Category: Consumer Duty

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HM Treasury publishes policy statement on reform of the Consumer Credit Act 1974

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

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Financial Conduct Authority publishes its consumer duty priorities for 2025 to 2026

On 30 September 2025, the UK Financial Conduct Authority (the FCA) published a webpage setting out its consumer duty focus areas for 2025 to 2026.

The FCA is clear that it is moving from the implementation phase, to the impact phase. So it’ll focus on four main areas:

(a) Embedding the duty and raising standards

No more just walking the way, you now need to show that you can talk the talk too. Be prepared to share board reports, complaints data and how you treat vulnerable customers, or customers who are struggling. We’re expecting more good and bad practice examples to help firms know what good looks like.

There are four ‘cross-cutting projects’:

– reviewing products and services outcome: How firms are designing products and services to meet customer needs, including those with characteristics of vulnerability.

– reviewing firms’ approaches to outcomes monitoring: Looking at how firms are responding to outcome monitoring requirements.

– reviewing firms’ customer journey design: Looking at the design and delivery of firms’ customer journeys to ensure customers’ needs are met, with a particular focus on how firms apply friction throughout the journey.

– reviewing the consumer understanding outcome: Looking at how firms’ communications are helping consumers make informed decisions.

(b) Looking at price and value

Fair value has always been a key agenda item for the FCA even before the introduction of the consumer duty. The FCA will be publishing findings on (a) unit-linked pensions and long-term savings and (b) pure protection insurance later this year (having recently published its market study into premium finance).

(c) Sector specific deep dives

The FCA has planned work to tackle “areas of existing concern in sectors where there may be harm, or the potential for harm“. These include:

– fair value in SME business current accounts: the FCA is looking at how small business banking firms’ current accounts are complying with the price and value, and consumer understanding outcomes. Expect feedback to firms by the end of 2025.

– consumer understanding in the credit card market: the FCA is looking at how consumers understand the terms and conditions of credit card products and if they get enough clear information to support decision making, particularly when looking to take out a promotional offer.

(d) Simplyfing the Handbook

The FCA is exploring how the duty can help with streamlining existing rules and guidance. Why? To achieve less complexity, more innovation and better outcomes. But with high level principles comes uncertainty: a challenging balance for many firms.

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FCA publishes policy statement setting out changes making it easier for borrowers to re-mortgage

Earlier today, on 22 July 2025, the UK Financial Conduct Authority published a news article, a press release and a policy statement setting out its changes to the the FCA Handbook, including to the Mortgages and Home Finance: Conduct of Business Sourcebook (or MCOB), aiming to make it easier for borrowers to re-mortgage.

What’s changed?

The FCA has made the following changes:

– mortgage advice and interactive dialogue: the FCA has removed the interaction trigger at MCOB 4.8A.7R(3) and associated rules and guidance in MCOB 4 and MCOB 8. This means interactions between firms and their customers should not automatically trigger advice.

– affordability assessments when reducing the mortgage term: the FCA has removed the requirement for a full affordability assessment when reducing a mortgage term by introducing MCOB 11.6.3R(6). But firms must still consider affordability under their responsible lending policy and the consumer duty and PRIN 2A.

– amending affordability assessments when re-mortgaging: the FCA has amended the modified affordability assessment in MCOB 11.9 to include new mortgage contracts with new lenders where it is more affordable than either (a) the borrower’s current mortgage or (b) a new mortgage product that is available to that customer from their current lender.

– retiring guidance: the FCA has retired guidance in FG13/7 (dealing fairly with interest-only mortgage customers who risk being unable to repay their loan) FG24/2 (guidance for firms supporting their existing mortgage borrowers impacted by the rising cost of living) (and there are some new provisions in MCOB 13.2.1AG, MCOB 13.3.8AR and MCOB 13.3.8BG).

– Gibraltar: the FCA has added MCOB 4.1.2ER to make it clear that these changes apply to any Gibraltar-based mortgage lenders who may want to lend within the UK in the future.

When do these changes come into force?

These changes come into effect straight-away.

Why has the FCA made these changes?

The changes made by the FCA aim to allow borrowers to:

– find it easier to reduce their mortgage term, helping to lower the total cost of borrowing and reduce the risk of their repayments extending into retirement;

– more easily re-mortgage with a new lender (which should help them access cheaper products); and

– be able to discuss options with their mortgage provider and get advice when they need it.

The FCA has removed guidance which has “served its purpose” to reduce the regulatory burden.

These changes are part of the FCA’s first steps to simplify its rules and increase flexibility. The FCA says the “Consumer Duty sets clearer, up-to-date standards in financial services“. The changes to the FCA’s rules, including MCOB, aim to provide “greater opportunity for innovation“.

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FCA joins with other regulators to warn firms about debt collection

On 18 March 2024, the UK Financial Conduct Authority published a news story calling on firms to improve debt collection practices. All of the regulators feel that this is particularly important given many consumers continue to feel cost of living pressures.

The news story also includes links to:

– a joint press release; and

– a copy of the joint letter dated 18 March 2024.

This joint letter follows on from a letter published on 28 June 2023 (see the press release and the joint letter dated 28 June 2023).

The latest joint letter makes the following points for financial services firms:

– firms should start from the position that customers in collections are highly likely to have characteristics of vulnerability and should follow FCA’s expectations under the consumer duty (including its finalised guidance) and its vulnerable customer guidance;

– the consumer duty strengthens existing requirements;

– there is foreseeable harm if a debt collection communication sent the customers are perceived to be intimidating or unsupportive (and communications should be tested)

– firms may want to encourage ‘warm’ handovers between frontline and specialist teams; and

– the FCA aims to publish its policy statement before June 2024 on its response to Consultation Paper 23/13.

The FCA reminds financial services firms (and this point should not come as any surprise) that debt collection rules and guidance apply to both debt collectors and to lenders taking steps to recover payments due under credit agreements or consumer hire agreements.

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Less than one month to go before the consumer duty comes into force

The UK Financial Conduct Authority’s new consumer duty comes into force (for most purposes) on 31 July 2023. This will require firms to act to deliver good outcomes for retail customers.

Whilst much has been said about the consumer duty, the FCA’s focus is now on ensuring firms properly implementing it. To help, the FCA published an update on 28 June 2023. It included ten questions for firms to consider:

1. Are you satisfied your products and services are well designed to meet the needs of consumers in the target market, and perform as expected? What testing has been conducted?

2. Do your products or services have features that could risk harm for groups of customers with characteristics of vulnerability? If so, what changes to the design of your products and services are you making?

3. What action have you taken as a result of your fair value assessments, and how are you ensuring this action is effective in improving consumer outcomes?

4. What data, MI and other intelligence are you using to monitor the fair value of your products and services on an ongoing basis?

5. How are you testing the effectiveness of your communications? How are you acting on these results?

6. How do you adapt your communications to meet the needs of customers with characteristics of vulnerability, and how do you know these adaptions are effective?

7. What assessment have you made about whether your customer support is meeting the needs of customers with characteristics of vulnerability? What data, MI and customer feedback is being used to support this assessment?

8. How have you satisfied yourself that the quality and availability of any post-sale support you have is as good as your pre-sale support?

9. Do individuals throughout your firm – including those in control and support functions – understand their role and responsibility in delivering the Duty?

10. Have you identified the key risks to your ability to deliver good outcomes to customers and put appropriate mitigants in place?

This is not, of course, a ‘checklist’ but it does give a useful insight into the FCA’s priorities.