Reforms aim to give consumers clearer information while giving firms greater flexibility to innovate in digital financial markets
The Government has announced plans to modernise the Consumer Credit Act (CCA) for the first time in more than 50 years, in reforms aimed at improving consumer protection while supporting innovation in financial services.
The reforms will update legislation first introduced in 1974, which ministers said no longer reflects how consumers access credit in an increasingly digital financial market. The changes are intended to provide clearer information for consumers using products such as loans, credit cards and overdrafts, while allowing firms greater flexibility to develop new products and services.
A significant element of the overhaul will involve transferring many of the Act’s detailed and prescriptive requirements out of primary legislation and into the Financial Conduct Authority’s (FCA) rulebook. The Government said this would allow regulation to adapt more quickly as financial products and technology evolve.
HM Treasury said the existing framework had failed to keep pace with developments in digital lending, fintech products and modern borrowing models, despite incremental reforms over recent decades. The proposals form part of broader financial services reforms intended to support economic growth while maintaining strong consumer safeguards.
Economic Secretary to the Treasury and City Minister Rachel Blake said: “People need to be able to make informed choices when applying for and using credit.” She added: “The Consumer Credit Act was written for a different era – we are creating a flexible regime fit for the digital age.”
In response to the Treasury’s policy statement, the FCA said reform of the CCA represented “an important step towards a more flexible regime” capable of supporting competition and innovation while maintaining appropriate consumer protection standards.
The regulator said the revised framework would place greater emphasis on FCA rules and guidance rather than detailed statutory requirements. It confirmed that future policy development would be underpinned by the Consumer Duty, which sets expectations for firms to deliver good outcomes for consumers.
The FCA also said it intended to consult on key aspects of the future consumer credit framework, including provisions currently contained in legislation covering cancellation rights, withdrawal rights and early settlement protections.
Industry groups welcomed the direction of reform. Peter Tutton, director of policy, research and public affairs at StepChange Debt Charity, said moving communication requirements into FCA rules would allow a “test and learn approach” capable of delivering better outcomes for consumers.
Eric Leenders, managing director of personal finance at UK Finance, described the proposals as “an important step towards a simpler, future-proofed regime with strong consumer protections in an increasingly digital world”.