HM Treasury has committed to reforming the 1974 Consumer Credit Act which regulates all credit card purchases and personal loans, including hire purchase and PCP agreements.
The Government revealed it would modernise the act in order to cut costs for businesses and simplify the rules for consumers. HM Treasury will launch a consultation on the direction of the reform by the end of 2022.
Commenting on the announcement John Glen, economic secretary to the Treasury, 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.”
A Government spokesman added: “The reforms will allow lenders to provide a wider range of finance whilst maintaining high levels of consumer protection. For example, we will ensure that the information a consumer receives throughout the lending process is easy to understand and will be both screen and print-friendly. We will also ensure that lenders are able to more easily provide credit for emerging and new technologies such as electric cars, helping millions of people embrace technological innovation.
“The reforms will build on the recommendations of the Financial Conduct Authority’s retained provisions report and the Woolard Review – which both made recommendations for a reformed regime.”
Stephen Haddrill, director general of the Finance and Leasing Assocation, welcomed the announcement: “This is a great result. We have campaigned for CCA reform on behalf of our members and their customers over several years, and I am very pleased indeed that the Economic Secretary to the Treasury, John Glen, has confirmed that this will now go ahead.
“The CCA’s tendency to complicate and delay that which should be simple and quick meant that it was barely up to the task of regulating business and protecting customers during benign periods, but during the pandemic, it fell well short of lender and customer expectations.”