implementation and next steps

The Government brought forward the changes for CCA reform set out in this policy statement in legislation as part of the Financial Services and Markets Bill announced in the King's Speech on 13 May. The CCA reform is likely to be broadly welcomed by the industry as a significant development in the direction of a more flexible and proportionate regime, supporting growth and innovation while maintaining appropriate consumer protection.

The Government is keen to ensure there is a smooth transition to the new regime with minimal disruption, in particular given the current role of the CCA and the importance of firms and consumer groups being given sufficient time to prepare for the changes. The transitional period is yet to be determined but will reflect the significant scale of change needed. HM Treasury will engage further with stakeholders in relation to the transitional provisions. 

The FCA will also need time to develop its policy and consult on its rules. The FCA’s approach is expected to be underpinned by the Consumer Duty and the regulator’s expectations for firms to deliver good outcomes for consumers. Stakeholder engagement on specific proposals and rules will follow in due course.

Firms across the consumer credit market should review the policy statement carefully to understand which CCA rights and obligations are being retained in statute, which are migrating to FCA rules, and which remain subject to further review. The Government has also signalled a separate review of the regulatory regime for credit broking within the Regulated Activities Order, which may be of particular relevance to firms offering point-of-sale credit, and is also working to modernise the legislative framework for payment services and e-money, including with respect to tokenised payments instruments.