UK commits to reform credit rules

The UK government has set out its intention to reform the Consumer Credit Act for the first time and update the rules for how people access credit.

The Act has been in force since 1974 and sets out the rules for consumers and finance providers for loans, credit card purchases, and other finance. Under new places, the rules set out in the Consumer Credit Act will be transferred to sit under the Financial Conduct Authority; the move aims to enable the regulator to respond more quickly to emerging developments in the market and simplifying the language to make it clearer for consumers and easier for businesses to comply.

Economic Secretary to the Treasury, John Glen said:

“The Consumer Credit Act has been in place for almost 50 years – and it needs to be reformed to keep pace with the modern world.

“We want to create a regulatory regime that fosters innovation but also maintains high levels of consumer protection.

“That’s why I have committed to undertake this ambitious long-term reform – and it’s exactly what I’ll deliver.”

The reforms will allow lenders to provide a wider range of finance whilst maintaining high levels of consumer protection and enable rules to be updated in response to technological and other changes. They will build on the recommendations of the Financial Conduct Authority’s retained provisions report and the Woolard Review, which both made recommendations for a new regime for the UK’s credit rules.

A consultation is expected to be published by the end of this year outlining the government’s proposals, and seeking views from stakeholders on how the Act should be reformed.