Forthcoming legislation will enable much of the regime to be recast in FCA rules.

By Becky Critchley, Nicola Higgs, Rob Moulton, and Charlotte Collins

Link to Key Points: Key Points:

  • Most CCA provisions will be repealed and replaced with more flexible, outcomes-focused FCA rules.
  • Some provisions will be removed entirely, such as those imposing sanctions for compliance errors relating to certain information requirements.
  • The overall timetable remains uncertain, and final reforms are likely to take time: primary legislation must be passed, and the FCA needs to consult on its replacement rules.

On 18 May 2026, HM Treasury published its Policy Statement on reforming the Consumer Credit Act 1974 (CCA). It published a consultation on Phase 1 reforms in May 2025, proposing to repeal most of the highly prescriptive information requirements under the CCA so that they could be recast in FCA rules, and to remove the draconian sanctions (such as unenforceability) for failures to comply with certain of the information requirements (see this Latham blog post). HM Treasury also asked for views on repealing the handful of criminal offences under the CCA.

The Policy Statement provides feedback on the Phase 1 reforms and sets out HM Treasury’s intention to repeal the majority of the remaining CCA provisions. In broad terms, most CCA provisions will be repealed and, where appropriate, replaced with more flexible, outcomes-focused FCA rules, supported by the Consumer Duty. HM Treasury stresses that these provisions are not intended to be copied wholesale into the FCA Handbook. Certain provisions will be retained in legislation, particularly those requiring further policy work or which cannot easily be replaced with FCA rules — for example, provisions that need to apply to persons who are not FCA-authorised. HM Treasury notes that it had planned to publish a Phase 2 consultation to address parts of the CCA not covered by the Phase 1 consultation, but has decided that there is sufficient support for these further changes without holding a further consultation.

Link to Phase 1 Consultation Response Phase 1 Consultation Response

HM Treasury received 65 responses to its May 2025 consultation. It reports mixed views: industry stakeholders were generally more supportive of repeal, while consumer groups tended to be more cautious, particularly on the removal of sanctions and criminal offences. HM Treasury nevertheless intends to repeal most of the information requirements so that they can be recast in FCA rules. It considers that this will support a more flexible, outcomes-focused approach, enabling firms to communicate in ways that better support consumer understanding and to adopt new technologies and innovative approaches.

One consequence of removing information requirements from legislation is that exempt persons who do not require FCA authorisation, but are currently subject to certain CCA obligations, would no longer be subject to those requirements because new FCA rules would not apply to them. HM Treasury does not consider this a concern, as exempt persons would still need to adhere to relevant standards, typically those of the professional bodies to which they belong. However, it states that it will closely monitor the activities of exempt persons and consider whether any future change is needed.

HM Treasury has also concluded that it will repeal the sanctions and rely instead on the FCA’s existing supervision and enforcement powers, together with other consumer protection mechanisms such as the Financial Ombudsman Service. It notes that the sanctions are out of step with modern regulation and considers them unnecessary in light of the broader consumer protection framework. However, HM Treasury has decided to retain the criminal offences in the CCA, taking the view that they deter harmful business practices such as canvassing off trade premises, circulating credit-related information to minors, and abusive pawnbroking.

Link to Remainder of the CCA Remainder of the CCA

While HM Treasury is proposing to repeal many of the remaining CCA provisions, the transition to FCA rules will not be seamless. Certain provisions, or parts of them, need to remain in legislation because HM Treasury considers that they cannot be replicated in FCA rules. Helpfully, Annex A of the Policy Statement sets out what is expected to happen to each provision.

Provisions to be repealed include those covering withdrawal and cancellation rights, termination of agreements, and early settlement and rebates. These would be recast in FCA rules. HM Treasury plans to retain provisions including those relating to key definitions (such as the definition of a consumer credit agreement and definitions of various types of agreement), pawnbroking, and protected goods.

In addition, HM Treasury intends to leave some of the more complex provisions, including those relating to connected lender liability (Section 75) and unfair relationships, in legislation for now as it considers that further work is required before it can develop policy proposals for those provisions.

Link to Transition Transition

HM Treasury has not set an implementation timetable, including for any transitional period. However, it clearly recognises the need for appropriate transitional provisions and the importance of avoiding unnecessary costs and complexity. It considers that transitional provisions cannot be set until the full reform package is clear, and therefore plans to make secondary legislation on transitional provisions in due course. In the meantime, it will engage with stakeholders on its proposals in this area.

Link to Next Steps Next Steps

Legislation to implement the CCA changes is included in the Financial Services and Markets Bill announced in the King’s Speech, which was introduced into Parliament on 19 May 2026. Finalisation of the legislation will pave the way for the FCA to consult on proposals to recast relevant provisions in its rules.

The FCA confirmed in a statement that it will consult on the elements of the regime being delegated to it, taking an approach underpinned by the Consumer Duty. The FCA has not yet set a timetable for this consultation, as timing will depend on the legislation. HM Treasury states that it will provide an update on its plans for the complex provisions it is retaining in legislation in due course.

Separately, HM Treasury states that it intends to review the regulatory regime for credit broking to ensure that it remains proportionate. In particular, it is considering the merits of extending some existing exemptions in light of the broad exemption for merchants offering point-of-sale credit products under the new “buy now, pay later” regime. HM Treasury will provide a further update on the next steps for this review separately from CCA reform.