The Financial Conduct Authority (FCA) has welcomed HM Treasury’s latest proposals to reform the Consumer Credit Act (CCA), describing the changes as an important step towards a more flexible and modern consumer credit regime. For consumer credit Appointed Representatives (ARs), particularly brokers, the announcement signals a significant shift in how consumer credit regulation may operate in the years ahead.
The CCA has been in place since 1974 and was designed for a very different lending environment. While the legislation has provided important protections for consumers over the decades, both HM Treasury and the FCA now acknowledge that many parts of the regime are outdated and overly prescriptive. The rise of digital journeys, online applications, Buy Now Pay Later (BNPL) products and faster lending decisions has highlighted the limitations of legislation that was originally drafted in a paper-based era.
Under the proposed reforms, many of the detailed requirements currently embedded in legislation would instead move into the FCA Handbook. This would give the FCA greater flexibility to amend rules more quickly in response to changing market conditions, emerging risks, and innovation in consumer finance. The regulator believes this approach will allow firms to provide clearer customer communications while maintaining strong consumer protections.
For brokers, this is likely to mean an increased emphasis on outcomes-based regulation rather than strict adherence to highly prescriptive wording and document requirements. Firms will already be familiar with this direction of travel through the Consumer Duty, which focuses heavily on consumer understanding, fair value and delivering good outcomes. The FCA has made clear that future reforms will continue to align with these principles.
One of the key themes emerging from the Treasury and FCA statements is simplification. The FCA has recently launched a consultation on reviewing financial promotions rules for consumer credit, including proposals to remove provisions considered outdated or unnecessarily rigid. Instead, firms would be expected to demonstrate that their communications genuinely help consumers make informed decisions.
While compliance will of course remain essential, regulators increasingly expect firms to think more broadly about whether customers actually understand the information they receive. This could affect areas such as financial promotions, pre-contract disclosures, digital customer journeys, commission explanations and affordability discussions.
The reforms are also intended to support innovation and competition within the market. HM Treasury has stated that the updated regime should give firms greater freedom to develop new products and improve customer experiences without unnecessary legislative barriers.
However, increased flexibility may also bring greater supervisory expectations. If firms are given more discretion in how they communicate with customers, the FCA is likely to expect stronger governance, better monitoring and clearer evidence that consumer outcomes are being achieved. For ARs, this means principals may strengthen oversight arrangements and place greater focus on training, file reviews and customer communication standards.
Another important point for brokers is that these reforms are not expected to happen overnight. Industry commentary suggests implementation will be phased over several years, with consultations and transitional arrangements likely before any major legislative changes take full effect.
For now, firms should see this as part of the FCA’s broader move towards a more agile, principles-based regulatory framework. Firms that already prioritise transparency, customer understanding, and robust compliance processes are likely to be well positioned as the reforms develop.
At Consumer Credit Compliance, we will continue monitoring the progress of the CCA reforms and support our ARs in understanding how regulatory expectations evolve. The direction of travel is clear: simpler rules, greater flexibility, but also greater accountability for delivering good customer outcomes.
