The UK government has published a policy statement setting out proposed reforms to the consumer credit regime. The measures are expected to be included in the Financial Services and Markets Bill announced in the King's Speech on 13 May.

HM Treasury consulted in 2025 on Phase 1 of its reform of the Consumer Credit Act 1974 (CCA), focusing on information requirements, sanctions and criminal offences. The government has now confirmed that it intends to proceed with the following changes:

• Repeal most information requirements. Most information disclosure requirements in the CCA and related regulations will be repealed and, where appropriate, recast in FCA rules following consultation. These requirements cover information provided to consumers before an agreement is entered into, after it is made, and in circumstances such as arrears, default and forbearance. The aim is to reduce prescription, give firms greater flexibility in the design of products, customer journeys and disclosures, and support the use of developing technology. The changes are also intended to promote proportionate regulation, better consumer outcomes and closer alignment with the Consumer Duty, while enabling the FCA to update the regime more quickly in response to market developments.
• Repeal the sanctions. The sanctions of unenforceability without a court order, unenforceability until a breach is remedied, and disentitlement to interest and default sums will be repealed, falling away alongside the information requirements to which they attach. These sanctions were designed for a very different regulatory regime under the Office of Fair Trading. By contrast, the FSMA framework and the FCA regime already provide a wide range of consumer protections, supported by broad supervisory and enforcement powers. The government considers the existing sanctions disproportionate and unnecessary, particularly as their automatic nature tends to require highly prescriptive rules and does not reflect the level of consumer harm in a particular case. Repeal would bring consumer credit more closely into line with other financial services and help ensure that firms' liability for redress is proportionate, while consumers would retain the ability to complain to the FOS.
• Retain criminal offences. The criminal offences that will remain cover canvassing off trade premises, circulars to minors, credit reference agencies, pawnbroking, and the provision by a debtor or hirer of information about goods. The government considers that these offences continue to play an important role in deterring harmful business practices.

Next steps

The government had originally planned a Phase 2 consultation on the remaining CCA provisions not addressed in Phase 1. It now considers that, in some areas, it has enough evidence to proceed without further consultation. It therefore proposes repealing the following provisions, which would either fall away or, where appropriate, be recast in FCA rules following consultation:

• Withdrawal rights (noting some parts will be retained);
• Cancellation rights (noting some parts will be retained);
• Early settlement and rebate rights;
• Termination of agreements (including voluntary termination), noting that some parts will be retained;
• Securities and sureties (noting some parts will be retained);
• Credit-token agreements, acceptance and liability for misuse of credit tokens;
• Agreement to enter future agreement void;
• Liability for misuse of credit facilities;
• Interest not to be increased on default; and
• Statements by creditor or owner to be binding.

By contrast, the government proposes retaining the following provisions in legislation, subject to any necessary amendments:

• Consumer credit agreements, including the meaning of credit, running-account credit, fixed-sum credit, restricted-use and unrestricted-use credit, debtor-creditor-supplier agreements, and debtor-creditor agreements;
• Consumer hire agreements;
• Linked transactions;
• Cancellation: recovery of money paid by debtor or hirer, return of goods and goods given in part exchange;
• Withdrawal from a prospective agreement;
• Death of debtor or hirer;
• Protected goods, recovery of possession of goods or land, summary diligence not competent in Scotland;
• Ineffective securities;
• Pawnbroking;
• Negotiable instruments;
• Land mortgages; and
• Most of the remaining provisions under Judicial Control (including time orders and interest), Ancillary Credit Businesses (including credit reference agencies), and Enforcement of Act and Supplemental (including interpretation and definitions).

The government also intends to repeal most provisions on securities and sureties, with replacement FCA rules to follow where appropriate and subject to consultation. At present, the FCA's rule-making powers under FSMA extend to sureties only where the security takes the form of a guarantee or indemnity. They do not cover other forms of security within section 189 of the CCA, such as charges or pledges. To address that gap, the government proposes extending the FCA's powers under FSMA and the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 so that, for the purpose of making rules on consumer credit and hire agreements, they apply to the full CCA definition of "security", including persons providing security other than by guarantee or indemnity.

The government does not, however, intend to amend certain more complex CCA provisions at this stage. These include section 56 (antecedent negotiations), sections 75 and 75A (connected lender liability), and sections 140A–C (unfair relationships). Although proposals may follow in due course, the government considers that the complexity of these provisions, and the potentially wide-ranging consequences of reform, mean that further policy work, data analysis and stakeholder engagement are needed first.

The government has emphasised the importance of ensuring a smooth transition to the new regime, with minimal disruption to a market in which the CCA continues to play a significant role. HM Treasury and the FCA will therefore work closely together to support implementation.

The legislation will include a commencement power designed to give firms sufficient time to prepare for the new regime once the FCA has finalised its rules.