Consumer Credit Act reform: a new landscape for consumer lending

On 20 May 2026, the HM Treasury published its long-anticipated policy statement on reform of the Consumer Credit Act 1974 (CCA). The policy statement confirms the UK government’s plans to overhaul the 52-year old consumer credit framework by repealing significant parts of the CCA, recasting some of its provisions within the FCA Handbook and transferring the conduct regulation of relevant firms to the FCA. The reforms are being introduced through the Financial Services and Markets Bill (the Bill).

For lenders and brokers, adapting to the reforms won’t be a simple compliance exercise. Rather, consumer credit market participants should be alive to the broader recalibration of the retail financial services framework following the introduction of the Consumer Duty. This is particularly true for those accustomed to managing CCA risk by complying with the CCA’s prescriptive rules on standardised documentation, disclosures, notices and formality checks.

Given the government’s desire to modernise the analogue CCA in a digital credit market so that it better reflects developments in technology and evolving consumer behaviour, there is a practical shift towards asking whether a firm can demonstrate that its credit products, customer communications and support arrangements work fairly in practice.

Key expected changes

Movement of information requirements into FCA rules

Acknowledging reports from consumers that the prescriptive format of the CCA’s current information disclosure requirements causes confusion and risks poor consumer outcomes, the government is likely to replace these requirements with FCA-made rules. This is expected to affect not only onboarding and pre-contractual information and disclosure mechanics but also information provided throughout the consumer lifecycle, including post-contract notices, arrears and default-related communications and forbearance documentation.

This doesn’t mean that disclosure obligations will disappear. On the contrary, in many respects, there will be an increased burden on firms. Compliance will depend on an evaluation of whether a communication reached the right consumer at the right point in their journey and whether it was presented in a language and format that enabled them to make a properly informed decision.

Reconsideration of statutory sanctions

The government accepts that complex and ambiguous sanctions in the CCA can create legal uncertainty for firms, resulting in increased litigation costs and operational challenges. Stakeholders argued that sanctions are often disproportionate because they are triggered by technical non-compliance without any assessment of actual or impending consumer harm.

The proposed model would use the FCA’s supervisory and enforcement powers as the mechanism for securing compliance. This includes requirements imposed through FCA rules, variation or cancellation of permissions, redress, public censure and financial penalties. It’s hoped this will lead to greater supervisory scrutiny of systems, controls, governance and consumer outcomes.

Retention of core statutory protections

The reforms are not intended to repeal every important statutory protection contained in the CCA. The government has acknowledged that complex and significant provisions, such as section 56 deemed statutory agency during antecedent negotiations, section 75 connected lender liability and the unfair relationship provisions in sections 140A to 140C of the CCA, require further policy work before any replacement or transfer is decided.

Retention of criminal offences

The criminal offences set out in the CCA will be retained to serve as a strong deterrent against harmful business practices. These apply in relation to canvassing off trade premises, circulars to minors, credit reference agencies, pawnbroking and the provision of information regarding goods by debtors and hirers.

A more FCA-led regime

With the FCA positioned as the principal rule-maker for much of the future consumer credit regime, compliance will become more closely integrated with the wider FCA regulatory experience.

How firms should prepare

Lenders, brokers and consumer credit market participants can expect the FCA to use data, supervisory engagement and thematic reviews to test whether the reformed regime is achieving its intended outcomes. Firms would therefore do well to consider product governance, fair value, customer understanding and support, affordability, financial promotions and complaints handling as parts of a single operating model rather than separate compliance silos.

In preparation for the new regime, firms should:

1. Identify where their CCA requirements currently sit across the business: firms should map out whether CCA requirements are embedded in templates, hard-coded into systems or managed through manual controls. This should help identify where current processes depend on existing statutory mechanics and where future remediation work will be required
2. Review communications through a Consumer Duty lens: as many information requirements are expected to be recast in FCA rules, firms should assess whether they provide key information at the right time, in the right format and in a way consumers are likely to understand. Lenders should consider testing communications with consumers, including those who are vulnerable, and retain evidence of the rationale for any redesigned approach
3. Consider interactions with other regulatory initiatives: firms should consider whether the reforms – the timing and detail of which will evolve – interact with other regulatory initiatives or products, including buy now, pay later regulations and credit information reform
4. Assess systems and data readiness: firms should assess whether they can monitor consumer outcomes across the credit lifecycle, from pre-contractual information disclosure through arrears and refinancing to settlement behaviour. A more outcomes-based regime will require reliable data, and firms’ systems should be able to support revised communications and customer journeys while facilitating this monitoring
5. Revisit product governance and distribution arrangements: where credit is introduced, brokered or embedded through retailers, platforms or intermediaries, lenders should consider how customer understanding and support will be delivered in practice, as the FCA will scrutinise not only the lender’s own conduct but the entire customer journey.

While lenders, brokers and consumer credit market participants will face the challenge of managing the transition, the reforms also provide an opportunity to reassess how credit products are designed, marketed, explained, distributed and serviced. Those that prepare early, reduce operational complexity, simplify customer journeys without losing sight of the underlying policy objectives and demonstrate good outcomes could gain a competitive advantage.