The proposed end of the Consumer Credit Act 1974: what the proposed move to FCA rules would mean for lenders, brokers and retailers

Context: fifty years of the Consumer Credit Act

The Consumer Credit Act 1974 is one of the most enduring statutes in UK commercial law. Enacted to consolidate earlier consumer credit legislation and give borrowers enforceable rights against lenders, it has governed the £200 billion non-mortgage consumer-lending market for more than five decades. Its provisions define regulated credit agreements, prescribe the form and content of documentation, set out pre-contract and post-contract disclosure requirements, and create automatic remedies — most notably the unenforceability of improperly executed agreements and the loss of the lender's right to interest — that operate without any need for court intervention.

The landscape in which it operates has, however, changed fundamentally. On 1 April 2014, consumer credit regulation transferred from the Office of Fair Trading to the Financial Conduct Authority under the Financial Services and Markets Act 2000 framework. The FCA created the Consumer Credit Sourcebook (CONC), brought consumer credit firms within its supervision and enforcement regime, and in July 2023 introduced the Consumer Duty — a broad, outcomes-focused obligation requiring firms to deliver good outcomes for retail customers across four cross-cutting areas: products and services, price and value, consumer understanding, and consumer support.

The result is a dual-layered regulatory architecture that industry and the government have long considered anomalous: consumer credit firms must comply with CONC and the Consumer Duty under FSMA 2000, and simultaneously with CCA 1974 provisions — many of them prescriptive and granular — that predate the FCA's existence and were designed for a licensing regime run by a non-financial regulator. The reform programme is the government's attempt to resolve that anomaly, consolidating consumer credit regulation within the FCA's existing rulebook and removing the parallel statutory layer.

The legislative journey has been extended. HM Treasury launched an initial consultation in 2022, with a response in 2023 confirming the direction of travel. A Phase 1 consultation, covering information requirements, sanctions, and criminal offences, was published on 19 May 2025 and closed on 21 July 2025, drawing 65 responses. The May 2026 policy statement constitutes the government's response to Phase 1. The Financial Services and Markets Bill, introduced to the House of Lords on 19 May 2026 (HL Bill 5, 2026–27 session), is the proposed legislative vehicle. A further Phase 2, addressing scope, consumer rights, and key definitions, is anticipated — the government has indicated it will proceed in some Phase 2 areas without a further formal consultation where sufficient evidence already exists.

From prescriptive statute to outcomes-based rules: the proposed shift

The analytical centrepiece of the reform is a proposed shift in regulatory philosophy: away from the CCA's prescriptive approach — mandatory forms, mandatory notices, automatic consequences for non-compliance — and towards the FCA's outcomes-based model, where firms are required to achieve specified results for consumers rather than follow a specified process.

Under the current regime, a failure to comply with CCA information requirements — for example, providing a pre-contract information document in the wrong form, or omitting a mandated statement in an arrears notice — triggers automatic statutory consequences. An improperly executed regulated credit agreement is unenforceable by the lender without a court order, and the court has discretion to refuse enforcement entirely. The lender loses the right to interest while the agreement remains improperly executed. These automatic sanctions have been criticised by lenders and their legal advisers as disproportionate: a technical breach in paperwork can render a commercially sound loan voidable, in some cases long after the credit has been advanced and spent.

The government's policy statement proposes to repeal most of these prescriptive information-disclosure provisions — pre-contractual, post-contractual, arrears notices, default notices, and forbearance notices — and recast them as rules in CONC, underpinned by the Consumer Duty. The automatic sanctions are also proposed for repeal: instead of agreement unenforceability or disentitlement to interest, the FCA's regulatory toolkit would apply — supervisory action, financial penalties, variation or cancellation of permissions, and redress requirements. The Financial Ombudsman Service would continue to provide redress for individual consumers.

The practical implications depend heavily on what replacement CONC rules the FCA eventually proposes. If FCA rules are broadly equivalent in substance to the CCA provisions they replace, the shift is primarily procedural. If the FCA uses the opportunity to simplify or modernise disclosure requirements — for example, moving towards digital-first, layered disclosure aligned with consumer behavioural research — the change may be substantive for lenders and their documentation systems. The FCA has signalled, through its broader Consumer Duty framework, a preference for clear, concise consumer communications over compliance-driven comprehensive disclosure — a philosophy that differs materially from the CCA's approach.

Consumer groups have raised a legitimate concern about this shift. The CCA's automatic sanctions, however technically arbitrary in individual cases, have historically provided borrowers with a powerful self-help remedy: a consumer who can demonstrate a procedural breach has a concrete enforcement lever that operates without recourse to the regulator or the courts. Replacing automatic sanctions with regulatory enforcement tools shifts the burden: consumers would depend on the FCA or FOS to act, rather than asserting private rights. Industry bodies, conversely, argue that proportionate regulatory consequences are preferable to automatic voidability, which creates uncertainty and — in structured finance and securitisation markets — complicates the legal analysis of portfolios. Both positions have analytical weight; the balance struck in the FCA's eventual replacement rules will be the key determinant.

What is proposed to be retained, repealed, and left open

The policy statement draws a careful distinction between what the government proposes to repeal, what it proposes to retain in statute, and what remains unresolved pending further engagement.

Proposed for retention: Core CCA definitions — "regulated agreement", "consumer", "creditor", "credit" — would be retained, preserving the established taxonomy on which case law, FCA rules, and firm systems are built. Pawnbroking provisions, protected goods rules (which limit repossession of goods once more than one-third of the price has been paid), land-mortgage provisions, and the courts' judicial-control powers over credit agreements are also proposed for retention. These are provisions where the CCA framework provides consumer protection that would be difficult to replicate through FCA rules alone, or where the private-law architecture is integral to the product type.

Proposed for repeal: The bulk of the CCA's information-disclosure architecture — including the pre-contract information requirements, the executed agreement requirements, the statement requirements for running-account credit, arrears notices, default notices, and post-contract disclosure obligations — is proposed for repeal and migration to CONC. The automatic sanctions framework is proposed for repeal. Most criminal offences in the CCA are also proposed for repeal, retaining only a targeted set considered essential — including those protecting minors from credit solicitation and the prohibition on off-premises canvassing for credit.

Unresolved — the significant open questions: Two provisions carry particular commercial importance and remain explicitly unresolved in the policy statement. Section 75 provides that where a consumer uses a credit card or other debtor-creditor-supplier agreement to make a purchase, the lender is jointly and severally liable for any breach of contract or misrepresentation by the supplier. This is a widely used and valued consumer right — it is the basis on which consumers can claim from their credit card issuer when a retailer fails. Section 56 deems dealers and retailers acting as credit intermediaries to be agents of the lender for certain purposes, affecting the allocation of liability between the retail chain and the lender. Both provisions are legally complex, commercially significant, and the subject of contested views among lenders, retailers, consumer groups, and their legal advisers. The government has indicated that further stakeholder engagement is anticipated before final legislative treatment is determined. For lenders and retailers in point-of-sale credit arrangements, the resolution of these two questions will be among the most consequential outcomes of the programme.

Who is affected and what the reform would mean for different market participants

The breadth of the CCA's reach means the reform programme would affect an unusually wide range of businesses. Consumer credit is a reserved matter and applies UK-wide, including Northern Ireland — a point of distinction from employment legislation where devolved carve-outs apply.

Consumer credit lenders — banks and building societies issuing credit cards, personal loans, and overdrafts; specialist lenders for hire purchase, personal contract purchase, and vehicle finance — carry the most extensive CCA compliance burdens. These firms maintain document libraries, notice templates, and remediation processes aligned to CCA form requirements. A transition to CONC-based rules would require systematic review and revision of documentation, systems, and operational processes. The vehicle finance sector faces additional complexity from ongoing FCA supervisory work on broker remuneration practices, which runs alongside the structural reform programme as a separate regulatory track.

Credit brokers — including comparison platforms, car dealerships arranging finance, and intermediaries in the insurance and financial services markets — are subject to both CONC credit broking rules and CCA provisions governing their interactions with lenders and consumers. Section 56 (deemed agency) is directly relevant to how liability is allocated between dealers and lenders in point-of-sale arrangements. The uncertainty over its future legislative treatment makes long-term commercial structuring more difficult for participants in these arrangements.

Retailers offering point-of-sale credit — from furniture and white-goods retailers to consumer electronics chains — use interest-free credit and deferred payment arrangements as significant commercial tools. Many operate under credit broking permissions or as appointed representatives of lenders. The proposed retention of FCA authorisation requirements means the authorisation gateway would remain, but the substantive rules within it are proposed to shift. Retailers would need to assess how their CCA-compliant documentation and processes translate to the FCA's outcomes-based framework once replacement rules are confirmed.

Buy-now-pay-later providers face a compounding regulatory environment. A parallel regulatory expansion has been under consideration to bring currently unregulated BNPL within the FCA's perimeter; this proceeds on a separate legislative track from the CCA reform programme. For BNPL providers already operating under FCA authorisation, the CCA reform is directly relevant. For those who may enter the FCA perimeter for the first time, the incoming framework may be an outcomes-based CONC regime rather than the current CCA architecture, depending on the timing of both tracks.

Debt management and consumer-hire firms are also within scope. The CCA governs consumer hire agreements as well as credit agreements, and debt management firms operate within the enforcement and arrears-notice framework that is proposed for repeal and migration to CONC. How the FCA calibrates replacement rules for these specialised sub-sectors is an open question.

What stakeholders and analysts are saying

The reform programme has broad support in principle across the lending industry, but that consensus masks significant divisions about the details — particularly around Section 75, the replacement for automatic sanctions, and the pace of change.

Industry bodies have long argued that the dual CCA/FSMA architecture creates unnecessary friction. The proliferation of mandated notice templates that must be followed precisely, combined with the risk of agreement unenforceability for technical breaches, has been criticised as disproportionate to the consumer-protection benefits. Lenders and their trade associations have broadly welcomed the direction of the policy statement. The shift to outcomes-based regulation aligns with an approach they consider more proportionate, more flexible, and more compatible with digital delivery of credit products. As Addleshaw Goddard's analysis of the Phase 1 consultation notes, the government's intent is to create "a simpler, more flexible regulatory framework that aligns with the FCA's principles-based approach." The concern from industry is transition risk: firms need sufficient lead time between the finalisation of replacement CONC rules and commencement to overhaul systems, retrain staff, and update documentation at scale across portfolios that, in aggregate, span millions of agreements.

Consumer groups and debt advice charities have been more cautious. The automatic sanctions — particularly agreement unenforceability — have historically given consumer advisers a concrete tool when helping borrowers in financial difficulty. A lender who has not complied with CCA form requirements faces potential unenforceability of the agreement; an adviser can assert this in response to enforcement action without needing to initiate FOS proceedings or await FCA regulatory referrals. The proposed replacement, which relies on FCA regulatory action and FOS redress rather than automatic private-law consequences, raises questions about whether consumers in difficulty will have equivalent access to effective remedies — particularly those who are unrepresented and may not know how to engage with the FOS or trigger FCA attention.

Legal practitioners note that the reform creates a period of extended uncertainty. Until the FCA publishes and finalises its replacement CONC rules, firms cannot know with certainty what the incoming regime will require. Planning product launches, system upgrades, and compliance frameworks against a moving target — particularly one with an undefined timetable — is an operational challenge that falls disproportionately on firms with smaller compliance functions.

What firms should be doing now — and what to watch

The most important immediate message is that current CCA 1974 and CONC obligations are unchanged. Firms should continue to operate under their existing compliance frameworks. Any preparation for change is best framed as contingency planning rather than implementation.

That said, firms are likely to benefit from beginning to map their CCA dependencies now, before the reform reaches a stage that requires action. This means identifying which current practices, document templates, system workflows, and remediation processes are anchored to specific CCA provisions rather than CONC or the Consumer Duty. Firms that understand where their CCA exposure lies — and which of those areas fall into the "proposed for repeal", "proposed for retention", and "unresolved" categories — will be better placed to respond efficiently when the FCA opens its replacement rules consultation. Firms whose operations depend materially on Section 75 or Section 56 arrangements should be monitoring the parliamentary process and any HM Treasury announcements on further stakeholder engagement on those specific provisions with particular attention.

The following are the key milestones to monitor:

• The Financial Services and Markets Bill's parliamentary progress. Introduced to the House of Lords on 19 May 2026, the Bill must complete Lords stages, pass to the Commons, and receive Royal Assent before any reform can take legal effect. The Bill may be amended in passage; the treatment of Section 75 and Section 56 in particular may be shaped by scrutiny and debate. Track the Bill's progress via the Parliament's Bills tracking service.
• The FCA's Regulatory Initiatives Grid. The FCA is expected to add its CCA replacement CONC consultation to its Regulatory Initiatives Grid once the Bill is enacted. This Grid provides the earliest signal of the FCA's timetable. Until that entry appears, the consultation timetable remains unknown.
• Resolution of Section 75 and Section 56. HM Treasury has indicated that further stakeholder engagement is anticipated before these provisions receive their final legislative treatment. Any call for evidence or consultation paper on these sections will be a significant trigger point for lenders, retailers, and credit brokers in point-of-sale arrangements, and warrants direct engagement.
• Phase 2 of the reform programme. The government has flagged further work on scope, consumer rights, and key definitions. A Phase 2 consultation paper, when published, will clarify outstanding questions about the boundary of the reformed regime and the treatment of provisions not addressed in Phase 1.
• The FCA's replacement CONC rules consultation. Once published, this will be the document that determines what firms will actually need to do. The FCA is likely to consult for a substantial period, given the breadth of affected firms and the complexity of the issues. The transition period between finalised rules and commencement will also be set at this stage. Firms that have engaged substantively in the consultation process — submitting responses and attending stakeholder events — are better positioned to influence the practical detail of rules and to anticipate the direction of travel.