Earlier today, on 18 May 2026 and in a rather unexpected development, HM Treasury (Treasury) published a press release and policy statement on reforming the Consumer Credit Act 1974 (the CCA) rather than publishing its proposed ‘Phase 2’ consultation paper. The Financial Conduct Authority (the FCA) also published a response to Treasury’s policy statement.
The devil is, of course, always in the detail but the headlines are:
– Treasury proposes to (a) repeal the majority of the pre and post-contract information requirements and recast them into FCA rules (by, presumably, adding provisions to CONC), (b) repeal the sanctions (being unenforceability without a Court order, unenforceability under the lender or owner fixes the position and disentitlement of interest and default fees for periods of non-compliance) and (c) keep criminal offences in the CCA.
– Treasury proposes to repeal and re-cast (where relevant and subject to consultation) a number of provisions in FCA rules (but will keep some things in legislation). These include (a) withdrawal and cancellation, (b) termination rights (including voluntary termination rights under Sections 99 and 100), (c) early settlement and rebates, (d) agreements to enter into future agreements being void, (e) securities and sureties, (f) interest not to be increased on default and (g) credit tokens and liability.
– Treasury proposes to keep a number of provisions. These include (a) CCA framework and definitions (including consumer credit agreements, the meaning of credit, running-account and fixed-sum credit, restricted and unrestricted use credit, debtor-creditor-supplier agreements, debtor-creditor agreements and consumer hire), (b) withdrawal of a prospective agreement under Section 57 of the CCA, (c) pawnbroking, (d) negotiable instruments, (e) time orders, (f) protected goods, (g) death of the debtor or hirer, (h) the provisions on credit reference agencies in Sections 157 to 160 of the CCA and (i) other provisions (being Sections 70 to 73, 93A, 102, 104, 126 and most of remaining provisions in Parts 9 to 12 of the CCA).
– Treasury will not be moving forward with a Phase 2 consultation. But it will consult in the future on other issues including ‘complex CCA provisions’ (being Sections 56, 75, 75A and 140A to 140C of the CCA);
– Treasury will be bringing forward legislation as part of the Financial Services and Markets Bill as announced in the King’s Speech on 13 March 2026 to enact its plans (see later).
– There will be transitional provisions to deal with the transfer from the old to the new.
The FCA says it intends to “consult on the key elements of the consumer credit framework previously set out in legislation, where we have the powers to do so, considering the whole consumer credit process” and its approach will be “underpinned by the Consumer Duty” (which is not, of course, a surprise). But Treasury was keen to make the point in its policy statement that the “Government does not expect that CCA provisions which are repealed and recast into FCA rules to be replicated exactly. Indeed, that is not the objective. Instead, the FCA will consider what appropriate requirements should be put in place, considering its statutory objectives, powers under FSMA and its existing rules including principles like the Consumer Duty“.
So we’ll all now need to wait with bated breath for both (a) the draft legislation and (b) the FCA’s consultation paper. But the timetable looks a lot shorter than perhaps everyone had expected.
If you have any questions, please contact your usual contact at Walker Morris LLP:
– Russell Kelsall | Partner & Head of Consumer & Motor Finance | M: 07811 805 702 | E: russell.kelsall@walkermorris.co.uk
– Jeanette Burgess | Managing Partner | M: 07968 114 901 | E: jeanette.burgess@walkermorris.co.uk
– Leanna Bradshaw | Director | M: 07944 091 982 | E: leanna.bradshaw@walkermorris.co.uk
– Paula Twist | Senior Associate | M: 07796 881 571 | E: paula.twist@walkermorris.co.uk
– Jessica Padget | Senior Associate | M: 07814 695 569 | E: jessica.padget@walkermorris.co.uk
