Plans have been agreed to modernise consumer credit laws

Plans have been agreed to modernise consumer credit laws, cutting costs for businesses and simplifying rules for consumers.

It is expected that HM Treasury will publish a consultation on the planned reforms by the end of 2022, granting the FCA more control over the rules that apply to the consumer credit market.

The reforms come in response to a government statement on the existing Consumer Credit Act of 1974, in which they described the Act to be ‘cumbersome and inflexible, leading to consumer confusion and unnecessary business costs’. It is thought that a new proposal will transfer much of the Act from statute to the umbrella of the FCA, enabling the regulator to quickly respond to emerging developments in the consumer credit market, rather than having to amend existing legislation which has a much longer timeframe.

The extended timeline is yet to be discussed and agreed. We will reach out to clients with the latest updates as and when they are released, allowing firms a generous amount of time to understand how any reforms will impact their business.