Category: Policy Statement

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Bill reforming the Consumer Credit Act 1974 has its first reading in the House of Lords

On 19 May 2025, Parliament’s website was updated to confirm that the House of Lords had its first reading of the Financial Services and Markets Bill (which is the Bill setting out the proposed reforms to the Consumer Credit Act 1974 (the CCA)). For those wanting to see the detail, the Bill has also been published.

Section 1 of the Bill sets out the key consumer credit changes (and the Bill covers many other financial services topics; more on those at some later point). Section 1(1) and Part 1 of Schedule 1 set out amendments to the CCA (for a summary of those, see our blog post from earlier this week). Section 1(2) and Part 2 of Schedule 1 set out “minor and consequential amendments to other legislation“.

We are currently waiting for a date for the second reading in the House of Lords.

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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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FCA publishes motor finance consumer redress schemes

On 30 March 2026, at around 4:45pm, the UK Financial Conduct Authority (the FCA) published a press release, updated its webpage and published Policy Statement 26/3: Motor Finance Consumer Redress Scheme (PS26/3) (covering 584 pages).

But that was not all. The FCA also published (in addition to PS26/3):

– Technical Annex 1 (covering 181 pages);

– Technical Annex 2 (covering 45 pages);

– consumer research survey (covering 46 pages) and a technical report analysing the awareness of the relationship between vehicle dealerships and motor finance companies (covering 41 pages);

– an updated diagnostic report (covering 101 pages);

– motor finance redress scheme firm-led communications (covering 42 pages) and a supporting annex (covering 89 pages);

– two factsheets: one for customers invited to join the scheme and another for customers who have complained (each being 2 pages);

– analyst briefing slides (covering 25 slides); and

– a transcript of the analyst briefing call (covering 20 pages).

To try and avoid the need to read 1,178 pages, we’ve prepared a handy one-page summary of the key features of the consumer redress schemes (if you click the imagine you should get a bigger version). But the devil is, of course, always in the detail.

If you have any questions, please contact me, Jeanette, Leanna, or Paula, or any of your other usual Walker Morris contacts.

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FCA publishes press release on proposed motor finance consumer redress scheme

Earlier today, on 4 March 2026, the UK Financial Conduct Authority published a press release on its proposals to introduce a motor finance consumer redress scheme.

Some key messages are:

– The FCA says that “if we proceed with a scheme, we are likely to make several changes“.

– If a scheme is made, the FCA expects “to publish final rules in late March” and the timing “will be outside market hours and we’ll confirm the date in advance“.  

– The FCA has not yet made any final decisions on any scheme.

– But the FCA proposes to “streamline the consumer journey to make it smoother for firms to operate“. These changes will include:

(a) removing the need to ask customers who have already complained if they want to opt out: instead consumers will be told within 3 months of the end of the implementation period if they’re owed compensation and how much.

(b) consumers receiving redress offers will be able to accept it straight-away; and

(c) firms will not need to communicate by recorded delivery: instead a range of channels will be acceptable to best meet a consumer’s needs while preventing fraud.

– The FCA is likely to introduce “an implementation period of 3 months, with up to 5 months for older agreements“.

– The FCA reminds consumers that there “is no need to use a claims management company (CMC) or law firm“.

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HM Treasury publishes consultation on proposed changes to the legislative regime for appointed representatives

Earlier today, on 12 February 2026, HM Treasury published a press release and a consultation paper on proposed changes to the legislative regime for appointed representatives.

This consultation follows the Government’s press release and policy statement, published on 11 August 2025, setting out its intention to “shore up confidence in the use of Appointed Representatives and to safeguard the future of the UK’s Appointed Representatives regime“.

The key proposals are:

– to require firms wishing to use appointed representatives to first obtain permission from the Financial Conduct Authority (which aims to ensure the principle is suitable to be authorised);

– to provide “appropriate consumer protection when things go wrong” by allowing a complainant to take a complaint to the Financial Ombudsman Service where the authorised firm is not responsible for the issue (for example, where an appointed representative acts outside of the scope of what the principal accepts responsibility for); and

– to bring appointed representatives within the scope of the Senior Managers and Certification Regime so that it is better aligned with the framework applying to authorised firms.

The consultation closes on 9 April 2026.

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FCA publishes mortgage rule review webpage

Earlier today, on 2 October 2025, the UK Financial Conduct Authority (the FCA) published a mortgage rule review webpage bringing together a summary of the FCA’s work on its mortgage rule review.

The webpage’s aim is to set out the FCA’s changes and communications and what they mean for firms.

So far, the FCA lists five important developments. These are:

– the flexibility in the FCA’s existing stress test rule in MCOB 11.6.18R (and more can be found by visiting another webpage published by the FCA);

– the FCA’s Discussion Paper on the future of the UK mortgage market (the FCA has published a webpage and the Discussion Paper; the consultation period ended on 19 September 2025);

– the changes made to MCOB to support greater choice in the mortgage market (for more, see our summary of the changes);

– the developments to the loan-to-income flow limits; and

– the FCA’s speech on mortgage reform to the Building Societies Association from May 2025.

It’s expected that this will continue to be updated in the coming weeks, months and years.

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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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Financial Ombudsman Service announces change to compensatory interest levels

Earlier this week, on 15 July 2025, the Financial Ombudsman Service (the Ombudsman Service) published a press release and a policy statement, following a consultation, setting out its decision to change the level of compensatory interest it awards where it upholds a complaint.

The key changes will be:

– If a complainant can show actual loss, their actual loss will be considered when making the money award so that the complainant “is restored to their original financial position”;

– To compensate a complainant from being kept out of their money, the Ombudsman Service will continue to award compensatory interest. But instead of awarding 8% a year, it will award “a time-weighted average of the Bank of England base rate plus one percentage point” and this rate “will generally apply to the period from when the complainant was unreasonably deprived of the money, to the payment deadline” set by the Ombudsman Service; and

– If a firm fails to pay any award by the date set out in the award, a rate of 8% will be used after the deadline date for payment until it is actually paid.

The Ombudsman Service proposes to implement these changes from 1 January 2026 (but the implementation date will be confirmed “in due course”).

This is a significant step forward and re-balances what has always been a penal rate awarded by the Ombudsman Service. In 2018, I wrote a case report in Goode: Consumer Credit Reports on Carrasco v Johnson [2018] GCCR 16001 saying that the Ombudsman Service had “developed a practice of awarding interest at 8% a year” and submitted that practice was flawed because there was “no clear legal basis for the FOS to award interest at 8% a year which, given the base rates, is likely to punish firms who are required to provide redress”. I said that decision should force “a re-think of the FOS’s current policy of awarding interest at 8% a year”. Seven years on, such a re-think has finally happened and cannot be implemented a moment too soon.

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HM Treasury publishes ‘Phase 1’ consultation on consumer credit reform, and response to feedback on plans to regulate BNPL

Earlier today, on 19 May 2025, HM Treasury published:

– a press release and a ‘Phase 1’ consultation paper on reform to the Consumer Credit Act 1974;

– an update to its consultation and its response to the feedback to its consultation on regulating buy-now, pay-later products (BNPL); and

– a news story on its proposals to regulate buy-now, pay-later.

The ‘Phase 1’ consultation on reform seeks views on information requirements, sanctions and criminal offences. The deadline for responding is 21 July 2025.

On BNPL, HM Treasury “intends to lay the [statutory instrument] before Parliament shortly after this responsible is published”. Once the SI is made, the FCA will then have 12 months to draft, consult on, and finalise its rules for BNPL Lending. BNPL products will then be regulated from mid-2026. The FCA will shortly publish a consultation on its rules.