Consumer Credit Act Reform
For those that may have missed it in June 2022 the government announced its intention to reform the Consumer Credit Act 1974, the legislation that governs the regulation “surrounding billions of credit card purchases, personal loans and consumer hire agreements made by UK consumers each year”.
As the legislation neared its 50th anniversary the government decided that reform was necessary to facilitate innovation in the credit sector and to ensure consumers remain adequately protected in a rapidly changing credit market.
To facilitate the process it launched a consultation in December 2022 inviting input from stakeholders in respect of issues such as 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.
Over 70 organisations responded to the consultation including some well-known industry names such as Money Saving Expert, HSBC, Barclays, the British Vehicle and Renting Association and the Consumer Credit Trade Association.
The government’s response to the consultation was published on 11 July 2023.
It concluded, perhaps unsurprisingly, that reform will take several years to deliver and will require primary legislation, a detailed rulemaking process by the Financial Conduct Authority and appropriate transitional periods to allow industry to prepare and adapt to the new rules.
The government will be undertaking policy development to produce more detailed proposals and will be engaging in a second stage consultation in 2024 to seek comment from stakeholders.
So in short, watch this space!
Stephen Crossley – 12 July 2023