The UK Government has revealed plans to reform the “highly prescriptive and increasingly cumbersome” Consumer Credit Act to reduce costs for businesses to comply and simplify the rules for consumers.
The Government will move much of the Act, which came into force in 1974, from statute to sit under the Financial Conduct Authority (FCA).
By doing this, it said the regulator will be able to “quickly respond to emerging developments” in the consumer credit market, rather than having to amend existing legislation.
The Consumer Credit Act governs credit card purchases and personal loans in the UK.
But HM Treasury called it “highly prescriptive and increasingly cumbersome and inflexible”, and said it is “confusing consumers and adding unnecessary costs to businesses when implementing its requirements”.
A consultation on the proposed overhaul of the Act is expected to be published by the end of the year, in which the Government will outline its proposals and seek views from stakeholders on how the Act should be reformed.
“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,” said Economic Secretary to the Treasury John Glen.
“We want to create a regulatory regime that fosters innovation but also maintains high levels of consumer protection.”
Any reforms introduced by the Government will build on the recommendations of the FCA’s retained provisions report and the Woolard Review, both of which made concluded a reformed regime is required.