HM Treasury has now confirmed the direction of travel for its long‑awaited reform of the Consumer Credit Act 1974 (CCA), a shift that marks one of the most significant changes to consumer credit regulation in over a decade. For insurance brokers involved in premium finance, consumer credit broking or lending arrangements, this is a development worth watching closely.
A Modernised, FCA‑Led Framework
The Government intends to move away from the CCA’s highly prescriptive, paper‑era rules and towards a more flexible, FCA‑designed regulatory framework. Since consumer credit regulation transferred to the FCA in 2014, firms have been operating under a hybrid regime of retained CCA legislation and FCA Handbook rules. With simplification objectives in mind, HMT now considers this dual structure outdated, duplicative and costly.
Under the new approach, many of the CCA’s detailed information and disclosure requirements will migrate into the FCA Handbook. This should allow the FCA to design clearer, more user-friendly communications that reflect how customers engage with credit products, in practice, using apps, digital journeys and online platforms. For brokers, this means future rules will align more closely with Consumer Duty expectations and modern customer behaviour.
End of Automatic Sanctions
One of the most notable changes is the removal of the CCA’s automatic sanctions regime. Currently, minor technical errors in prescribed documentation can render agreements unenforceable or require lenders to forgo interest, even where no consumer harm has occurred. HMT views this as disproportionate.
In future, firms will instead be subject to the FCA’s existing supervisory and enforcement framework, supported by Consumer Duty and access to the Financial Ombudsman Service. This represents a shift away from strict statutory consequences and towards outcomes-based regulation.
What Stays in Legislation
Not everything will move into the FCA Handbook. Key statutory protections, including Section 75 connected lender liability, unfair relationship provisions, and certain criminal offences, will remain in legislation. HMT is also considering updates to core definitions such as “credit”, “running‑account credit” and “consumer hire”, which may affect premium finance arrangements.
What Brokers Should Do Now
Although implementation will be phased over several years, brokers should begin preparing by:
- reviewing customer communications and disclosure processes
- assessing reliance on prescriptive CCA wording
- considering how Consumer Duty governance supports future FCA rules
- monitoring upcoming FCA consultations
As in other areas, compliance will increasingly focus on judgement, governance and demonstrable customer outcomes rather than strict adherence to legacy legislative wording.